Capital Subsidies Research Articles

The impact of COVID-19 on the financial sustainability of the municipalities of the district of Braga

The financial sustainability of organizations, whether public or private, has become an increasingly relevant issue in the context of the 2030 Agenda and the Sustainable Development Goals (SDGs). This study aims to present preliminary results on the impact of the COVID-19 pandemic on the financial sustainability of municipalities and to analyze which contextual factors may determine this impact. Following a qualitative methodology, a documentary analysis was carried out of the management reports of the 14 municipalities belonging to the district of Braga, in the period between 2018 and 2021. The results show that the financial sustainability of the municipalities was affected by the COVID-19 pandemic crisis, particularly in terms of debt, which increased significantly during the pandemic, and the decrease in tax revenue. On the other hand, financial autonomy improved during the period in question, due to the transfers and capital subsidies obtained from the state to deal with the pandemic. These impacts were felt more acutely in small and medium-sized municipalities. Political competition also proved to be a variable with a significant influence on the financial sustainability of municipalities. The aim of this study is to understand the lessons learned during this period in order to apply them to possible future crises, supporting politicians and managers in managing their organizations in crisis contexts.

An Exploration of Entrepreneurs’ Socio-economic Situation and Its Impact on Micro and Small Businesses in South Andaman

This study aims to investigate the socio-economic conditions of entrepreneurs that influence the growth of micro and small enterprises (MSEs) in the South Andaman District. In this study, a scheduled questionnaire-based survey research design was used, and a sample of 344 small business owners was collected for analysis. The data were processed using SPSS, and chi-squared test was applied for statistical analysis. The study’s findings revealed that factors such as entrepreneurs’ business experience, income levels, the number of working employees and ownership of house property significantly impact the growth of enterprises in the island region. However, factors like business location and sector of enterprises were found to be statistically insignificant in determining MSEs’ growth in the island region. The study suggests that policymakers and local administrations should enhance support for micro, small and medium-sized enterprises in island regions by implementing policies such as island capital investment subsidies and island transport subsidies for MSEs. As a result, small businesses play a pivotal role by contributing to local employment, production and investment opportunities in the island region.

An economic analysis of tidal energy to support sustainable development

Decarbonization of the energy sector, requires a strong expansion of renewable energy, which combined with effective and efficient use of resources, enables the development of models based on the green economy. Tidal energy, which is currently underutilized, can contribute to this change by providing affordable and clean energy, thus contributing to sustainable development. This work evaluates the economic dimension of sustainability and provides a profitability analysis related to a 1 MW plant located in central Italy. The methodology consists of a technical framework, geared toward quantifying the energy potential from that plant, and economic models based on indicators such as Net Present Value (NPV), Levelized Cost of Energy (LCOE) and Discounted Payback Time (DPBT).The results show that the plant turns out to be profitable in the base case (NPV = 573 k€ and DPBT = 21 years) and policy interventions, which see the use of capital grants and subsidies, change the results to NPV ranging between 338 and 1287 k€ and DPBT between 11 and 15 years. However, alternative scenarios indicate that the variables that most impact economic outcomes are changes related to energy selling price and capacity factor. The LCOE in the different scenarios varies between 49.4–89.8 €/MWh. The implications of this work define that tidal energy supports the energy transition to sustainable development and that the mix of technical, market, and political factors must be considered in policy decision making.

At scale adoption of Green Hydrogen in Indian Industry: Costs, subsidies and policies

Indian Industry is gearing up to leverage hydrogen's potential as an alternative to fossil fuels. This paper answers three related questions that would help scale green hydrogen in Indian industry vital for sustainable development. First, is there an economic case for green hydrogen production in terms of cost-competitiveness compared to other hydrogen production sources i.e., coal and natural gas? Second, what is the cheapest way to subsidize green hydrogen? Third, how policies and frameworks can be designed to produce and procure green hydrogen at scale? Key findings include. First, at present, the levelized cost of green hydrogen is USD 4.45/Kg, which reduces to USD 3.26/Kg by 2025 and USD 2.45/Kg by 2030. The present cost of green hydrogen is nearly twice that of hydrogen produced from coal and about four times that of hydrogen produced from natural gas. In the absence of policy support, green hydrogen may become competitive in India only after 2030. Second, upfront Capital expenditure subsidy is the most suited cost-effective policy option with partial viability gap coverage, and its combination with Generation based incentive for 100 % coverage. Third, subsidies need to be complemented with deployment-based policies such as hydrogen portfolio standard (HPS) for scale adoption of green hydrogen in Indian industry.

