Back in May, I mentioned some comments by economist Amar Breckenridge on the FIT/Renewable Energy WTO panel report. Along with a colleague, he has a new piece on the AB report. Here's an excerpt related to the AB's discussion of market definitions and the existence of a subsidy:
It is not clear, however, that the existence of “green energy” plans offers a persuasive basis for considering that different markets exist for electricity according to energy source. The fact that energy producers offer such plans is not primarily a reflection of a response to consumer tastes. Rather, it more usually reflects the response by energy suppliers (and retailers, more specifically) to incentive mechanisms put in place by governments to expand the supply of electricity based renewable energy sources. But these incentive mechanisms exist precisely because in their absence suppliers would have few incentives to supply electricity from low emissions sources which in the normal operation of energy systems would be substituted for by lower cost- higher emissions sources. Ultimately, the extent to which end-consumers of electricity differentiate on the basis of energy sources is an empirical question to be addressed by robust analysis.
