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Cost-effectiveness and incidence of renewable energy promotion in Germany

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  • Böhringer, Christoph
  • Landis, Florian
  • Tovar Reaños, Miguel Angel

Abstract

Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raises concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and microsimulation analysis to investigate the cost-effectiveness and incidence of Germany's renewable energy promotion. We find that the regressive effects of renewable energy promotion could be ameliorated by alternative subsidy financing mechanisms which achieve the same level of electricity generation from renewable energy sources.

Suggested Citation

  • Böhringer, Christoph & Landis, Florian & Tovar Reaños, Miguel Angel, 2017. "Cost-effectiveness and incidence of renewable energy promotion in Germany," ZEW Discussion Papers 17-004, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:17004
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    Cited by:

    1. Tovar Reaños, Miguel & Lynch, Muireann Á., 2019. "Distributional impacts of carbon taxation and revenue recycling: a behavioural microsimulation," Papers WP626, Economic and Social Research Institute (ESRI).
    2. Rui Marvão Pereira & Alfredo Marvão Pereira, 2019. "Financing a Renewable Energy Feed-in Tariff with a Tax on Carbon Dioxide Emissions: A Dynamic Multi-Sector General Equilibrium Analysis for Portugal," GEE Papers 0123, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jun 2019.
    3. Schulte, Isabella & Heindl, Peter, 2017. "Price and income elasticities of residential energy demand in Germany," Energy Policy, Elsevier, vol. 102(C), pages 512-528.
    4. Gavard, Claire & Voigt, Sebastian & Genty, Aurélien, 2022. "Using emissions trading schemes to reduce heterogeneous distortionary taxes: The case of recycling carbon auction revenues to support renewable energy," Energy Policy, Elsevier, vol. 168(C).

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    More about this item

    Keywords

    renewable energy policy; feed-in tariffs; CGE; microsimulation;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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