Renewable Energy Subsidies Research Articles

Understanding public acceptability of climate policies in Europe

ABSTRACT Urgent and decisive government action to mitigate greenhouse gas emissions is more likely when the proposed measures are popular among the public. This paper compares the drivers of European public support for three alternative policies to combat climate change: carbon taxation, renewable energy subsidies, and minimum energy efficiency standards that apply to household appliances. We combine survey data with regional socio-economic and environmental indicators to provide a comprehensive, comparative analysis of policy acceptance that accounts for the geographic context in which these policies would be implemented. By comparing the drivers among three climate policies, we identify a rural-urban gap in predicting public perception of carbon taxation, which does not exist in the other policies. We also found a positive relationship between regional exposure to fine particular matter (PM2.5) and public support for climate policy, providing novel insights into the influence of environmental factors on public perceptions. This research highlights the importance of environmental and socio-economic context in predicting climate policy acceptance and offers valuable implications for policymakers seeking to garner public support for effective climate change mitigation strategies.

Does information change public support for climate mitigation policies?

ABSTRACT Carbon pricing policies can play an important role in reducing global greenhouse gas emissions. However, policymakers often cite the lack of public support as a major obstacle to adopting and expanding the coverage of such policies. Using data from a large cross-country survey of about 28,500 people across 28 countries conducted during the summer of 2022, we show that providing information about the costs and benefits of carbon pricing can swing public support. Highlighting the efficacy and revenue recycling potential of carbon pricing increases support, especially in emerging market economies. In contrast, highlighting costs reduces support, but less so for people who report being already significantly impacted by climate change. Moreover, people adopt more negative views of subsidies for renewable energy and low-carbon technologies when the salience of their costs is increased, with the shift being more pronounced for people, especially in advanced economies, who believe that effective climate polices require global efforts. Our results suggest that there is scope to increase public support for climate mitigation measures by providing people with the policy information they may lack.

Sustainable development through the balancing of photovoltaic charging facilities and agriculture for energy harvesting

Photovoltaics (PV) and electric vehicles (EVs) provide viable alternatives for powering rural areas and promoting sustainable development. However, solar energy and agricultural land compete with each other, necessitating a balance between energy needs and land preservation. Despite the potential of agricultural PV charging stations, there is a lack of research on their operational models, policies, stakeholder interactions, and feasibility of development. This study combines renewable energy and charging infrastructure subsidy policies, utilizes a public-private partnership model, and employs evolutionary game theory to establish a theoretical framework exploring strategic interactions among energy operators, EV users, and farmers. The model considers the impacts of generation, charging, and agricultural elements, conducting techno-economic research. A case study conducted in Sioux Falls, South Dakota, USA, revealed subsequent findings: (1) The players' evolutionary stable approach ultimately converges to (1,1,1). When renewable energy subsidies are decreased by 50 %, the likelihood of active engagement for energy operators drops to 0, and for farmers, it falls to 0.8. (2) As the usage duration of charging facilities grows by 50 %, energy operators and EVUs make steady progress before reaching 0.2 cycles, but farmers encounter a delay after 0.4 cycles. (3) It is feasible to fulfil the yearly charging requirements for EVs in Sioux Falls and South Dakota using only 7.4 ha and less than 22 ha of agricultural land area, respectively. Investors in Sioux Falls have the potential to earn an annual income of $1.1085 million, generate 7906.07 MWh of electricity, and reduce GHG emissions by 6525.91 tons of CO2-equivalent. Although farmers generate higher annual revenue, it typically takes them over a decade to reach the point of breaking even, and their return on investment is comparatively lower than that of energy operators.

