Keywords: UK, renewable obligation, feed-in tariffs, FIT, renewable energy, markets, neoclassical economics, green economics, renewable electricity, United Kingdom, market-based governance
Where neoclassical economics fails: impacts on renewable electricity in the UK
This paper explores the appropriateness and effectiveness of using a market-based governance system, in the form of the renewable obligation (RO) in the UK, to drive the uptake of electricity from renewable technologies. The paper will argue that neoclassical thinking around markets makes key assumptions on efficiency, effectiveness and equity that are not suitable for emerging renewable electricity technologies. The workings of the RO and the planned addition of a feed-in tariff (FIT) will be critiqued using alternative assumptions of the market under a green economic framework (Kennet and Heinemann, 2006). The paper discusses what a green economics vision of the structure of renewable electricity in the UK could be.