Creating Path Dependency: The Divergence of German and U.S. Renewable Energy Policy

Abstract

Germany and the United States followed similar renewable energy policy paths after the energy crisis of the 1970s. Starting around 1990 Germany moved onto a different path, promoting renewable energy with aggressive and consistent policies and, despite its weak renewable resources, became a leading country in terms of both renewable energy installations and manufacturing. At about the same time United States policy makers began debating greater support for renewable energy but never got onto a new policy path, providing instead weaker and volatile policy supports for the technologies. We utilize a historical institutionalist account to explain these divergent outcomes and, in the process, explore how well different theories of policy change work as explanatory frameworks. The cases reveal some unexpected outcomes, as the conventional institutionalist account of German policy making argues that Germany tends to avoid innovative policies for fear of upsetting carefully crafted social bargains. Yet, in our case, Germany not only strengthened its support for renewable energy but did so by adopting an innovative policy instrument, the feed-in tariff, a policy now popular almost everywhere except in the United States. The United States, in contrast, seemed both technologically and institutionally poised to become a leading renewable energy country but failed to do so, in part because of the interaction of institutional structures of policy making and deep-seated conflicts over the social nature of energy systems. Understanding these barriers to policy innovation is important at a time when the United States seems, again, to be on the brink of enacting policies that will substantially remake the energy system.