Abstract
The impact of fiscal incentive policies on the installed capacity of renewable energy was examined in thirteen Latin American countries, over the period of 1980 to 2014. The Autoregressive Distributed Lag (ARDL) methodology was used to decompose the total effect of fiscal incentive policies on installed capacity in its short- and long-run components. The results showed that the fiscal incentive policies in short-run do not cause any impact on the installed capacity of renewable energy, due to the possible inefficiency of these policies, while in long-run, the fiscal incentives stimulate the investments in renewable energy in 0.8977 %. The economic growth of Latin American countries and economic growth of China in the short-run have a positive impact of 3.1564 %, and 5.2724 % respectably, while in long-run exerts a positive influence of 2.4934 % and 1.0498 %. The results of this article point to the necessity to create more fiscal incentive policies in order to promote the investments in renewable energy sources, to foster the economy of countries or specific regions, as well as generate income, and also increases the consumption of alternative sources.
Highlights
The renewable energy becoming a priority for Latin American countries in the last three decades
The fiscal incentive policies most common in the Latin American countries are the feed-in tariffs that are mechanisms that accelerate the investments in renewable energy technologies, and energy producers
The results showed that the feed-in tariffs increase the generation of renewable energy
Summary
The renewable energy becoming a priority for Latin American countries in the last three decades. The fiscal incentive policies most common in the Latin American countries are the feed-in tariffs that are mechanisms that accelerate the investments in renewable energy technologies, and energy producers. Several authors have investigated the impact of fiscal incentive policies on the installed capacity of renewable energy. In order to answer this question, the impact of fiscal incentive policies on the installed capacity of renewable energy will be analyzed for thirteen Latin American countries in a period from 1980 to 2014, using Unrestricted Error Correction Model (UECM) form of the Auto-Regressive Distributive Lag (ARDL). The feed-in tariffs policies in the Latin American countries have led to limited renewable energy development because the rates are based on avoided cost (and are too low). The literature provides that the fiscal incentive policies have contributed to increase of installed capacity of renewable energy
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