How Clean Can We Get? Technological Change and Renewable Energy Use in Mexico, A General Equilibrium Perspective

This study explores the impact of technological change and renewable energy adoption on Mexico's economy using a Computable General Equilibrium (CGE) model. As global concerns about climate change intensify, reducing carbon emissions has become a priority, but traditional CGE models often predict significant economic costs associated with fossil fuel restrictions. In this analysis, we modify the conventional CGE framework to incorporate increasing returns to scale and endogenously modeled technological change, reflecting the real-world diffusion of renewable energy technologies in developing countries like Mexico. By accounting for these factors, our model demonstrates that a combined policy of carbon taxation and renewable energy subsidies can achieve significant CO2 reductions without negatively impacting economic welfare. However, while the environmental benefits—such as reduced emissions of particulates, SO2, and NOx—are substantial, the overall welfare gains remain modest, and the policy's success depends on effective government implementation and potential trade impacts. These findings offer valuable insights for policymakers in Mexico and other developing nations seeking to balance economic growth with environmental sustainability through strategic carbon emission reduction policies.

When trusting the state is not enough: broader institutional trust and public support for energy transition policies

ABSTRACT Existing research shows that public attitudes toward climate policies reflect political trust. Support for some policies may reflect not only trust in the state and its institutions, narrowly defined, but also other institutions. In this paper, we show how a broader measure of institutional trust that includes the state but reaches beyond it matters for public opinion toward energy transition policies, including just transition policies assisting workers who lose their jobs because of new environmental policies. Using data from Iceland, we find that trust in both state and non-state institutions correlates with attitudes toward three key energy transition policies: taxation of fossil fuels, subsidies for renewable energy, and just transition support for workers. More narrowly defined political trust, in contrast, correlates only with attitudes towards taxes. These results suggest that support for climate action, including a just energy transition, reflects overarching trust towards different institutions, including but not limited to the state.

Carbon tariffs and energy subsidies: Synergy or antagonism?

Carbon tariffs represent an alternative mechanism devised by developed nations to combat climate change, yet their ramifications on the economies of developing nations necessitate deeper investigation. This study introduces a new open economy macroeconomic framework incorporating bilateral trade dynamics to analyze the effects of forthcoming carbon tariff policies on developing economies. Our research reveals that carbon tariffs, on the one hand, reduce the exports of intermediate goods from developing countries, thereby worsening their domestic economic development. On the other hand, they will curb fossil energy consumption in developing countries, improving air quality. Additionally, we propose two common policies that may mitigate the adverse effects of carbon tariff shocks on developing countries, namely, subsidies by developing country governments for the domestic use of renewable energy (Renewable Energy Subsidy Policy, RESP) and tax incentive discounts for the domestic use of fossil energy (Tax Discount on Fossil Fuels, TDFF). Our analysis shows that the RESP outperforms the TDFF in facilitating the transition to renewable energy, incentivizing structural reforms in corporate energy consumption, and improving environmental quality. Furthermore, variations in conditional consumption compensation within RESP are about 10 times that of TDFF under identical circumstances, leading to higher household welfare levels. We argue that despite the antagonistic impacts of RESP and TDFF on carbon tariffs, there are synergistic effects between RESP and carbon tariffs, particularly concerning environmental improvement. This offers a theoretical foundation for the policy responses of developing countries to carbon tariffs.

Effect of renewable energy subsidy policy on firms’ total factor productivity: The threshold effect

Studies examining the influence of government subsidies on total factor productivity have yielded inconsistent conclusions. Utilizing data from 114 renewable energy companies in China from 2011 to 2022, this study empirically investigated the threshold effects of government subsidies on the total factor productivity of these firms. The research findings indicate: (1) Government subsidies reduce Chinese renewable energy firms' total factor productivity, with a more significant negative impact on firms with lower total factor productivity. (2) These subsidies negatively influence total factor productivity by reducing firms’ capacity utilization and increasing rent-seeking costs. (3) The influence of government subsidies on total factor productivity shows a single-threshold effect related to technological innovation. When technological innovation surpasses a certain threshold, the adverse impact of these subsidies is weakened. Therefore, it is recommended that the government limit excessive subsidies and simultaneously encourage renewable energy firms to enhance their technological innovation.

