Ex-Ante Evaluation of a New Policy Instrument. Carbon Contracts for Difference in Energy-Intensive Industries

Master's Thesis from the year 2022 in the subject Politics - Environmental Policy, grade: 1,5, University of Potsdam, language: English, abstract: This thesis aims to clarify how feasible Carbon Contracts for Difference (CCfDs) are and how they compare to other policy instruments. It further explores what design elements the policy instrument needs to contain to be effective. To answer these questions, the feasibility of CCfDs was analysed through industry and policy publications using evaluation criteria and subsequently the most important design elements were identified and examined.

The introduction of climate-friendly technologies in energy-intensive industries requires significant investments. These investments are often withheld due to competitive disadvantages and carbon price risks, thus preventing the progress of industry. As a remedy, CCfDs between the state and companies should reduce risks and thus create incentives for investment.