Nuremberg Research Seminar in Economics on 13 November 2024, LG 0.423
You are invited to join the weekly Nuremberg Research Seminar in Economics on 13 November 2024, from 13.15 to 14.45 pm. The seminar will be held in room LG 0.423. Oliver Ruhnau (University of Köln) will be talking about „Green hydrogen support with overlapping climate policies”.
More information can be found here:
A large body of literature examines the interactions between overlapping climate policies. So far, this literature focused on emissions pricing (through taxes and trading schemes) and subsidies for renewable electricity generation. More recently, support policies for electrolytic hydrogen have been introduced, but interactions with existing climate policies remain poorly understood. Here, we use both an analytical and a numerical model to examine the combination of an emissions trading scheme and subsidies for renewable electricity and electrolytic hydrogen. In particular, we investigate the implications of requiring electrolytic hydrogen to be matched with additional renewable electricity on an annual or more granular temporal basis to qualify for the subsidy (“green hydrogen”). Without matching, we find that introducing a hydrogen policy leads to a shift from coal- to gas-fired electricity generation, to an increase in electricity and emission prices, and to a decrease in renewable subsidies. With annual matching, introducing a hydrogen policy increases renewable subsidies, while the electricity generation mix, electricity prices, and emission prices remain unaffected. With hourly matching, introducing a hydrogen policy leads to a more-than-proportionate increase in renewables and, as a result of the exogenous emission cap, a shift from gas- to coal-fired electricity generation; electricity and carbon prices decrease, but the hydrogen subsidy increases.