Market Mechanisms and Decarbonisation Policies

The Research Area Comprises

  • Assessment and Design of Future Climate and Energy Policy Instruments 
  • Decarbonisation of the Energy System, Especially Electricity Markets and Electrification
  • Overall Economic Decarbonisation and Sectoral Impacts

A number of major challenges related to the use of fossil fuels provide a rationale for public policy intervention, i.e. limiting carbon dioxide emissions to mitigate climate change, lowering air pollution to reduce health costs and enhancing the security of energy supply. A transition from fossil-based to sustainable energy systems dominated by renewable energy sources can address these challenges. The conditions for such a transition are complex and touch on the fundamental question of how the environment and the economy, including technology, interact in decentralised market-based systems. Public policy is the primary means by which the government can influence market decisions of firms and consumers regarding energy supply and demand.