Game-Theory-Based Design and Analysis of a Peer-to-Peer Energy Exchange System between Multi-Solar-Hydrogen-Battery Storage Electric Vehicle Charging Stations

As subsidies for renewable energy are progressively reduced worldwide, electric vehicle charging stations (EVCSs) powered by renewable energy must adopt market-driven approaches to stay competitive. The unpredictable nature of renewable energy production poses major challenges for strategic planning. To tackle the uncertainties stemming from forecast inaccuracies of renewable energy, this study introduces a peer-to-peer (P2P) energy trading strategy based on game theory for solar-hydrogen-battery storage electric vehicle charging stations (SHS-EVCSs). Firstly, the incorporation of prediction errors in renewable energy forecasts within four SHS-EVCSs enhances the resilience and efficiency of energy management. Secondly, employing game theory’s optimization principles, this work presents a day-ahead P2P interactive energy trading model specifically designed for mitigating the variability issues associated with renewable energy sources. Thirdly, the model is converted into a mixed integer linear programming (MILP) problem through dual theory, allowing for resolution via CPLEX optimization techniques. Case study results demonstrate that the method not only increases SHS-EVCS revenue by up to 24.6% through P2P transactions but also helps manage operational and maintenance expenses, contributing to the growth of the renewable energy sector.

Evaluation of renewable energy subsidy programs in Croatia during a 5-year period based on a LCoH analysis

Evaluation of renewable energy subsidy programs in Croatia during a 5-year period based on a LCoH analysis

Contribution of the carbon tax, phase-out of thermoelectric power plants, and renewable energy subsidies for the decarbonization of Chile − A CGE model and microsimulations approach

There are various climate policies to decarbonize the energy matrix of a country. In the case of Chile, a carbon tax of 5 USD/tCO2 was initially implemented, and later, a schedule was established for the phase-out of coal-fired thermoelectric plants, all the above in the absence of subsidies for non-conventional renewable energy (NCRE). This study uses a computable general equilibrium (CGE) model and microsimulations to assess the contribution of current climate policies and other more demanding scenarios that accelerate the decarbonization of the Chilean energy matrix, considering economic, environmental, and distributional impacts. Specifically, carbon taxes are simulated with and without complementary climate policies (phase-out of coal-fired power plants and NCRE subsidies). The results show that the scenarios that combine the three climate policies generate a greater decrease in greenhouse gas emissions (40.4% ∼ 57.5%). Besides, the drop in GDP is more pronounced when coal-fired thermoelectric plants phase out (0.3% additional), and NCRE subsidies contribute to moderately reducing emissions. However, NCRE subsidies reduce the negative effect on households’ expenditure and income, especially in the poorest quintile. Finally, microsimulations show marginal changes in income distribution and an increase of up to 0.4 percentage points in the poverty rate.

How to promote the trading in China's green electricity market? Based on environmental perceptions, renewable portfolio standard and subsidies

The behavior evolution of market players is crucial to promoting green electricity trading. This paper develops an evolutionary game model of China's green electricity market to analyze the strategic interactions among players. The model incorporates key variables such as renewable energy subsidies, renewable energy quotas, and environmental perceptions. Then, a system dynamics simulation model is constructed, and simulation experiments are designed to reveal the influence of key factors on the evolutionary path. The results indicate that: (1) Players exhibit varying sensitivities to green electricity prices under different trading modes. (2) Renewable energy projects with high subsidy intensity have no willingness to enter the market if the benefits of participating in the green electricity market cannot surpass subsidies. (3) The evolutionary stabilization trend depends on users' environmental perceptions, and the environmental perception effect exhibits a diminishing marginal trend. (4) The implementation of renewable portfolio standard is an effective way to promote green electricity trading, especially when there is a high green electricity premium. (5) There is a trade-off between low incentive participation and high incentive coefficients in the system. These findings provide valuable policy recommendations for effectively promoting green electricity trading in China.

