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

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  • Mulder, Arjen

Abstract

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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  • Mulder, Arjen, 2008. "Do economic instruments matter? Wind turbine investments in the EU(15)," Energy Economics, Elsevier, vol. 30(6), pages 2980-2991, November.
  • Handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:2980-2991
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    Cited by:

    1. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?," International Review of Environmental and Resource Economics, now publishers, vol. 4(1), pages 51-92, June.
    2. Marc Baudry & Clément Bonnet, 2016. "Demand pull isntruments and the development of wind power in Europe: A counter-factual analysis," Working Papers 1607, Chaire Economie du climat.
    3. Mostafaeipour, Ali, 2010. "Feasibility study of offshore wind turbine installation in Iran compared with the world," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 1722-1743, September.
    4. Kubiszewski, Ida & Cleveland, Cutler J. & Endres, Peter K., 2010. "Meta-analysis of net energy return for wind power systems," Renewable Energy, Elsevier, vol. 35(1), pages 218-225.
    5. Gilbert E. Metcalf, 2010. "Investment in Energy Infrastructure and the Tax Code," NBER Chapters,in: Tax Policy and the Economy, Volume 24, pages 1-33 National Bureau of Economic Research, Inc.
    6. Gavard, Claire, 2016. "Carbon price and wind power support in Denmark," Energy Policy, Elsevier, vol. 92(C), pages 455-467.
    7. Marc Baudry & Clément Bonnet, 2015. "Market pull instruments and the development of wind power in Europe: a counterfactual analysis," EconomiX Working Papers 2015-18, University of Paris Nanterre, EconomiX.
    8. Walters, Ryan & Walsh, Philip R., 2011. "Examining the financial performance of micro-generation wind projects and the subsidy effect of feed-in tariffs for urban locations in the United Kingdom," Energy Policy, Elsevier, vol. 39(9), pages 5167-5181, September.
    9. Menegaki, Angeliki N., 2011. "Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis," Energy Economics, Elsevier, vol. 33(2), pages 257-263, March.
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    11. Feurtey, Evariste & Ilinca, Adrian & Sakout, Anas & Saucier, Carol, 2015. "Lessons learned in France and Quebec regarding financial and legal mechanisms to develop renewable energy: A hybrid model as an acceptable solution for onshore wind?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 34-45.
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    13. Feurtey, Évariste & Ilinca, Adrian & Sakout, Anas & Saucier, Carol, 2016. "Institutional factors influencing strategic decision-making in energy policy; a case study of wind energy in France and Quebec (Canada)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 1455-1470.
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    16. Gugler, Klaus & Haxhimusa, Adhurim & Liebensteiner, Mario & Schindler, Nora, 2016. "Investment under Uncertainty in Electricity Generation," Department of Economics Working Paper Series 5177, WU Vienna University of Economics and Business.
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    19. Portman, Michelle E. & Duff, John A. & Köppel, Johann & Reisert, Jessica & Higgins, Megan E., 2009. "Offshore wind energy development in the exclusive economic zone: Legal and policy supports and impediments in Germany and the US," Energy Policy, Elsevier, vol. 37(9), pages 3596-3607, September.
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    More about this item

    Keywords

    E62 H23 Q48 Subsidies Fiscal investment incentives Renewable energy;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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