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Public Policy Influence on Renewable Energy Investments – A Longitudinal Study Across OECD Countries

44 Pages Posted: 27 Sep 2014  

Friedemann Polzin

Utrecht University - Utrecht University School of Economics; Sustainable Business Institute (SBI)

Michael Migendt

EBS Universität für Wirtschaft und Recht - EBS Business School

Florian A. Täube

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite

Paschen von Flotow

Sustainable Business Institute (SBI)

Date Written: June 19, 2014

Abstract

This paper examines the impact of public policy measures on renewable energy (RE) diffusion through corresponding investments in electricity-generating capacity made by institutional investors (i.e. investment/pension funds, banks and insurance companies). Capacity investment data is gathered from Bloomberg New Energy Finance (BNEF) and policy indicators from the IEA/IRENA Policy and Measures Database. The authors observe the influence of different policy measures on a sample of OECD countries during an 12-year period (2000-2011) to suggest an effective policy mix which could tackle existing path dependencies and failures in the market for clean energy. The results call for technology-specific policies which take into account actual market conditions and the position in the technology life cycle. To improve the environment for institutional investments, advisable policy instruments include economic/fiscal incentives such as feed-in tariffs (FIT) with grants and subsidies being less effective. Additionally market-based instruments such as greenhouse gas emission trading systems for mature technologies should be included. These policy measures directly impact the risk and return structure of RE projects. Supplementing these with regulatory measures such as codes and standards (e.g. RPS), and long term strategic planning could further strengthen the environment for RE investments.

Keywords: renewable energy, public policy mix, institutional investors, longitudinal analysis

JEL Classification: G28, O33, O38, Q42, Q48

Suggested Citation

Polzin, Friedemann and Migendt, Michael and Täube, Florian A. and von Flotow, Paschen, Public Policy Influence on Renewable Energy Investments – A Longitudinal Study Across OECD Countries (June 19, 2014). Available at SSRN: https://ssrn.com/abstract=2423310 or http://dx.doi.org/10.2139/ssrn.2423310

Friedemann Polzin (Contact Author)

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Sustainable Business Institute (SBI) ( email )

Burgstr. 4
Oestrich-Winkel, 65375
Germany

Michael Migendt

EBS Universität für Wirtschaft und Recht - EBS Business School ( email )

Gustav-Stresemann-Ring 3
65189 Wiesbaden, Hessen
Germany

Florian A. Täube

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite ( email )

19 Av Franklin Roosevelt
1050
Brussels
Belgium

HOME PAGE: http://www.solvay.edu

Paschen Von Flotow

Sustainable Business Institute (SBI) ( email )

Burgstr. 4
Oestrich-Winkel, 65375
Germany

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