Energy models in service of aquifer specific groundwater irrigation expansion in India

Abstract Pumping energy is a key component of the groundwater governance challenge, yet it is largely missing in the discourse on agricultural use of groundwater. A sub-category of literature studying groundwater-energy nexus tends to focus on groundwater depletion hotspots where entrenched interests and long-standing histories restrict the range of feasible energy pricing options. Using an agent based model, we estimate expected impacts of expanding groundwater irrigation under five different energy provision models in Odisha, an Indian state with among the lowest irrigation coverage, and therefore, free of path dependent policies. We find aquifer properties play a crucial role in mediating the groundwater-energy nexus. For this study region, on average, the maximum volume of water that can be pumped from a well of a specific depth in an alluvial aquifer is approximately 150 times the volume that can be pumped from a well in a hard-rock aquifer. Therefore, the risk of over-consumption and aquifer depletion is a far greater challenge in alluvial than hard-rock aquifers. Risks of groundwater consumption and depletion can be limited in hard-rock aquifers provided the number and depths of wells can be controlled. Capital subsidies for well construction could be an effective policy to increase irrigated area so long as economic incentives for digging deeper are not distorted. Our results imply that solar pumps are a relatively safe option for hard-rock regions where deep drawdowns naturally limit the extent of over-extraction. Solar pumps are also estimated to be among the most economical for expanding irrigation. Using a novel dataset comprising of biophysical and socioeconomic data, we find hard-rock regions to have limited irrigation coverage, high availability of annually replenishable groundwater, and high concentrations of marginalized farmers. Therefore, groundwater irrigation expansion in hard-rock areas could have dual benefits of ensuring future food security and targeting poverty reduction.

Novel integration of molten carbonate fuel cell stacks in a biomass-based Rankine cycle power plant with CO2 separation: A techno-economic and environmental study

A novel integration of molten carbonate fuel cell (MCFC) stacks in a biomass-based Rankine cycle power plant with CO2 separation has been proposed, and techno-economic and environmental analyses have been performed for the plant configuration. Both a biomass gasifier and a biomass combustion fluidized boiler (CFB) have been considered for the proposed plant, which has a unique configuration of MCFC stacks placed in the back-pass of the CFB to achieve an efficient plant configuration. Parametric variations of the key performance parameters with varying input variables have been observed, and a best-case operating condition has been identified from the parametric study. It is observed that the proposed plant can produce 12.645 MW of power with 60.22 % electrical efficiency at a unit electricity cost of 0.09497 $/kWh at best-case operating condition. Moreover, 137701 tons/year of CO2 cutting is observed at the best-case condition, which results in 20.66 million $/year of total environmental benefit. Cost sensitivity suggests that the plant can yield a unit electricity cost of 0.03314 $/kWh at the best economic conditions, and the payback analysis outlines that the plant can recover its initial investment in 3.467 years when there is a 50 % capital subsidy.

What growth policies protect the environment? A two-engine growth model

This paper compares the effects of patent protection and subsidy policies on growth and the environment in a model where technology innovation and capital accumulation are both engines of growth. Pollution is a by-product of the intermediate goods, and can be reduced by public abatement activities. The results show that, compared to subsidies, stronger patent protection is a more promising tool for achieving a double dividend, i.e., simultaneously enhancing growth and improving the environment. By contrast, a uniform increase in the subsidy rate on R&D and capital stimulates growth but harms the environment, implying a trade-off relationship between growth and the environment. For sector-specific subsidies, an R&D subsidy is superior to a capital subsidy in terms of environmental protection, but this superiority fades away if the productivity of abatement labor or the public abatement expenditure is higher.

The impact of solar PV subsidies on investment over time - the case of Sweden

Over the past decade, different economic incentives have been created to increase investments in solar photovoltaics (PV). Although research outlines that investors in renewable electricity technologies (RET) are heterogeneous, policies have not taken this into account when designing subsidy programs. This paper aims to analyse the relationship between policy incentives and the willingness to invest in PV systems for different investor groups, including households, companies, associations, and public organizations. Using data from all applications to the capital subsidy program for PV in Sweden between 2009 and 2021, we analyse the impact of the subsidy level on investments over time. Our analysis shows that the subsidy has had a positively significant impact for households and private companies as investor groups. However, we also found that other variables have had a significantly positive or negative effect on the willingness to invest for different investor groups. This stresses the need of going from “one size fits all” policies to policies that better adapted to different investor characteristics. To meet the urgent need to accelerate the diffusion of RETs, our results show the impact of investor heterogeneity on policy responsiveness and provide avenues for the design of targeted policies.

