Renewable energy policy effectiveness: A panel data analysis across Europe and Latin America

Renewable energy (RE) technologies for electricity generation are a central pillar of energy sector decarbonisation strategies worldwide. Public policies to promote their diffusion have been in place in developed economies since 1980, and, since the 2000s, a growing number of emerging countries began implemented such policies. The Latin American countries have been proactive in RE promotion, but few attempts have been made to evaluate the results. This article proposes an econometric analysis of the effectiveness of RE policies, based on panel data for 20 Latin American and 30 European countries, over 20 years. The results converge for the influence of promotion policies in general: they have a positive and statistically significant effect on RE investment, being the principal determinant in both regions. Nevertheless, on their own, tax incentives are insufficient to assure the deployment of RE technologies. This article also highlights specificities in policy approaches and motivations across both regions and explains why auction became the main instrument in Latin American countries.