How government policies affect the export dynamics of renewable energy technologies: A subsectoral analysis

Abstract

This study explores the long- and short-term dynamic relationships between government policies and exports of renewable energy technologies (RETs) at the subsector level (biomass, wind, and solar energy technologies). This allows a more robust exploration of the relationships, in which differences in cost structures and maturity levels exist for different RETs, without losing the generality of the results. Dynamic panel econometric techniques are employed to analyze the relationships, using data of annual measures for 18 countries during 1992–2008. The vector error correction mechanism (VECM) is used to test the dynamic relationships among government policies, exports, and gross domestic product (GDP) for biomass and wind energy technologies, and the vector auto-regression (VAR) model, for solar energy technologies. The study indicates that each subsector has a unique path-dependent process, showing the presence of different positive feedback mechanisms based on interactions among technology-push policy, market-pull policy, exports, and/or GDP in the short and long run. We suggest some policy implications based on the results of this study.