Wind and Solar Sectors in Brazil and China: Interests, State-Business Relations, and Policy Outcomes

Abstract

This paper examines developments in the renewable electricity sector in Brazil and China since 2000. The two countries share many interests with respect to solar and wind power, but institutional differences in state-business relations led to different outcomes. In China, in a context of state corporatist state-business relations, state interventions were more far-reaching, with the state coordinating with state-owned banks, offering large financial and investment incentives to state-owned or state-connected enterprises. By contrast, in Brazil’s private-public partnerships, state support to promote renewable energies was shaped by a stronger preference for competitive auctions and stricter financing rules. The differences in the state-business relations help to explain the observed developmental trajectories in wind and solar power.

Keywords: solar industry, wind industry, state-business relations, Brazil, China, private-public partnerships, state corporatism

JEL Classification: Q20, Q21, Q28