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Are green hopes too rosy? Employment and welfare impacts of renewable energy promotion

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  • Böhringer, Christoph
  • Keller, Andreas
  • van der Werf, Edwin

Abstract

In view of pressing unemployment problems, policy makers across all parties jump on the prospects of renewable energy promotion as a job creation engine which can boost economic well-being. Our analytical model shows that initial labor market rigidities in theory provide some scope for such a double dividend. However, the practical outcome of renewable energy promotion might be sobering. Our computable general equilibrium analysis of subsidized electricity production from renewable energy sources (RES-E) in Germany suggests that the prospects for employment and welfare gains are quite limited and hinge crucially on the level of the subsidy rate and the financing mechanism. If RES-E subsidies are financed by labor taxes, welfare and employment effects are strictly negative for a broad range of subsidy rates. The use of an electricity tax to fund RES-E subsidies generates minor benefits for small subsidy rates but these benefits quickly turn into significant losses as the subsidy rate exceeds some threshold value.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 36 (2013)
Issue (Month): C ()
Pages: 277-285

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Handle: RePEc:eee:eneeco:v:36:y:2013:i:c:p:277-285

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

Related research

Keywords: Renewable energy promotion; Wage rigidities; Computable general equilibrium; Double dividend;

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Cited by:
  1. Arouri, Mohamed El Hedi & Ben Youssef, Adel & M'henni, Hatem & Rault, Christophe, 2014. "Exploring the Causality Links between Energy and Employment in African Countries," IZA Discussion Papers 8296, Institute for the Study of Labor (IZA).
  2. Wadim Strielkowski & Štepán Krška & Evgeny Lisin, 2013. "Energy Economics and Policy of Renewable Energy Sources in the European Union," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 333 - 340.
  3. Ina Meyer & Mark Sommer, 2014. "Employment Effects of Renewable Energy Supply - A Meta Analysis," WWWforEurope Policy Paper series 12, WWWforEurope.

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