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Effects of Consumer Subsidies for Renewable Energy on Industry Growth and Welfare: Japanese Solar Energy

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  • Satoshi Myojo

    (Faculty of Economics, Hosei University)

  • Hiroshi Ohashi

    (Faculty of Economics, the University of Tokyo)

Abstract

　　 This paper examines the effectiveness of consumer subsidies to encourage the installment of solar panels in Japan. Such subsidies can be justified on the ground that the prices to consumers of the conventional energy alternative do not reflect their full social costs. The paper investigates two types of subsidies: buy-back rebates and feed-in tariffs. Estimates reveals modest demand elasticity and small learning effect. Simulations, based on structural demand and supply estimates, indicate that the subsidies can have either beneficial or detrimental effects on social welfare. The paper concludes that the impacts of the subsidies critically rely on the cost structure and the magnitude of external costs arising from greenhouse emissions.

Suggested Citation

  • Satoshi Myojo & Hiroshi Ohashi, 2014. "Effects of Consumer Subsidies for Renewable Energy on Industry Growth and Welfare: Japanese Solar Energy," CIRJE F-Series CIRJE-F-925, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2014cf925
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    References listed on IDEAS

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    1. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
    2. Nemet, Gregory F., 2006. "Beyond the learning curve: factors influencing cost reductions in photovoltaics," Energy Policy, Elsevier, vol. 34(17), pages 3218-3232, November.
    3. Chowdhury, Sanjeeda & Sumita, Ushio & Islam, Ashraful & Bedja, Idriss, 2014. "Importance of policy for energy system transformation: Diffusion of PV technology in Japan and Germany," Energy Policy, Elsevier, vol. 68(C), pages 285-293.
    4. David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer.
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    Cited by:

    1. Hadi Sasana & F. Salman & Suharnomo Suharnomo & S. B. M. Nugroho & A. G. Edy Yusuf, 2018. "The Impact of Fossil Energy Subsidies on Social Cost in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 168-173.

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