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It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

Author

Listed:
  • Jacob Funk Kirkegaard

    () (Peterson Institute for International Economics)

  • Thilo Hanemann

    (Rhodium Group)

  • Lutz Weischer

    () (World Resources Institute)

Abstract

This working paper maps out the structure and value chains of the wind industry, analyzes the wind industry's increasing global integration via cross-border trade and investment flows, and offers recommendations to policymakers for the design of investment and trade policies to help realize wind energy's potential. We find that demand for wind energy through longterm government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind energy more competitive and increase the overall demand for turbines and equipment. Cross-border investment rather than trade is the dominant mode of the wind industry's global integration. Principal barriers to global integration are nontariff trade barriers and formal and informal barriers that distort firms' investment decisions. These include local content requirements, divergent national industrial standards and licensing demands, and in particular political expectations. Intellectual property accounts for only a very small part of cost in the wind industry, and wind technology is widely available for licensing. Intellectual property rights are correspondingly not a major impediment for market participation. Credible long-term commitments coupled with a reduction or elimination of existing barriers to cross-border trade and investment are necessary to harness the full potential of global integration in reducing wind industry prices and increase worldwide deployment of wind energy.

Suggested Citation

  • Jacob Funk Kirkegaard & Thilo Hanemann & Lutz Weischer, 2009. "It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry," Working Paper Series WP09-14, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp09-14
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    Citations

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    Cited by:

    1. de la Tour, Arnaud & Glachant, Matthieu & Ménière, Yann, 2011. "Innovation and international technology transfer: The case of the Chinese photovoltaic industry," Energy Policy, Elsevier, vol. 39(2), pages 761-770, February.
    2. Matthieu Glachant, 2013. "Greening Global Value Chains: Innovation and the International Diffusion of Technologies and Knowledge," OECD Green Growth Papers 2013/5, OECD Publishing.
    3. Lema, Rasmus & Berger, Axel & Schmitz, Hubert, 2013. "China's Impact on the Global Wind Power Industry," MPRA Paper 49604, University Library of Munich, Germany.
    4. Juliana Subtil Lacerda & Jeroen C. J. M. van den Bergh, 2014. "International Diffusion of Renewable Energy Innovations: Lessons from the Lead Markets for Wind Power in China, Germany and USA," Energies, MDPI, Open Access Journal, vol. 7(12), pages 1-28, December.
    5. Bolinger, Mark & Wiser, Ryan & Darghouth, Naïm, 2010. "Preliminary evaluation of the Section 1603 treasury grant program for renewable power projects in the United States," Energy Policy, Elsevier, vol. 38(11), pages 6804-6819, November.
    6. Varela-Vázquez, Pedro & Sánchez-Carreira, María del Carmen, 2015. "Socioeconomic impact of wind energy on peripheral regions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 982-990.
    7. Mani, Muthukumara S., 2012. "Assessing the investment climate for climate investments : a comparative framework for clean energy investments in South Asia in a global context," Policy Research Working Paper Series 6211, The World Bank.
    8. Damien Dussaux, Antoine Dechezlepretre, Matthieu Glachant, 2018. "Intellectual property rights protection and the international transfer of low-carbon technologies," GRI Working Papers 323, Grantham Research Institute on Climate Change and the Environment.

    More about this item

    Keywords

    Wind Energy; Renewable Energy Subsidies; Energy Policy; Global Industry Integration; Foreign Direct Investment; Carbon Emissions; Climate Change;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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