Reconciling Development and Decarbonization: An Examination of China's Policy Options for Curbing Emissions While Sustaining Supply Chains

China faces the challenge of balancing economic growth while meeting carbon emission reduction targets. This essay analyzes current Chinese government policies aimed at reducing emissions, including supply-side reforms, renewable energy subsidies, and awareness campaigns. It argues these policies have limitations, such as only temporary emissions reductions from supply cuts, high costs of subsidies, and lack of infrastructure to support consumer adoption of electric vehicles. To improve outcomes, the essay recommends implementing a carbon tax or cap-and-trade system, choosing the optimal policy based on demand elasticities. It also suggests subsidizing a transition from coal to electricity for heating in rural areas. In conclusion, modifying existing policies and implementing new market-based and technological solutions can help China achieve its twin goals of reducing emissions while maintaining economic growth. The essay provides a thoughtful analysis of the issues and policy trade-offs China faces in balancing environmental sustainability and development.

AN ANALYSIS OF GREEN TAXATION AND ITS EFFECT ON ECONOMIC GROWTH

This study examined green taxation as one of the tools that governments are utilizing to protect the environment and deter enterprises from having a detrimental influence. In order to lessen the tax burden from growth-oriented elements and contribute to the reduction of pollution and the depletion of natural resources, green taxes also known as environmental, pollution, eco, and carbon taxes are implemented. Though it is primarily seen to apply in industrialized countries, the application of green taxes has not been fully approved in all nations. A few emerging nations use soft policies, such renewable energy subsidies. The policies pertaining to green taxes have encountered numerous obstacles, mostly because of their adverse effects on the economy, which include elevated rates of unemployment. Nonetheless, there are ways to implement the reforms without having a detrimental effect on the environment, as by bolstering them with complementing legislation. Furthermore, in order to develop novel production techniques, cooperation between all parties involved primarily the government, businesses, and environmental organizations is required. The primary industries that degrade the environment are those that manufacture tires, transportation equipment, and other goods. These industries can’t be completely eradicated, but there are strategies that can keep them viable and profitable.

Economic and environmental effects of financing subsidies for non-conventional renewable energies with a carbon tax – A comparison of intersectoral models

Non-conventional renewable energy (NCRE) subsidies have been introduced in various countries to help reduce greenhouse gas (GHG) emissions. However, other social priorities limit the allocation of fiscal resources to this climate policy in Chile. This study analyzes the option of financing NCRE subsidies through carbon taxes in the thermoelectric sector. Specifically, two intersectoral models (the Leontief price model and the SAM price model) are used to simulate the impact of this mix of climate policies on prices, production, employment, and emissions of global and local air pollutants. The results of both models show that CO2 emissions would be reduced slightly in the short term, which is explained by the low current tax rate, the inelasticity of energy demand, and the indirect stimulus of subsidies on production in other sectors of the economy. In addition, it is concluded that the Leontief price model overestimates the impacts since it omits the falls in labor income and household consumption that the SAM price model captures. So, it is recommended to use models based on a social accounting matrix to evaluate energy policies when more sophisticated intersectoral models with endogenous prices and quantities (computable general equilibrium models) are unavailable.

Do strong oligopolies reverse Green Paradox effects?

In a competitive market renewable energy subsidies or postponement of carbon pricing tend to boost emissions and global warming in the short run. This so-called Green Paradox effect may be reversed if fossil-fuel firms operate under an oligopoly and the number of members is low enough. A reversal of the Green Paradox always occurs under a fossil fuel monopoly. If the extraction costs of fossil fuel depend on the aggregate remaining stock of reserves, Green Paradox effects vanish if the number of oligopolists becomes infinitely large. For an intermediate number of members, a Green Paradox occurs. The strength of the Green Paradox effect depends non-monotonically on the number of oligopolists. We also show that a Green Paradox is more likely for higher slopes of the demand curve, higher sensitivities of unit extraction costs with respect to remaining reserves, and lower interest rates.

