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Global Expansion of Renewable Energy Generation: An Evaluation of Policy Instruments Sanya Carley USAEE Conference July, 2013.

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Presentation on theme: "Global Expansion of Renewable Energy Generation: An Evaluation of Policy Instruments Sanya Carley USAEE Conference July, 2013."— Presentation transcript:

1 Global Expansion of Renewable Energy Generation: An Evaluation of Policy Instruments Sanya Carley USAEE Conference July, 2013

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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 6

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. 7

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 8

9 9 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

10 10 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

11 11 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

12 12 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

13 13 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

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 14

15 Questions? Contact Information: Sanya Carley Assistant Professor School of Public and Environmental Affairs, Indiana University scarley@indiana.edu 812-856-0920 Collaborators: Elizabeth Baldwin, Lauren MacLean, Jennifer Brass

16 VariableDescriptionMeanStandard Deviation MinimumMaximum Total REAnnual renewable electricity generation (billion kwhs)19.18060.4210770.9 Total non-hydro REAnnual non-hydroelectric RE generation (billion kwhs)2.0019.2820167.2 Percent RERenewable electricity as % of annual electricity generation0.3560.35501 Percent non-hydro RENon-hydroelectric renewable electricity as % of annual electricity generation 0.0220.05400.4 FITFeed-in tariff exists for any renewable resource0.0870.28201 Non-hydro FITFeed-in tariff exists for any non-hydroelectric renewable resource 0.0800.27101 RPSRenewable Portfolio Standard or mandatory renewable quota obligation in place 0.0370.18801 SubsidiesCountry provides subsidies for RE as tax reductions or production/investment incentives 0.2340.54001 Non-hydro subsidiesCountry provides subsidies for non-hydro RE as tax reductions or production/investment incentives 0.2330.53901 FreedomFreedom House rating (political freedom and civil liberties)3.4971.85906.0 FrameworkLegal and regulatory framework for RE in place0.1510.35801 Commercial financePrivate sector share of financial sector, divided by 1000.8090.2110.031 CDMCountry has hosted Clean Development Mechanism projects0.0730.26001 FDI/GDPForeign direct investment as a % of gross domestic product, divided by 1000 0.0040.008-0.080.1 GDP per capitaGross domestic product per capita (thousand $US)6.85711.1700.0670.6 Population growthAnnual population growth1.5841.377-7.314.8 Electricity growthAnnual change in electricity consumption0.0470.108-0.81.5 Oil exportsAnnual oil exports (barrels per day)0.0850.22302.3 NG exportsAnnual natural gas exports (million cubic feet)0.1310.63408.4 Coal exportsAnnual coal exports (short tons)5.12724.5580328.1 16

17 17 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

18 18 Independent 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*RPS25.757** (12.841) 7.306*** (1.866) Framework*FIT22.449*** (5.620)2.946*** (0.814) Framework-6.390** (2.504)-1.848*** (0.542) Tax subsidies6.562*** (1.952)0.409* (0.222) Political and Economic Factors Political freedom0.731** (0.370)0.285*** (0.068) Commercial finance-0.033* (0.017)-0.024*** (0.004) CDM7.194*** (2.020)-0.409 (0.284) FDI/GDP-0.032** (0.016)-0.014*** (0.004) GDP per capita0.0002 (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 growth2.246* (1.190)-0.084 (0.312) Oil exports0.065*** (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) Constant12.964*** (3.019)1.779** (0.784) No. observations 2896 Adjusted R 2 0.93110.8835

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