Economic impacts from the promotion of renewable energy technologies: The German experience

The allure of an environmentally benign, abundant, and cost-effective energy source has led an increasing number of industrialized countries to back public financing of renewable energies. Germany’s experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of far-reaching energy and environmental laws that stretch back nearly two decades. This paper critically reviews the centerpiece of this effort, the Renewable Energy Sources Act (EEG), focusing on its costs and the associated implications for job creation and climate protection. We argue that German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country’s energy portfolio. To the contrary, the government’s support mechanisms have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security.     

The role of energy efficiency and renewable energies in the future world energy market

The world population is rising rapidly, notably in the developing countries. Historical trends suggest that increased annual energy use per capita is a good surrogate for the standard of living factors which promote a decrease in population growth rate. If these trends continue, the stabilization of the world's population will require the increased use of all sources of energy as cheap oil and gas are depleted. The improved efficiency of energy use and renewable energy sources will be essential to stabilizing population, while providing a decent standard all over the world.     

The diverging paths of German and United States policies for renewable energy: Sources of difference

The United States and Germany started out with very similar policies for renewable energy after the energy crisis of the 1970s. By the year 2000 they were on very different policy paths and, as a result, the German renewable energy industry has moved well ahead of that in the United States, both in terms of installed capacity in the country and in terms of creating a highly successful export market. In this paper, we reject some of the conventional explanations for this difference. Instead, these differences arise from the intersection of contingent historical events with the distinctive institutional and social structures that affect policy making in each country. Our analysis of the historical path-dependent dynamics of each country suggests that those who wish to further renewable energy policy in the United States need to take into account these institutional and social factors so that they will better be able to exploit the next set of favorable historical circumstances.     

The role of income in energy consumption behaviour: Evidence from French households data

The main purpose of this paper is to characterise quantitatively the impact of income on household energy consumption in the residential and transport sectors. Starting from the data collected in a paper survey, we analyse the extent of the constraint experienced by households in terms of equipment purchasing behaviour and daily energy consumption. This analysis shows that the least well-off households are particularly constrained since the share of their budget represented by these energy services is very large (15–25%), and this corresponds to a level of energy service well below that of the better-off households. The case of space-heating shows a factor of 2 in terms of level of comfort achieved between the extreme 10-percentiles. These households also face a strong capital constraint for equipment purchases. This leads either to a large increase in the required rate of return or to a reduction in the proportion of households that are prepared to replace their equipment earlier. The least well-off households are thus doubly constrained, since it is more difficult for them to invest. In our opinion, it is crucial to take into account this observation in the context of political measures aimed at reducing households’CO₂ emissions.     

The impacts of energy prices on energy intensity: Evidence from China

In this paper, we present a review of the deregulation of energy prices in China between 1985 and 2004 and assess the impacts of changes in energy prices on aggregate energy intensity and coal/oil/electricity intensity. We used time series data to provide estimates of energy price elasticities. Empirical results showed that: (1) The own-price elasticities of coal, oil, and aggregate energy were negative in periods both before and after 1995, implying that higher relative prices of different energy types lead to the decrease in coal, oil, and aggregate energy intensities. However, the positive own-price elasticity of electricity after 1995 probably indicates that the price effect was weaker than other factors such as income effect and population effect. (2) The impacts of energy prices were asymmetric over time. (3) Sectoral adjustment also drove the decrease in aggregate energy intensity. Although raising energy prices to boost efficiency of energy use seems to be an effective policy tool, other policy implications concerned with energy prices, such as energy supply security and fuel poverty, must also be considered.     

Nonlinear dynamic of the renewable energy cycle transition in Tunisia: Evidence from smooth transition autoregressive models

In this paper, we focus on the problem of the energy transition in Tunisia were we suggest to study and modeling the nonlinear dynamic of the endogenous renewable energy cycle.As today the socioeconomic development in Tunisia is too complicated and dependent on the adopted energetic strategy. Our contribution consists on recognizing exactly the main bases of this correlative development.In this context, we try to provide some theoretical and empirical studies for renewable energy politics especially under the chaotic transition in the post revolution period in Tunisia.All this work will be based on the application of the univariate STAR (smooth transition autoregressive) method composed by two transition process types the logistic STAR model (LSTAR) and the exponential STAR model (ESTAR). As results we found that the LSTAR process is more adequate for asymmetric data for our case. In this regard, our results indicated that the renewable energy can not only work as a possible factor for energetic strategy transition in Tunisia, but also, is a promising candidate for stability and socioeconomic development.     

Price formation and market power in the German wholesale electricity market in 2006

From 2002 to 2006, German wholesale electricity prices more than doubled. The purpose of this paper is to estimate the price components in 2006 in order to identify the factors responsible for the increase. We develop a competitive benchmark model, taking into account power plant characteristics, fuel and CO₂-allowance prices, wind generation, cross-border flows, unit commitment, and startup conditions, to estimate the difference between generation costs and observed market prices for every hour in 2006. We find that prices at the German wholesale market (European Energy Exchange—EEX) are above competitive levels for a large fraction of the observations. We verify the robustness of the results by carrying out sensitivity analyses. We also address the issue of revenue adequacy.     

Prospects for hydrogen in the German energy system

The focus of the paper concerns the current discussion on the contribution of the hydrogen economy to a “sustainable energy system”. It considers whether advantages for the environmental situation and energy carrier supply can be expected from the already visible future characteristics of hydrogen as a new secondary energy carrier.     

