Are green hopes too rosy? Employment and welfare impacts of renewable energy promotion
AbstractIn 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 InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 36 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/eneco
Renewable energy promotion; Wage rigidities; Computable general equilibrium; Double dividend;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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- 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.
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