DO AGRICULTURAL REFORMS INCREASING THE PROSPERITY OF INDONESIAN FARMERS?

Since several decades, agricultural movements have been supporting the majority of villages in Indonesia. Agricultural reform is a new program organized by the government that started in 2019. In this context, the objectivity of the paper is to examine causality between technology adoption (TA), capital subsidies (CS), educational skills (ES), and health and scholarships (H&S) on farmers' prosperity (FP). Using a time–series regression simulation, the investigation is focused on agricultural reform in the era of President Jokowi, to be precise in the 2nd period (2019–2023). In Indonesia, there are simultaneous parallel effects of technology adoption, capital subsidies, educational skills, and health and scholarships on the farmers' prosperity. When testing partially, the result is that technology adoption as well as health and scholarships have a positive effect on the farmers' prosperity. Yet, capital subsidies and educational skills actually have a negative effect on the farmers' prosperity. Explicitly, the consistency of agricultural reform is expected to be accessible to all farmers.

Selective industrial policy and innovation resource misallocation

Innovation resource misallocation is a major obstacle to improving innovation quality and economic efficiency. This study draws on a quasi-natural experiment designed from the “Ten Industrial Rejuvenation Plan” (TIRP) in China and investigates how selective industrial policy impacts innovation resource misallocation. The results show that the TIRP intensifies innovation resource misallocation and that this impact persists even after the policy terminates. Mechanism analyses reveal that TIRP-induced disparities in innovation resource accessibility among firms with varying productivity are potential causes. Specifically, the TIRP raises innovation personnel, innovation capital, and government subsidies for low-productivity firms but lowers them for high-productivity firms. The financing constraints of the low-productivity firm groups ease, whereas those of the high-productivity firm groups worsen. Heterogeneity examinations demonstrate that the exacerbating influence is more noticeable in businesses with state-owned attributes and in low-marketization regions. These findings deepen our understanding of policy interventions and innovation development in emerging nations.

Assessing the effect of urban digital infrastructure on green innovation: mechanism identification and spatial-temporal characteristics

Under the background of digitization and greening in China, digital infrastructure offers new opportunities for developing green innovation. This paper investigates the effect of digital infrastructure on urban green innovation using panel data from 285 Chinese prefecture-level cities between 2011 and 2020, and explains the mechanism and its spatial-temporal dynamic effect. The results demonstrate that digital infrastructure promotes urban green innovation. Talent agglomeration, R&D investment increase, and industrial structure upgrading are crucial channels. Furthermore, depending on a city’s size, human capital, environmental regulations, and financial subsidies, digital infrastructure contributes to urban green innovation differently. Also, there is not only a positive spatial spillover effect of digital infrastructure but a threshold effect that presents a nonlinear trend of rising marginal effect. This study provides a new perspective for promoting digital infrastructure and urban green innovation, which makes a difference in facilitating its high-level development collaboratively.

Analyzing Policy Framework of Agrovoltaics Across the Water Energy and Food (WEF) Nexus in The Gambia

The projected increase in demand for food, water, and energy owing to systemic shocks has heightened the need for innovative solutions and integrated resource governance. The Agrovoltaics for Mali and Gambia (APV MaGa) Project, focuses on sustainable electricity production through agrovoltaics' triple land-use system and is leveraged with digital technologies. The project addresses The Gambia’s high food importation gap, growing dependency on fossil fuels for electricity generation, and high electricity tariffs. However, the nascence of agrovoltaics presents a new energy dimension that calls for increased coordination of sectoral policy and management, a domain of WEF nexus governance detached mainly from governance practice. Thus, a policy and institutional foresight of the potential implications of agrovoltaics’ integration is warranted, since Gambia’s decision-making for land, water, energy, and agriculture remains mainly sectoral. A qualitative research design was adopted, using a sample of twenty-eight key informative interviews, policy document analysis, and grey literature. Research findings show that the existing policy frameworks such as ‘Feed-in tariffs for excess RE, renewable energy funds, and capital subsidies can practically accommodate the frame of the agrovoltaics. However, clarification is required on the siting aspect of solar panels within the compartmentalized land policy structures. Institutionally, the Ministry of Energy’s nexus platform allows for technical coordination of agrovoltaics projects. However weak institutional harmonization, technical/financial incapacities, and overriding national interests due to sectoral bias present challenges. Therefore, harmonizing sectoral divergent policy provisions, interests, and prioritization of sustainability concerns will foster the pertinent integration of agrovoltaics for fast expansion.

