Policy instruments for renewable energy: an empirical evaluation of effectiveness

Abstract

This paper evaluates the effectiveness of renewable energy policy instruments on wind energy production using annual data from 106 countries over the period 1997-2014. Eleven policy instruments are evaluated: direct investment, feed-in tariffs, grants and subsidies, loans, taxes, green certificates, information and education, strategic planning, codes and standards, research, development and deployment and voluntary approaches. The empirical evidence uncovers the impact of different policy instruments on wind energy production. The model tests which policy instruments are effective in promoting wind energy, and whether their effectiveness depends on their existence, experience, implementation or combination. The results of the mean group estimation show that two policy instruments have positive impact on wind energy production: tax incentives and the strategic planning. The impact of strategic planning increases with a number of policy changes.