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Germany's Solar Cell Promotion: Dark Clouds on the Horizon

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Author Info
Manuel Frondel ()
Nolan Ritter
Christoph M. Schmidt

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Abstract

This article demonstrates that the large feed-in tariffs currently guaranteed for solar electricity in Germany constitute a subsidization regime that, if extended to 2020, 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 theEUEmissions 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 support. Along the lines of the International Energy Agency (IEA 2007:77), we therefore 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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Publisher Info
Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0040.

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Length: 22 pages
Date of creation: Mar 2008
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Handle: RePEc:rwi:repape:0040

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Related research
Keywords: Energy policy; energy security; learning effects;

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Find related papers by JEL classification:
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Frondel, Manuel & Peters, Jorg, 2007. "Biodiesel: A new Oildorado?," Energy Policy, Elsevier, vol. 35(3), pages 1675-1684, March. [Downloadable!] (restricted)
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  2. Jochen Kluve, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 0037, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
  3. Frondel, Manuel & Kambeck, Rainer & Schmidt, Christoph M., 2007. "Hard coal subsidies: A never-ending story?," Energy Policy, Elsevier, vol. 35(7), pages 3807-3814, July. [Downloadable!] (restricted)
    Other versions:
  4. Jochen Kluve, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute for the Study of Labor (IZA). [Downloadable!]
  5. 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. [Downloadable!] (restricted)
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