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The economics of policy instruments to stimulate wind power in Brazil

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  • Landis,Florian
  • Timilsina,Govinda R.

Abstract

Large-scale deployment of renewable energy technologies, such as wind power and solar energy, has been taking place in industrialized and developing economics mainly because of various fiscal and regulatory policies. An understanding of the economy-wide impacts of those policies is an important part of an overall analysis of them. Using a perfect foresight computable general equilibrium model, this study analyzes the economy-wide costs of achieving a 10 percent share of wind power in Brazil?s electricity supply mix by 2030. Brazil is in the midst of an active program of wind capacity expansion. The welfare loss would be small, 0.1 percent of total baseline welfare in the absence of the 10 percent wind power expansion. The study also finds that, in the case of Brazil, production subsidies financed through increased value-added tax would have superior impacts on welfare and greenhouse gas mitigation, compared with a consumption mandate where electricity utilities are allowed to pass the increased electricity supply costs directly to consumers. These two policies would impact various production sectors differently to achieve the wind power expansion targets: the burden of the mandate falls mostly on electricity-intensive production and consumption, whereas the burden of the subsidy is distributed toward goods and services with higher value added.

Suggested Citation

  • Landis,Florian & Timilsina,Govinda R., 2015. "The economics of policy instruments to stimulate wind power in Brazil," Policy Research Working Paper Series 7346, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7346
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    References listed on IDEAS

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    Cited by:

    1. Timilsina,Govinda R., 2020. "Demystifying the Costs of Electricity Generation Technologies," Policy Research Working Paper Series 9303, The World Bank.

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    Keywords

    Energy Production and Transportation; Environment and Energy Efficiency; Climate Change Mitigation and Green House Gases; Climate Change Economics; Energy and Environment;
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