Assessing the Impact of Carbon Tax and Renewable Portfolio Standards on Hybrid Renewable Energy Investments and Emissions Reduction

Abstract

Renewable portfolio standards and carbon tax are policies designed to drive a low carbon transition. This study designs four policy scenarios and examines the impact of equilibrium decision-making in different policy contexts. And the following results are obtained: first, both policies promote renewable energy investment and reduce carbon emissions. Second, hybrid policies perform best. Third, if the government should be careful in setting carbon tax and quota standards. In addition, our paper considers the intermittency of renewable energy and consumers' environmental awareness. Our findings provide policy recommendations for promoting a high-quality, low-carbon transition of the electricity system.

Keywords: Carbon tax, Renewable portfolio standards, Renewable energy investment