global expansion of renewable energy generation: an evaluation of policy instruments

Global Expansion of Renewable Energy Generation: An Evaluation of Policy Instruments

Sanya Carley USAEE ConferenceJuly, 2013

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

2010

0

500

1000

1500

2000

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Renewable Energy Production, 1990 - 2010

OECD Non OECD

World

Billi

on k

whs

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

2010

0

100

200

300

400

500

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700

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Renewable Energy Production Excluding Hydroelectricity, 1990 - 2010

OECD Non OECD

World

Billi

on k

whs

5

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

2010

0

10

20

30

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70Global Policy Adoption, 1990 - 2010

FITRPSSubsidies

No. o

f cou

ntrie

s

6

Policy Effectiveness•FIT: provides certainty to investors▫Previous studies find effect on renewable

energy development, particularly solar•RPS: direct regulation▫Previous studies demonstrate mixed results

•Relative effectiveness?•All such studies limited to EU or US

7

Research Overview•Research Questions: Which factors

explain RE deployment across a wide variety of country contexts? Are energy policies an important factor?

•Methodological Approach: Fixed effects model with sample of countries (165) between 1990 and 2010 (n= 2,896); robust standard errors.

8

Variables•Dependent variables: Renewable

energy generation, including and excluding hydro; % of renewable energy generation, including and excluding hydro

•Policy variables: RPS, FIT, subsidies, framework laws

•Control variables: political factors, macro-economic factors, energy market factors

9Independent Variables

Model 1:All Renewable Energy

(billion kWhs)

Model 2:Non-hydro Renewable Energy (billion kWhs)

Policies RPS -1.315 (3.440) 0.213 (1.307) FIT -2.564 (2.283) -0.765 (0.531) Framework*RPS 25.757** (12.841) 7.306*** (1.866) Framework*FIT 22.449*** (5.620) 2.946*** (0.814) Framework -6.390** (2.504) -1.848*** (0.542) Subsidies 6.562*** (1.952) 0.409* (0.222)Political and Economic Factors Political freedom 0.731** (0.370) 0.285*** (0.068) Commercial finance -0.033* (0.017) -0.024*** (0.004) CDM 7.194*** (2.020) -0.409 (0.284) FDI/GDP -0.032** (0.016) -0.014*** (0.004) GDP per capita 0.0002 (0.0002) 0.0002*** (0.00004)

GDP per capita squared-0.00000001** (0.000000005) -

Population growth -0.767*** (0.214) -0.244*** (0.085)Energy Market Characteristics Electricity growth 2.246* (1.190) -0.084 (0.312) Oil exports 0.065*** (0.015) 0.023*** (0.005) NG exports -0.003 (0.003) 0.0009 (0.0009) Coal exports -0.00003 (0.0001) -0.00003** (0.00001)Constant 12.964*** (3.019) 1.779** (0.784)No. observations 2896 2896Adjusted R2 0.9311 0.8835



(billion kWhs)





14

Implications•Renewable portfolio standards and feed-in tariffs

are drivers of renewable energy but only statistical significant when supported by framework laws▫When considering entire range of countries in

sample, this distinction is important•Subsidies play an important supporting role for

renewable energy development• These policies drive both hydro and non-hydro

renewable energy•Non-policy factors are very important as well:

political freedom, country wealth, energy resources

Questions?Contact Information:Sanya CarleyAssistant ProfessorSchool of Public and Environmental Affairs, Indiana [email protected]

Collaborators: Elizabeth Baldwin, Lauren MacLean, Jennifer Brass

mailto:[email protected]

16Variable Description Mean Standard

Deviation

Minimum Maximum

Total RE Annual renewable electricity generation (billion kwhs)

19.180 60.421 0 770.9

Total non-hydro RE

Annual non-hydroelectric RE generation (billion kwhs)

2.001 9.282 0 167.2

Percent RE Renewable electricity as % of annual electricity generation

0.356 0.355 0 1

Percent non-hydro RE

Non-hydroelectric renewable electricity as % of annual electricity generation

0.022 0.054 0 0.4

FIT Feed-in tariff exists for any renewable resource 0.087 0.282 0 1Non-hydro FIT Feed-in tariff exists for any non-hydroelectric

renewable resource0.080 0.271 0 1

RPS Renewable Portfolio Standard or mandatory renewable quota obligation in place

0.037 0.188 0 1

Subsidies Country provides subsidies for RE as tax reductions or production/investment incentives

0.234 0.540 0 1

Non-hydro subsidies

Country provides subsidies for non-hydro RE as tax reductions or production/investment incentives

0.233 0.539 0 1

Freedom Freedom House rating (political freedom and civil liberties)

3.497 1.859 0 6.0

Framework Legal and regulatory framework for RE in place 0.151 0.358 0 1Commercial finance

Private sector share of financial sector, divided by 100

0.809 0.211 0.03 1

CDM Country has hosted Clean Development Mechanism projects

0.073 0.260 0 1

FDI/GDP Foreign direct investment as a % of gross domestic product, divided by 1000

0.004 0.008 -0.08 0.1

GDP per capita Gross domestic product per capita (thousand $US)

6.857 11.170 0.06 70.6

Population growth

Annual population growth 1.584 1.377 -7.3 14.8

Electricity growth Annual change in electricity consumption 0.047 0.108 -0.8 1.5Oil exports Annual oil exports (barrels per day) 0.085 0.223 0 2.3NG exports Annual natural gas exports (million cubic feet) 0.131 0.634 0 8.4Coal exports Annual coal exports (short tons) 5.127 24.558 0 328.1



(billion kWhs)







(billion kWhs)


Policies RPS -1.315 (3.440) 0.213 (1.307) FIT -2.564 (2.283) -0.765 (0.531) Framework*RPS 25.757** (12.841) 7.306*** (1.866) Framework*FIT 22.449*** (5.620) 2.946*** (0.814) Framework -6.390** (2.504) -1.848*** (0.542) Tax subsidies 6.562*** (1.952) 0.409* (0.222)Political and Economic Factors Political freedom 0.731** (0.370) 0.285*** (0.068) Commercial finance -0.033* (0.017) -0.024*** (0.004) CDM 7.194*** (2.020) -0.409 (0.284) FDI/GDP -0.032** (0.016) -0.014*** (0.004) GDP per capita 0.0002 (0.0002) 0.0002*** (0.00004)



global expansion of renewable energy generation: an evaluation of policy instruments

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