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Does the stick make the carrot more attractive? State mandates and uptake of renewable heating technologies

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  • Germeshausen, Robert
  • von Graevenitz, Kathrine
  • Achtnicht, Martin

Abstract

Command and control regulation is a popular tool for mitigating greenhouse gas emissions from the building stock. We exploit the introduction of a state-specific mandate in Germany on renewable heating when replacing the heating system in existing homes. We study the effect of the mandate on the uptake of subsidies for renewable heating technologies using unique data from a pre-existing federal government subsidy scheme. Using a geographic discontinuity design, we find that the mandate has positive effects on take-up of these subsidies, with 2 additional subsidized installations per 1000 eligible buildings in the existing building stock on average. Effects are larger in municipalities where adoption rates as measured by the subsidy scheme were below median prior to the introduction of the mandate. However, we also find suggestive evidence that retrofitting activities in the state declined in response to the introduction of the mandate.

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  • Germeshausen, Robert & von Graevenitz, Kathrine & Achtnicht, Martin, 2022. "Does the stick make the carrot more attractive? State mandates and uptake of renewable heating technologies," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:regeco:v:92:y:2022:i:c:s0166046221001137
    DOI: 10.1016/j.regsciurbeco.2021.103753
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    Cited by:

    1. Kun Huang & Xingyu Zhou & Cheng Huang & Lin Wang & Dequan Li & Jinrei Zhao, 2023. "Heat Transfer Analysis and Operation Optimization of an Intermediate Fluid Vaporizer," Energies, MDPI, vol. 16(3), pages 1-23, January.
    2. Singhal, Puja & Pahle, Michael & Kalkuhl, Matthias & Levesque, Antoine & Sommer, Stephan & Berneiser, Jessica, 2022. "Beyond good faith: Why evidence-based policy is necessary to decarbonize buildings cost-effectively in Germany," Energy Policy, Elsevier, vol. 169(C).
    3. Robert Germeshausen & Kathrine von Graevenitz, 2023. "State Mandates on Renewable Heating Technologies and the Housing Market," Land Economics, University of Wisconsin Press, vol. 99(4), pages 543-557.

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    More about this item

    Keywords

    Technology diffusion; Building regulations; Subsidies; Renewable energy sources; Geographic discontinuity design;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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