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Economic Impacts from the Promotion of Renewable Energy Technologies - The German Experience

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  • Manuel Frondel

    ()

  • Nolan Ritter
  • Christoph M. Schmidt
  • Colin Vance

Abstract

The allure of an environmentally benign, abundant, and cost-effective energy source has led an increasing number of industrialized countries to back public financing of renewable energies. Germany's experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of far-reaching energy and environmental laws that stretch back nearly two decades. This paper critically reviews the current centerpiece of this effort, the Renewable Energy Sources Act (EEG), focusing on its costs and the associated implications for job creation and climate protection. We argue that German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country's energy portfolio. To the contrary, the government's support mechanisms have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security.

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Bibliographic 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 0156.

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Length: 32 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:rwi:repape:0156

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Keywords: Energy policy; energy security; climate; employment;

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References

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  1. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2008. "Germany's solar cell promotion: Dark clouds on the horizon," Energy Policy, Elsevier, vol. 36(11), pages 4198-4204, November.
  2. Nemet, Gregory F., 2006. "Beyond the learning curve: factors influencing cost reductions in photovoltaics," Energy Policy, Elsevier, vol. 34(17), pages 3218-3232, November.
  3. Hillebrand, Bernhard & Buttermann, Hans Georg & Behringer, Jean Marc & Bleuel, Michaela, 2006. "The expansion of renewable energies and employment effects in Germany," Energy Policy, Elsevier, vol. 34(18), pages 3484-3494, December.
  4. Neij, Lena, 1997. "Use of experience curves to analyse the prospects for diffusion and adoption of renewable energy technology," Energy Policy, Elsevier, vol. 25(13), pages 1099-1107, November.
  5. Morthorst, P. E., 2003. "National environmental targets and international emission reduction instruments," Energy Policy, Elsevier, vol. 31(1), pages 73-83, January.
  6. Thure Traber & Claudia Kemfert, 2009. "Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 155-178.
  7. Manuel Frondel & Christoph M. Schmidt, 2008. "Measuring Energy Security – A Conceptual Note," Ruhr Economic Papers 0052, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Economic Impacts from the Promotion of Renewable Energy Technologies
    by Ariel Goldring in Free Market Mojo on 2010-01-02 08:39:04
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Lehmann, Paul & Gawel, Erik, 2011. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," UFZ Discussion Papers 5/2011, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  2. Donald N. Dewees, 2013. "The Economics of Renewable Electricity Policy in Ontario," Working Papers tecipa-478, University of Toronto, Department of Economics.
  3. Pasqualetti, Martin J. & Haag, Susan, 2011. "A solar economy in the American Southwest: Critical next steps," Energy Policy, Elsevier, vol. 39(2), pages 887-893, February.
  4. Benjamin Dachis & Jan Carr, 2011. "Zapped: The High Cost of Ontario's Renewable Electricity Subsidies," e-briefs 117, C.D. Howe Institute.
  5. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2013. "Polit-ökonomische Grenzen des Emissionshandels und ihre Implikationen für die klima- und energiepolitische Instrumentenwahl," UFZ Discussion Papers 2/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  6. Purkus, Alexandra & Gawel, Erik & Thrän, Daniela, 2012. "Bioenergy governance between market and government failures: A new institutional economics perspective," UFZ Discussion Papers 13/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  7. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2012. "Germany’s Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 0353, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  8. Manuel Frondel & Nolan Ritter & Christoph M. Schmidt, 2011. "Die Kosten des Klimaschutzes am Beispiel der Strompreise," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, 04.
  9. Richard Schmalensee, 2011. "Evaluating Policies to Increase the Generation of Electricity from Renewable Energy," Working Papers 1108, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  10. Manuel Frondel & Christoph M. Schmidt & Nils aus dem Moore, 2010. "Eine unbequeme Wahrheit – Die frappierend hohen Kosten der Förderung von Solarstrom durch das Erneuerbare-Energien-Gesetz," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, December.
  11. Dr. Christian Lutz & Dr. Ulrike Lehr & Philip Ulrich & Dr. Michael Schlesinger, 2012. "Analyse der gesamtwirtschaftlichen Effekte des Energiemarktes," GWS Discussion Paper Series 12-7, GWS - Institute of Economic Structures Research.

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