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.