Paper details

Title:

Handling Uncertainty in Bioenergy Policy Design - A Case Study Analysis of UK and German Bioelectricity Policy Documents

Author(s):

Purkus, A., Röder, M., Gawel, E., Thrän, D., Thornley, P.

Document(s):

Abstract:

In designing policies to promote bioenergy, policy makers face challenges concerning uncertainties about greenhouse gas balances of heterogeneous bioenergy pathways, the sustainability of biomass production, technology and resource costs, or future framework conditions of energy markets. New information becomes available with time, but policy adjustments can involve high levels of negotiation and adaptation costs. To enable an effective steering of technology choices and innovation efforts, policies have to strike a balance between creating a consistent institutional framework, which establishes planning security for investors, and sufficient flexibility to adapt policy instruments to new information. We examine implications of economic theory for handling uncertainties in bioelectricity policy design, focusing on choices between price and quantity instruments, technology differentiation, and policy adjustment. Findings are then applied to an analysis of two case studies, the UK’s Renewables Obligation and the German feed-in tariff/feed-in premium scheme. We examine how challenges regarding the minimization of social costs of errors, the allocation of uncertainties, and trade-offs between planning security and incentive intensity as well as adaptive efficiency and policy uncertainty have been addressed in practice. Based on this, we derive potential policy recommendations.

Keywords:

bioenergy, economics, electricity sector, external effects, policy, policies, uncertainty

Topic:

Biomass Policies, Markets and Sustainability

Subtopic:

Biomass strategies and policies

Event:

22nd European Biomass Conference and Exhibition

Session:

4DO.3.1

Pages:

1441 - 1444

ISBN:

978-88-89407-52-3

Paper DOI:

10.5071/22ndEUBCE2014-4DO.3.1

Price:

FREE