Environmental, economic, and social impacts of feed-in tariffs: A Portuguese perspective 2000–2010

Over the past two decades, many countries have used aggressive policies such as feed-in tariffs and power purchase agreements to promote renewable energy. These policies have been very successful in several countries, initiating large changes in the structure of energy sectors, and conferring large environmental, economic, and social impacts. In this paper, we quantify these impacts over the period 2000–2010 for Portugal; a country that witnessed a substantial increase in renewable energy penetration rates, with the share of wind power in electricity production jumping from 0.4% in 2000 to 16.8% in 2010. We use a novel, hybrid energy-economic input–output model to compare the historical energy policy against a counterfactual scenario in which the surge in energy subsidies and concurrent expansion of renewable energies did not take place. We consider the impact of renewable energy policy stemming from three propagation modes – operational, investment, and opportunity costs – in both the energy sector and the rest of the economy. This is the first time such a comprehensive analysis has been undertaken. Our findings show that, in the period under consideration, the combined historical renewable energy policy and renewable energy developments yielded a clear reduction in emissions, in excess of 7.2MtCO2eq, an increase in GDP of 1557M€, and a creation of 160 thousand job-years. These estimates do not include opportunity costs from future FIT payments that projects built in this period may be entitled to. Therefore, this work will be of critical interest to RES-E and climate change policy makers, other scientists, and the public.