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Abstract
Since the energy crisis in the 1970s and later the growing concern for climate change in the
1990s, policymakers at all levels of government and around the world have been enthusiastically
supporting a wide range of incentive mechanisms for electricity from renewable energy sources (RES-E).
Motivations range from energy security to environmental preservation to green jobs and innovation, and
measures comprise an array of subsidies to mandates to emissions trading. But do these policies work
together or at cross-purposes? To evaluate RES-E policies, one must understand how specific policy
mechanisms interact with each other and under what conditions multiple policy levers are necessary. In
this article, we review the recent environmental economics literature on the effectiveness of RES-E
policies and the interactions between them, with a focus on the increasing use of tradable quotas for both
emissions reduction and RES-E expansion.