Panel Paper: National Policy Drivers: A Global Evaluation of Renewable Energy Technology Policy

Saturday, November 9, 2013 : 3:30 PM
3016 Adams (Washington Marriott)

*Names in bold indicate Presenter

Sanya Carley1, Jennifer Brass2, Elizabeth Baldwin2 and Lauren MacLean2, (1)School of Public and Environmental Affairs, Indiana University, (2)Indiana University
Renewable energy deployment has increased rapidly across the globe in recent years. Various countries are using suites of policies to promote renewable energy, such as feed-in tariffs, renewable portfolio standards, and subsidies. While most analyses of policy effectiveness have focused on the U.S and Europe, these policies are increasingly common in other regions. Empirical analysis across all countries of how these policies operate can provide valuable insights on the effects and effectiveness of these policies on a global scale.

In the first multi-country evaluation of renewable energy development and deployment, our research evaluates the effect of several energy policies that are used throughout the world to overcome economic, institutional, and political barriers to renewable energy development. These policies include feed-in tariffs, renewable portfolio standards, regulatory frameworks for renewable energy, subsidies, and climate change commitments. Particularly in weakly institutionalized countries, where the existence of rules and laws does not always translate into government action, the literature has yet to establish whether there is a relationship between formal renewable energy policies and the country’s output of energy from renewable sources.

Our analysis tests the relationship between these policies and renewable energy output, while controlling for factors such as energy-based international development aid, participation in funding mechanisms under the Kyoto Protocol, the degree of a country’s economic and political freedom, and the strength of a country’s financial sector, among other controls. We hypothesize that each of these variables plays a role, but that national policy is crucial for renewable energy uptake. Using panel data from 167 countries between 1990 and 2010, we employ a country-level fixed effects model to estimate the impact of energy policies on renewable energy generation. Data on renewable energy policies were collected from six international energy policy databases and coded to create binary variables indicating whether each renewable energy policy was in place in a given country and year.

Preliminary results indicate that national level policies, participation in the Clean Development Mechanism, and growth in the electric sector are all statistically significant drivers of renewable energy production. Comparing renewable energy portfolios with feed-in tariffs, we find that renewable portfolio standards have a significant and positive effect on renewable energy – countries with this policy produce over 23 billion kWhs more annually, on average, than those without the policy. The effect of feed-in tariffs as a stand-alone policy is not statistically significant, but our results suggest that there are strong interaction effects between feed-in tariff policies and framework laws for renewable energy: countries with both a feed-in tariff and a framework law produce 20 billion kWhs more, on average, than those that lack both policies. Our results suggest that national level policies can increase renewable energy generation and that suites of policies are more effective than individual policies. We discuss the implications of these findings for renewable energy development and deployment, and focus on ways to improve the performance of these energy policies through adjustments in the policy design features of each.