Exploring the synergistic development strategy of vocational education and regional economy based on the separating equilibrium game model

Abstract To promote the synergistic development of vocational education and regional economy, this paper proposes to use the separated equilibrium game model to study vocational education and regional economy. Starting from the theoretical foundation of the components of game theory, the separated equilibrium game model oriented to the synergistic development of vocational education and regional economy is constructed by combining the game tree and the separated equilibrium game. According to the calculation formula for evolutionary stabilization strategies and equilibrium analysis, the case analysis of vocational education and regional economies is conducted. The results show that when W2 is taken as 2, 3, or 4, the system evolves towards antagonistic cooperation, but evolution is becoming increasingly slow. When W2=6, the two sides of the school and enterprise choose the strategy tends to (positive cooperation, positive cooperation), which indicates that in the school-enterprise cooperation, the government departments through tax concessions, capital subsidies and other incentives to improve the enthusiasm of enterprises is an effective method. This study analyzes the dispute of interests of school-enterprise cooperation in vocational education development from the game perspective. It provides the basis for the construction of regional economic synergistic development strategy.

Evaluating the impact of industrial loads on the performance of solar PV/diesel hybrid renewable energy systems for rural electrification in Ghana

Access to reliable electricity remains a significant challenge in many rural communities worldwide. Off-grid solar PV hybrid renewable energy systems (HRES) have emerged as a viable option for rural electrification. However, rural communities' lack of productive load often limits their effectiveness. This study aimed to assess the impact of agro-processing productive loads on the performance of off-grid solar PV HRES for rural electrification. Hybrid Optimization Multiple Energy Resource (HOMER) software was used to perform a techno-economic analysis of a solar PV/diesel HRES. The study findings showed improvement in the rural community's load factor and solar load correlation with the integration of the productive load. Subsequently, increasing the renewable energy fraction in solar PV/diesel HRES reduces the levelized cost of energy (LCOE), making electricity generation more cost-effective for rural electrification in Ghana. Comparatively, the improved LCOE was found to be substantially higher than the End User Tariff of all residential consumers on the national grid, even under high PV penetration and full capital cost subsidy cases. The study provides valuable insights into the role of agro-based productive loads in enhancing the performance of rural off-grid solar HRES.

“Cowboy up”: Gender, labor, and workforce housing in Colorado ski country

Workforce housing does not reproduce all workers equally. So, what kind of workers does “workforce” housing reproduce? Whose reproduction is prioritized, whose is devalued, and how? A case study of housing access and design in three elite Vail Resorts enclaves in Colorado shows that workforce housing prioritizes the reproduction of a young, flexible androcentric workforce who can be cheaply and easily housed. Extending McIntyre and Nast’s theorization of racial subsidies, I argue that resort capital awards unearned gendered subsidies to privileged workers and instantiates what Susanne Soederberg calls “displaced survival,” or recursive dislocation, for women workers and those with dependents. I detail how twin processes of displaced survival and gendered subsidy emerge in resort communities using data from interviews, survey, ethnographic observation, autoethnography, and municipal records. By attending to the lived experiences of workers in this niche industry, this paper contributes to literature on geographies of exclusion and expands scholarly understandings of how the gendered political economy of labor is sedimented in housing regimes.

Optimization of an off-grid PV/biogas/battery hybrid energy system for electrification: A case study in a commercial platform in Morocco

The use of hybrid renewable energy systems is growing as a viable option for clean power generation, fueled by the increasing demand for sustainable energy sources and the need to reduce carbon emissions. In this context, this paper evaluates the optimal configuration, as well as the economic and environmental performances of a hybrid solar PV/biogas/battery energy system designed to provide electricity to a commercial platform in Berkane- Morocco. The optimization model aims to determine the optimal capacity of renewable energy systems achieving the most cost-effective levelized cost of electricity, reducing greenhouse gas emissions, and utilizing locally available renewable energy resources. The model was developed using HOMER software incorporating real-measured data for electricity demand, solar irradiance, and biogas availability. It was found that the PV/biogas/battery combination is very optimal in terms of cost and emissions savings in comparison with the use of only one source of power generation. The optimal design of the energy system results in 231 kW of PV modules, 170 kW biogas generator, a 140-kW converter, and a 201 kWh Li-Ion battery park. The optimization results in an LCOE of 0.280 $/kWh; Moreover, the proposed system would save almost 40 % of carbon dioxide (CO2) emissions in comparison with only biogas system. A sensitivity test has been performed, showing that the proposed hybrid system is sensitive to capital subsidies and discount rates. This study demonstrates the economic viability and environmental benefits driven by the integration of the hybrid of PV/Biogas/Battery system in Morocco, making it an attractive alternative for future sustainable development.

