Government Promotion of Renewable Energy Technologies (eBook)

Dr. Katrin Jordan-Korte conducted her doctoral studies under the supervision of Prof. Carl-Ludwig Holtfrerich at the Department of Economics at the Freie Universität Berlin. She currently works as an Economic Specialist at the U.S. Embassy in Berlin.

Preface 6
Contents 7
1 Introduction 17
1.1 Motivation 17
1.2 Research Questions and Aims 19
1.3 Literature Review 20
1.4 Definition of Renewable Energy 27
1.5 Research Design and Methodology 29
1.6 Outline 33
2 Government Intervention in Renewable Electricity Markets 35
2.1 Characteristics of Electricity Markets and Renewable Energy Technologies 36
2.2 Main Justification for Intervention: Market Failure 38
2.2.1 Monopolistic Competition and Cartels 39
2.2.2 Externalities 39
2.2.3 Forms of Externalities 40
2.2.3.1 Pigovian Taxes 43
2.2.3.2 Coase Theorem 44
2.2.4 Information Asymmetry 45
2.3 The Risk of Government Failure 46
2.3.1 Capture Theory 47
2.3.2 Imperfect Information of the Regulator 48
2.4 Industrial Policy Approaches 48
2.4.1 The Competitiveness “Problem” 50
2.4.2 Infant Industry Argument 57
2.4.3 First-Mover Advantages 60
2.5 Summary and Conclusion 65
3 The Context of Renewable Energy Promotion 68
3.1 Key Drivers of Renewable Energy Use 68
3.1.1 Increased Energy Demand 69
3.1.2 The Limits of Fossil Fuels 70
3.1.3 Sustainability and Climate Change 71
3.2 Three Main Policy Objectives of Renewable Energy Policy 73
3.3 Generation Costs of Renewable Energy and External Costs of Electricity Generation 74
3.3.1 Factors Relevant for Decrease in Generation Costs 75
3.3.2 Quantifying External Costs of Electricity Production 77
3.4 Renewable Energy Policy Instruments 79
3.4.1 Price-Based Systems 81
3.4.2 Quantity-Based Systems and Tradable Certificates 84
3.5 Summary 86
4 National Markets and Promotion Policies for Renewable Energy Sources 87
4.1 Renewable Energy Policy Instruments in Germany 87
4.1.1 Renewable Electricity Targets 88
4.1.2 Renewable Energy Sources Act (EEG) 89
4.1.3 Preferential Loans 93
4.1.4 Further Financial Incentives 94
4.2 Renewable Energy Policy Instruments in the United States 96
4.2.1 Renewable Electricity Target 97
4.2.2 Renewable Energy Policy Instruments at the Federal Level 97
4.2.3 State Level 101
4.3 Renewable Energy Policy Instruments in Japan 108
4.3.1 Renewable Electricity Targets 109
4.3.2 Sunshine Project 110
4.3.3 Voluntary Purchase Agreements 111
4.3.4 Renewable Portfolio Standard 113
4.4 Government Renewable Energy R& D in Germany, Japan and the United States
4.4.1 Historical Development of Renewable Energy R& D
4.4.2 Share of Renewable Energy R& D in Total Energy R&
4.4.3 The Distribution by Renewable Energy Technology 120
4.5 Summary on Renewable Energy Policies in Germany, Japan and the United States 123
4.6 National Markets for Renewable Electricity 126
4.6.1 Renewable Power Market Development in Germany 126
4.6.2 Renewable Power Market Development in the United States 130
4.6.3 Renewable Power Market Development in Japan 133
4.6.4 Comparison of Renewable Power Generation in Germany, Japan and the United States 136
4.6.5 Summary 141
4.7 Capacity to Induce a Decline in Generation Costs 143
4.8 Lessons for the Design of Renewable Energy Promotion Instruments 148
5 International Markets for Renewable Energy Technologies and Export Promotion Policies 153
5.1 Public Promotion of Renewable Energy Technology Exports 153
5.1.1 Export Promotion of Renewable Energy Technologies 153
1. Network building and coordination 155
2. Export expertise for German companies 155
3. Development of foreign markets 155
5.1.2 Restrictions of Renewable Energy Technologies Imports 163
5.2 International Markets for Renewable Energy Technologies 166
5.2.1 Methodology 167
5.2.2 Development by Renewable Energy Technology 179
5.2.3 The Export Performance and the Level of Specialization of Germany, Japan and the United States in Renewable Energy Technol 190
5.3 Summary and Conclusions 210
6 Explaining Differences in the Renewable Energy Policy Approaches in Germany, the United States and Japan 215
6.1 Development of Domestic Environmental and Renewable Energy Policies 216
6.1.1 Development in Germany 216
6.1.2 Development in the United States 219
6.1.3 Development in Japan 223
6.2 Emphasis on Economic Benefits 227
6.2.1 Strong Renewable Energy Coalition in Germany 228
6.2.2 Less Emphasis on Economic Benefits of Renewable Energy Use in the United States and Japan 229
6.3 Conclusion 231
7 Summary and Conclusion: Implications for Renewable Energy Instruments and Markets 233
Appendix 240
Bibliography 257