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Germany's solar cell promotion: Dark clouds on the horizon

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  • Frondel, Manuel
  • Ritter, Nolan
  • Schmidt, Christoph M.

Abstract

This article demonstrates that the large feed-in tariffs currently guaranteed for solar electricity in Germany constitute a subsidization regime that threatens to reach a level comparable to that of German hard coal production, a notoriously outstanding example of misguided political intervention. Yet, as a consequence of the coexistence of the German Renewable Energy Sources Act (EEG) and the EU Emissions Trading Scheme (ETS), the increased use of renewable energy technologies does not imply any additional emission reductions beyond those already achieved by ETS alone. Similarly disappointing is the net employment balance, which is likely to be negative if one takes into account the opportunity cost of this form of solar photovoltaic (PV) support. Along the lines of the international energy agency [IEA, 2007. Energy policies of IEA countries: Germany, 2007 review. International Energy Agency, OECD, Paris, p. 77], we recommend the immediate and drastic reduction of the magnitude of the feed-in tariffs granted for solar-based electricity. Ultimately, producing electricity on this basis is among the most expensive greenhouse gas abatement options.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 11 (November)
Pages: 4198-4204

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Handle: RePEc:eee:enepol:v:36:y:2008:i:11:p:4198-4204

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Keywords: Energy policy Energy security Learning effects;

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References

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  1. Manuel Frondel & Rainer Kambeck & Christoph M. Schmidt, 2006. "Hard Coal Subsidies: A Never-Ending Story?," RWI Discussion Papers 0053, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  2. Jochen Kluve, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 0037, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  3. Papineau, Maya, 2006. "An economic perspective on experience curves and dynamic economies in renewable energy technologies," Energy Policy, Elsevier, vol. 34(4), pages 422-432, March.
  4. Manuel Frondel & Jörg Peters, 2005. "Biodiesel: A New Oildorado?," RWI Discussion Papers 0036, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
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Citations

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Cited by:
  1. Lüthi, Sonja & Wüstenhagen, Rolf, 2012. "The price of policy risk — Empirical insights from choice experiments with European photovoltaic project developers," Energy Economics, Elsevier, vol. 34(4), pages 1001-1011.
  2. Christoph Heinzel & Thomas Winkler, 2011. "Economic functioning and politically pragmatic justification of tradable green certificates in Poland," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 157-175, June.
  3. Lehmann, Paul, 2013. "Supplementing an emissions tax by a feed-in tariff for renewable electricity to address learning spillovers," Energy Policy, Elsevier, vol. 61(C), pages 635-641.
  4. Hart, David M., 2010. "Making, breaking, and (partially) remaking markets: State regulation and photovoltaic electricity in New Jersey," Energy Policy, Elsevier, vol. 38(11), pages 6662-6673, November.
  5. Antonelli, Marco & Desideri, Umberto, 2014. "The doping effect of Italian feed-in tariffs on the PV market," Energy Policy, Elsevier, vol. 67(C), pages 583-594.
  6. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2013. "A public choice view on the climate and energy policy mix in the EU: How do the emissions trading scheme and support for renewable energies interact?," UFZ Discussion Papers 5/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  7. Peters, Michael & Schneider, Malte & Griesshaber, Tobias & Hoffmann, Volker H., 2012. "The impact of technology-push and demand-pull policies on technical change – Does the locus of policies matter?," Research Policy, Elsevier, vol. 41(8), pages 1296-1308.
  8. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010. "Economic impacts from the promotion of renewable energy technologies: The German experience," Energy Policy, Elsevier, vol. 38(8), pages 4048-4056, August.
  9. Leepa, Claudia & Unfried, Matthias, 2013. "Effects of a cut-off in feed-in tariffs on photovoltaic capacity: Evidence fromGermany," Energy Policy, Elsevier, vol. 56(C), pages 536-542.
  10. David Anthoff & Robert Hahn, 2010. "Government failure and market failure: on the inefficiency of environmental and energy policy," Oxford Review of Economic Policy, Oxford University Press, vol. 26(2), pages 197-224, Summer.
  11. Tveten, Åsa Grytli & Bolkesjø, Torjus Folsland & Martinsen, Thomas & Hvarnes, Håvard, 2013. "Solar feed-in tariffs and the merit order effect: A study of the German electricity market," Energy Policy, Elsevier, vol. 61(C), pages 761-770.
  12. Martin, Nigel & Rice, John, 2013. "The solar photovoltaic feed-in tariff scheme in New South Wales, Australia," Energy Policy, Elsevier, vol. 61(C), pages 697-706.
  13. White, Lee V. & Lloyd, Bob & Wakes, Sarah J., 2013. "Are Feed-in Tariffs suitable for promoting solar PV in New Zealand cities?," Energy Policy, Elsevier, vol. 60(C), pages 167-178.
  14. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
  15. Stokes, Leah C., 2013. "The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada," Energy Policy, Elsevier, vol. 56(C), pages 490-500.
  16. Christoph Böhringer, 2010. "1990 bis 2010: Eine Bestandsaufnahme von zwei Jahrzehnten europäischer Klimapolitik," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 11(s1), pages 56-74, 05.

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