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Market and Non-market Policies for Renewable Energy Diffusion: A Unifying Framework and Empirical Evidence from China’s Wind Power Sector

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  • Yang Liu
  • Taoyuan Wei

Abstract

We provide a comprehensive framework of analyzing the diffusion process of renewable technology, incorporating epidemic and pecuniary effects. Relying on a panel dataset consisting of information from 1207 CDM wind projects in thirty provinces over the period 2004-2011, we find strong evidence on the dominant role of the epidemic effect and new evidence on pecuniary effects that generate a diminishing marginal effect of profitability in inducing technology adoption. Our numerical simulation demonstrates that the epidemic effect can play a quantitatively important role in the spread of renewable energy technology and markedly enhance the optimal social welfare. Our findings convey important policy implications for regulators when choosing policy instruments to enhance the diffusion and adoption of clean technology. Price instruments should be complemented by a wide range of non-market instruments to address non-market barriers.

Suggested Citation

  • Yang Liu & Taoyuan Wei, 2016. "Market and Non-market Policies for Renewable Energy Diffusion: A Unifying Framework and Empirical Evidence from China’s Wind Power Sector," The Energy Journal, , vol. 37(1_suppl), pages 195-210, January.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:1_suppl:p:195-210
    DOI: 10.5547/01956574.37.SI1.lyan
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    References listed on IDEAS

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    1. Yao, Xilong & Liu, Yang & Qu, Shiyou, 2015. "When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance," Applied Energy, Elsevier, vol. 160(C), pages 697-704.
    2. Dan Andrews & Chiara Criscuolo & Peter N. Gal, 2015. "Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries," OECD Productivity Working Papers 2, OECD Publishing.
    3. He, Gang & Kammen, Daniel M., 2014. "Where, when and how much wind is available? A provincial-scale wind resource assessment for China," Energy Policy, Elsevier, vol. 74(C), pages 116-122.
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