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Are green hopes too rosy? Employment and welfare impacts of renewable energy promotion

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Listed author(s):
  • Böhringer, Christoph
  • Keller, Andreas
  • van der Werf, Edwin

Abstract

In view of pressing unemployment problems, policy makers across all parties jump on the prospects of renewable energy promotion as a job creation engine which can boost economic well-being. Our analytical model shows that initial labor market rigidities in theory provide some scope for such a double dividend. However, the practical outcome of renewable energy promotion might be sobering. Our computable general equilibrium analysis of subsidized electricity production from renewable energy sources (RES-E) in Germany suggests that the prospects for employment and welfare gains are quite limited and hinge crucially on the level of the subsidy rate and the financing mechanism. If RES-E subsidies are financed by labor taxes, welfare and employment effects are strictly negative for a broad range of subsidy rates. The use of an electricity tax to fund RES-E subsidies generates minor benefits for small subsidy rates but these benefits quickly turn into significant losses as the subsidy rate exceeds some threshold value.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 36 (2013)
Issue (Month): C ()
Pages: 277-285

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Handle: RePEc:eee:eneeco:v:36:y:2013:i:c:p:277-285
DOI: 10.1016/j.eneco.2012.08.029
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

Keywords: Renewable energy promotion; Wage rigidities; Computable general equilibrium; Double dividend;

Find related papers by JEL classification:

  • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
  • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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Cited by:

  1. Mattia Cai, Niccolò Cusumano, Arturo Lorenzoni, Federico Pontoni, 2016. "A comprehensive ex-post assessment of the Italian RES policy: deployment, jobs, value added and import leakages," IEFE Working Papers 88, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
  2. Iyer, Gokul C. & Clarke, Leon E. & Edmonds, James A. & Hultman, Nathan E., 2016. "Do national-level policies to promote low-carbon technology deployment pay off for the investor countries?," Energy Policy, Elsevier, vol. 98(C), pages 400-411.
  3. Ina Meyer & Mark Sommer, 2014. "Employment Effects of Renewable Energy Supply - A Meta Analysis," WWWforEurope Policy Paper series 12, WWWforEurope.
  4. Markandya, Anil & Arto, Iñaki & González-Eguino, Mikel & Román, Maria V., 2016. "Towards a green energy economy? Tracking the employment effects of low-carbon technologies in the European Union," Applied Energy, Elsevier, vol. 179(C), pages 1342-1350.
  5. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española, IEF, vol. 208(1), pages 145-190, March.
  6. Kandpal, Tara C. & Broman, Lars, 2014. "Renewable energy education: A global status review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 34(C), pages 300-324.
  7. Dai, Hancheng & Xie, Xuxuan & Xie, Yang & Liu, Jian & Masui, Toshihiko, 2016. "Green growth: The economic impacts of large-scale renewable energy development in China," Applied Energy, Elsevier, vol. 162(C), pages 435-449.
  8. Wadim Strielkowski & Štepán Krška & Evgeny Lisin, 2013. "Energy Economics and Policy of Renewable Energy Sources in the European Union," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 333-340.
  9. Wiser, Ryan & Bolinger, Mark & Heath, Garvin & Keyser, David & Lantz, Eric & Macknick, Jordan & Mai, Trieu & Millstein, Dev, 2016. "Long-term implications of sustained wind power growth in the United States: Potential benefits and secondary impacts," Applied Energy, Elsevier, vol. 179(C), pages 146-158.
  10. Arouri, Mohamed El Hedi & Ben Youssef, Adel & M'henni, Hatem & Rault, Christophe, 2014. "Exploring the Causality Links between Energy and Employment in African Countries," IZA Discussion Papers 8296, Institute for the Study of Labor (IZA).
  11. Dvořák, Petr & Martinát, Stanislav & der Horst, Dan Van & Frantál, Bohumil & Turečková, Kamila, 2017. "Renewable energy investment and job creation; a cross-sectoral assessment for the Czech Republic with reference to EU benchmarks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 360-368.
  12. Blazejczak, Jürgen & Braun, Frauke G. & Edler, Dietmar & Schill, Wolf-Peter, 2014. "Economic effects of renewable energy expansion: A model-based analysis for Germany," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 1070-1080.
  13. Till Requate, 2015. "Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(2), pages 211-239, April.
  14. Duscha, Vicki & Fougeyrollas, Arnaud & Nathani, Carsten & Pfaff, Matthias & Ragwitz, Mario & Resch, Gustav & Schade, Wolfgang & Breitschopf, Barbara & Walz, Rainer, 2016. "Renewable energy deployment in Europe up to 2030 and the aim of a triple dividend," Energy Policy, Elsevier, vol. 95(C), pages 314-323.
  15. Ortega, Margarita & Río, Pablo del & Ruiz, Pablo & Thiel, Christian, 2015. "Employment effects of renewable electricity deployment. A novel methodology," Energy, Elsevier, vol. 91(C), pages 940-951.
  16. Creutzig, Felix & Goldschmidt, Jan Christoph & Lehmann, Paul & Schmid, Eva & von Blücher, Felix & Breyer, Christian & Fernandez, Blanca & Jakob, Michael & Knopf, Brigitte & Lohrey, Steffen & Susca, Ti, 2014. "Catching two European birds with one renewable stone: Mitigating climate change and Eurozone crisis by an energy transition," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1015-1028.
  17. Eugenio Demartini & Anna Gaviglio & Marco Gelati & Daniele Cavicchioli, 2016. "The Effect of Biogas Production on Farmland Rental Prices: Empirical Evidences from Northern Italy," Energies, MDPI, Open Access Journal, vol. 9(11), pages 1-23, November.
  18. Adolfo Maza & José Villaverde & María Hierro, 2015. "Non- $$\hbox {CO}_2$$ CO 2 Generating Energy Shares in the World: Cross-Country Differences and Polarization," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 319-343, July.
  19. repec:ipg:wpaper:2014-475 is not listed on IDEAS
  20. Fischer, W. & Hake, J.-Fr. & Kuckshinrichs, W. & Schröder, T. & Venghaus, S., 2016. "German energy policy and the way to sustainability: Five controversial issues in the debate on the “Energiewende”," Energy, Elsevier, vol. 115(P3), pages 1580-1591.

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