The impacts of energy finance policies and renewable energy subsidy on energy vulnerability under carbon peaking scenarios

The impacts of energy finance policies and renewable energy subsidy on energy vulnerability under carbon peaking scenarios

Green electricity trading driven low-carbon sharing for interconnected microgrids

Green electricity becomes an inevitable trend to reduce carbon emissions. However, green certificate issuance based on power generation amounts restricts microgrids to participate in regional green electricity trading. In this context, a green electricity trading-driven low-carbon sharing approach for interconnected microgrids (IMG) is proposed. First, a new green electricity peer-to-peer (P2P) trading mechanism for regional IMG is proposed, where the energy sharing profile of each microgrid (MG) can be flexibly managed based on the interest. And the Nash equilibrium theory based on a non-cooperative game is applied to determine the trading capacity. Second, we define the green electricity value generated by P2P trading of renewable energy among IMG systems, where the green electricity value includes the value of traded green electricity, reduced carbon emission cost, and renewable energy subsidies. Especially, environmentally friendly factors are proposed to allocate the green electricity value between the buyer and seller, which can guide MGs to improve their energy composition and reduce carbon emissions. Third, a decentralized energy management approach is introduced to coordinate energy transactions among IMG systems based on the alternating direction method of multipliers (ADMM). The simulation analysis shows that the green electricity trading mechanism can reduce energy costs, carbon emissions and promote the consumption of green electricity.

Economic, environmental, and social assessment of the replacement of coal-fired thermoelectric plants for solar and wind energy in Chile

In 2019, a plan for the early shutdown of coal-fired power plants in Chile was announced, which will contribute to cleaner production in the energy sector and electricity-intensive industries. For the above, this research simulates the phase-out of coal-fired thermoelectric generation by solar and wind energy with an intersectoral model. Previous literature using a traditional input‒output model can evaluate only the effects of increased renewable energy investment. In contrast, this study is novel because it uses a mixed input‒output model that also allows the production of the thermoelectric, solar, and wind sectors to be exogenously modified. The results show that net national production rises by USD 977 million since the drop in thermoelectric energy is more than compensated by the investment and production in renewable energies. However, employment is reduced by 24 thousand jobs. In addition, replacing coal-fired thermoelectric plants would reduce CO2 emissions at the national level by 37%. The magnitude of the emissions reduction under this climate policy is much higher than the reduction yielded by carbon taxes, environmental taxes on multiple pollutants, and renewable energy subsidies previously evaluated in Chile by other studies. Thus, it is concluded that this policy is more compatible with carbon neutrality. Finally, in the cities where coal-fired thermoelectric plants are located, the social health benefits from lower premature mortality are valued at USD 27 million.

Does improvement in capital intensity facilitate the transition to renewable energies? Evidence from Tunisia.

The objective of this study is to investigate the potential role of capital deepening in promoting the transition to renewable energy in Tunisia. To this end, the long and short run effects of capital deepening on the renewable energy transition were explored using the vector error correction model (VECM) and the Johansen cointegration technique, along with a linear and nonlinear causality test in the context of Tunisia for the period 1990 to 2018. In particular, we found that capital deepening contributes positively to the transition to clean energy resources. In fact, the results of the linear and nonlinear causality tests confirm a unidirectional causal relationship between capital intensity and the transition to renewable energy. This explains that the increase in capital intensity ratio conducts technical change towards renewable energy, which constitutes a capital-intensive technology. Moreover, these results enable us to draw a conclusion about the energy policies in Tunisia and the developing countries in general. In fact, the renewable energy substitution depends on capital intensity, through the development of specific energy policies, such as renewable energy policies. Gradual substitution of fossil fuel subsidies with renewable energy subsidies is essential to faster the transition to renewable energy and promote capital-intensive production methods.

Which approaches to climate policy decrease carbon dioxide emissions? Evidence from US states, 1997–2017

Effective policies are needed to reduce fossil fuel use, but scholars disagree about which policy approach is most effective at decreasing fossil fuel use: renewable energy subsidies, energy substitution requirements, energy efficiency requirements, or carbon pricing. In this paper, I use fixed effect panel models to estimate the effect of ten different state-level climate policies, which each take one of these four approaches, on US states' energy-related CO2 emissions. I use these results to determine which policy approaches have been more effective at reducing fossil fuel use up until the present. I find that cap and trade implementation and my control for gas price increases are most consistently associated with emission reductions, and they generally reduce emissions more than the other tested policies. These findings suggest that carbon pricing has been more effective than the other policy approaches at reducing fossil fuel use.