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Do economic instruments matter? Wind turbine investments in the EU(15)

  • Mulder, Arjen
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    This paper analyses how governments in the EU(15) countries have succeeded in stimulating investments in wind turbines between 1985 and 2005. I use four different evaluation criteria (Tobin's Q, Euler equation estimation, investment accelerator model, and the effective marginal tax rate) to describe the observed investment patterns. After a period of rapid growth in capital stock (1985-2000), a period of modest growth (2001-2005) can be observed even though the economic attractiveness of investing increases modestly. This pattern cannot be explained by the evaluation criteria unless we accept economic attractiveness is a necessary condition and not a necessary and sufficient condition. When analysing which policy has worked best, the policies of Germany, Denmark and Spain stand out. Their early and consistent support has been based on feed-in tariffs combined with subsidies.

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    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 30 (2008)
    Issue (Month): 6 (November)
    Pages: 2980-2991

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    Handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:2980-2991
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