The Effect of Government Subsidies on Innovation Capability of the New Energy Vehicle Industry

Countries all over the world are paying attention to the growth of the new energy vehicle industry and implementing various subsidy policies to stimulate industry development to enhance the new energy vehicle industry’s innovative capability. This study uses a network DEA model to analyze China’s new energy vehicle industry’s technological innovation capability, decomposing it into two stages: technology development and innovation transformation, and calculating the innovation capability level of China’s new energy vehicle industry from 2012 to 2017. The findings show that due to a disconnect between the efficiency of the technology development stage and the efficiency of the innovation transformation stage, innovation technology cannot serve business operations, resulting in China’s new energy vehicle industry’s overall low level of innovation capability. Based on this, an IT3SLS analysis of the factors influencing innovation capability and phase-by-phase efficiency reveals that while China’s new energy vehicle industry’s subsidy policy has historically failed to significantly improve innovation capability, there is a complementary/substitution effect between labor input, corporate capital, and government subsidies. Based on the findings of this study, important policy recommendations are made to further develop the technological capabilities of the new energy vehicle industry in the context of China’s present new energy policy.

Optimal taxation in the life cycle with human capital investment

This paper studies optimal taxes in a lifecycle model with unverifiable human capital investment inseparable from regular consumption. The planner faces asymmetric information regarding agents’ exogenous abilities and endogenous human capital. Agents deviate in two ways: misreporting ability and mis-investing in human capital. We characterize the distortions in a model with i.i.d. shocks and full human capital depreciation. Distortions are characterized by capital wedges that are positive over the life cycle, labor wedges that are negative early and positive later in the life cycle, and net human capital wedges that are positive in the life cycle. These wedges serve as mechanisms to eliminate the distortion to consumption due to inseparability from education expenditure. Calibrate to U.S. data, we show numerically that these results apply in a richer model with persistent shocks and non-full human capital depreciation. Simulation suggests that average capital wedges are positive in all working periods, with progressive capital wedges in contemporary skills, average labor wedges are negative in early and positive in later periods, with hump-shape in skills and nonzero at the top and the bottom of the skill distribution, and net human capital wedges are positive and regressive in skills, indicating that human capital subsidies are in favor of the high skilled.

The role of policy instruments on deployment of carbon capture, storage and utilization technologies: A case study in Türkiye

Carbon capture, utilization and storage (CCUS) technologies are vital towards carbon neutrality targets. However, deployment of these technologies requires the development of policy instruments. Türkiye develops many decarbonization strategies; however, has not deployed any CCUS related projects yet. Considering the potential costs associated with the European Union's recently announced Carbon Border Adjustment Mechanism, CCUS technologies can be essential for energy-intensive sectors with high export outreach.This research explores the role of policy instruments on deployment of CCUS technologies in Türkiye across several sectors. To achieve that, a mixed method study has been conducted with a combination of data collection through surveys and semi-structured interviews followed by a multi-criteria-decision-making model.The results show that the stakeholders mostly expect CCUS to play a key role in Türkiye's green growth through the utilization of carrot (operational and capital subsidies) and stick (regulatory standards and obligations) kind of policy instruments. However, the level of CCUS understanding of the public sector and their willingness to include the industry sector in the policy making process were observed to be significantly low. Therefore, this study primarily recommends a collaborative approach to the development of CCUS knowledge and human capacity through the establishment of a national CCUS institute.

A hidden channel of “blood transfusion”: Internal capital market subsidies and zombie firms

From the perspective of internal capital markets, we investigate the causes of zombie firms and propose possible governance measures. Based on Chinese A-share listed firms, we find that internal capital market subsidies promote the zombification of firms. This impact is stronger when the liquidity of the external capital market is higher or when there is a finance firm in the internal capital market. Additionally, there is a “pecking order” of the subsidies that contribute to the zombification of firms: government subsidies take the lead, followed by internal capital market subsidies, and then bank loans. The motivations for internal capital markets to subsidize zombie firms include avoiding risk contagion, avoiding losing control rights, being socially responsible, and maintaining rent-seeking opportunities for managers. The sources of internal capital market subsidies are mainly parent firms and brother firms. Constraining agency problems and engaging in related major asset restructuring play important role in the governance of zombie firms. Overall, our study reveals internal capital markets to be a “blood transfusion” channel and it provides guidance for tackling the problem of zombie firms.