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Do economic instruments matter? Wind turbine investments in the EU(15)

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  • Mulder, Arjen
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    Abstract

    This paper analyses how governments in the EU(15) countries have succeeded in stimulating investments in wind turbines between 1985 and 2005. I use four different evaluation criteria (Tobin's Q, Euler equation estimation, investment accelerator model, and the effective marginal tax rate) to describe the observed investment patterns. After a period of rapid growth in capital stock (1985-2000), a period of modest growth (2001-2005) can be observed even though the economic attractiveness of investing increases modestly. This pattern cannot be explained by the evaluation criteria unless we accept economic attractiveness is a necessary condition and not a necessary and sufficient condition. When analysing which policy has worked best, the policies of Germany, Denmark and Spain stand out. Their early and consistent support has been based on feed-in tariffs combined with subsidies.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 30 (2008)
    Issue (Month): 6 (November)
    Pages: 2980-2991

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    Handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:2980-2991

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    Web page: http://www.elsevier.com/locate/eneco

    Related research

    Keywords: E62 H23 Q48 Subsidies Fiscal investment incentives Renewable energy;

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    Cited by:
    1. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less than the Sum of Its Parts?," Discussion Papers dp-10-19, Resources For the Future.
    2. Aravena, Claudia & Hutchinson, W. George & Longo, Alberto, 2012. "Environmental pricing of externalities from different sources of electricity generation in Chile," Energy Economics, Elsevier, vol. 34(4), pages 1214-1225.
    3. Gilbert E. Metcalf, 2009. "Investment in Energy Infrastructure and the Tax Code," Discussion Papers Series, Department of Economics, Tufts University 0743, Department of Economics, Tufts University.
    4. Grothe, Oliver & Müsgens, Felix, 2012. "The influence of spatial effects on wind power revenues under direct marketing rules," EWI Working Papers 2012-7, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
    5. Walters, Ryan & Walsh, Philip R., 2011. "Examining the financial performance of micro-generation wind projects and the subsidy effect of feed-in tariffs for urban locations in the United Kingdom," Energy Policy, Elsevier, vol. 39(9), pages 5167-5181, September.
    6. Menegaki, Angeliki N., 2011. "Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis," Energy Economics, Elsevier, vol. 33(2), pages 257-263, March.
    7. Portman, Michelle E. & Duff, John A. & Köppel, Johann & Reisert, Jessica & Higgins, Megan E., 2009. "Offshore wind energy development in the exclusive economic zone: Legal and policy supports and impediments in Germany and the US," Energy Policy, Elsevier, vol. 37(9), pages 3596-3607, September.
    8. Zhang, Fan, 2013. "How fit are feed-in tariff policies ? evidence from the European wind market," Policy Research Working Paper Series 6376, The World Bank.
    9. Grothe, Oliver & Müsgens, Felix, 2013. "The influence of spatial effects on wind power revenues under direct marketing rules," Energy Policy, Elsevier, vol. 58(C), pages 237-247.

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