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Germany's solar cell promotion: Dark clouds on the horizon

  • Frondel, Manuel
  • Ritter, Nolan
  • Schmidt, Christoph M.

This article demonstrates that the large feed-in tariffs currently guaranteed for solar electricity in Germany constitute a subsidization regime that threatens to reach a level comparable to that of German hard coal production, a notoriously outstanding example of misguided political intervention. Yet, as a consequence of the coexistence of the German Renewable Energy Sources Act (EEG) and the EU Emissions Trading Scheme (ETS), the increased use of renewable energy technologies does not imply any additional emission reductions beyond those already achieved by ETS alone. Similarly disappointing is the net employment balance, which is likely to be negative if one takes into account the opportunity cost of this form of solar photovoltaic (PV) support. Along the lines of the international energy agency [IEA, 2007. Energy policies of IEA countries: Germany, 2007 review. International Energy Agency, OECD, Paris, p. 77], we recommend the immediate and drastic reduction of the magnitude of the feed-in tariffs granted for solar-based electricity. Ultimately, producing electricity on this basis is among the most expensive greenhouse gas abatement options.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 11 (November)
Pages: 4198-4204

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Handle: RePEc:eee:enepol:v:36:y:2008:i:11:p:4198-4204
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Frondel, Manuel & Kambeck, Rainer & Schmidt, Christoph M., 2007. "Hard coal subsidies: A never-ending story?," Energy Policy, Elsevier, vol. 35(7), pages 3807-3814, July.
  2. Frondel, Manuel & Peters, Jörg, 2005. "Biodiesel: A New Oildorado?," RWI Discussion Papers 36, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
  3. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute for the Study of Labor (IZA).
  4. Frondel, Manuel & Peters, Jorg, 2007. "Biodiesel: A new Oildorado?," Energy Policy, Elsevier, vol. 35(3), pages 1675-1684, March.
  5. 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.
  6. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
  7. Papineau, Maya, 2006. "An economic perspective on experience curves and dynamic economies in renewable energy technologies," Energy Policy, Elsevier, vol. 34(4), pages 422-432, March.
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