Can market oriented economic reforms contribute to energy efficiency improvement? Evidence from China

Since China accelerated its market oriented economic reforms at the end of 1992, its energy intensity has declined 3.6% annually over 1993–2005. However, its energy intensity declined 4.2% annually during its first reform period 1979–1992. Therefore, can we conclude that the accelerated marketization since the end of 1992 has made no contribution to its energy efficiency improvement? In order to answer this challenging question, we examine the changes of energy own-price elasticity, as well as the elasticities of substitution between energy and non-energy (capital and labor) in China during the periods of 1979–1992 and 1993–2003. Generally, in transition or developing economies, holding the technology and output level fixed, if the energy own-price elasticity (algebraic value) declines or the substitution elasticity between factors rises, they will contribute to energy efficiency improvement. Our empirical study finds that: (1) during 1979–1992, the energy own-price elasticity is positive (0.285), and capital-energy, labor-energy are both Morishima complementary; which indicates a distorted energy price and inefficient allocation; and (2) during 1993–2003, the own-price elasticity for energy is negative (−1.236), and capital-energy and labor-energy are both Morishima substitute. All factor demands become more elastic, and all elasticities of substitution increase. The implication is that the accelerated marketization contributes substantially to energy efficiency improvement since 1993.     

A review of computer tools for analysing the integration of renewable energy into various energy systems

This paper includes a review of the different computer tools that can be used to analyse the integration of renewable energy. Initially 68 tools were considered, but 37 were included in the final analysis which was carried out in collaboration with the tool developers or recommended points of contact. The results in this paper provide the information necessary to identify a suitable energy tool for analysing the integration of renewable energy into various energy-systems under different objectives. It is evident from this paper that there is no energy tool that addresses all issues related to integrating renewable energy, but instead the ‘ideal’ energy tool is highly dependent on the specific objectives that must be fulfilled. The typical applications for the 37 tools reviewed (from analysing single-building systems to national energy-systems), combined with numerous other factors such as the energy-sectors considered, technologies accounted for, time parameters used, tool availability, and previous studies, will alter the perception of the ‘ideal’ energy tool. In conclusion, this paper provides the information necessary to direct the decision-maker towards a suitable energy tool for an analysis that must be completed.     

The status and prospects of renewable energy for combating global warming

Reducing anthropogenic greenhouse gas (GHG) emissions in material quantities, globally, is a critical element in limiting the impacts of global warming. GHG emissions associated with energy extraction and use are a major component of any strategy addressing climate change mitigation. Non-emitting options for electrical power and liquid transportation fuels are increasingly considered key components of an energy system with lower overall environmental impacts. Renewable energy technologies (RETs) as well as biofuels technologies have been accelerating rapidly during the past decades, both in technology performance and cost-competitiveness — and they are increasingly gaining market share. These technology options offer many positive attributes, but also have unique cost/benefit trade-offs, such as land-use competition for bioresources and variability for wind and solar electric generation technologies. This paper presents a brief summary of status, recent progress, some technological highlights for RETs and biofuels, and an analysis of critical issues that must be addressed for RETs to meet a greater share of the global energy requirements and lower GHG emissions.     

Industrial relocation and energy consumption: Evidence from China

With economic development and the change of industrial structure, industrial relocation is an inevitable trend. In the process of industrial relocation, environmental externality and social cost could occur due to market failure and government failure. Little attention has been paid to this issue. In this paper, we address it with a theoretical analysis and an empirical investigation on the relationship between China's industrial relocation in the early 1990s and energy consumption which is the primary source of CO₂ emission, an environmental externality that causes increasing concerns. The macro-policy analysis suggests that there would be a positive link between China's industrial relocation in the early 1990s and energy saving (and environmental externalities reduction). Using fixed-effect regression model and simulation method, we provide an empirical support to this argument. In order to further reduce environmental externalities and social cost in the process of industrial relocation, we provide policy suggestions as follows: First, strengthen the evaluation of environmental benefits/costs; Second, pay more attention to the coordinated social-economic development; Third, avoid long-lived investment in high-carbon infrastructure in areas with industries moved in; Fourth, address employment issue in the areas with industries moved out.     

The development of the German energy market until 2030—A critical survey of selected scenarios

Many scenarios have been generated in the last years analysing the international energy market. The variety of these scenarios is manifold, as they are generated by different institutions using different methodological approaches and different framework assumptions. However, these scenarios can roughly be classified into three main groups: “moderate”, “climate protection” and “resource scarcity and high fossil fuel prices”. Analysing the German energy market makes a fourth scenario group necessary, which considers the possible revision of the decided nuclear energy phase out. Most of the existing scenarios developed by different institutions can be allocated into one of these groups. A representative scenario for each group has been selected to illustrate the development of the energy sector until 2030. Contrary to the worldwide primary energy demand (PED), the German PED decreases in each scenario, even though the drop differs strongly throughout the scenarios. On the other hand the structure of the PED in 2030 varies strongly for each scenario, especially regarding the share of fossil energy sources. However, a common robust result can be observed throughout all scenarios, namely the high increase in the share of the renewable energy resources, although the scenario generation processes are not always robust.     

Determinants of households’ space heating type: A discrete choice analysis for German households

Considering the increasing attention on efficient use of energy, it becomes vitally important to understand the energy-related behavior of households. This article presents empirical evidence on the determinants of the space heating technology applied by a household. Three sets of variables are examined as potential influences—building, socio-economic, and regional characteristics. To highlight both the differences and similarities, the results are obtained from a sample of house owners, and from a sample including all households. The influence of socio-economic factors is similar across these groups. Income is found to exert only a minor impact on the system choice. Dwelling features are significant in determining the heating type, particularly in the sample including all households. Regional effects are important—clear differences prevail between East and West Germany.     

Energy consumption and economic growth in the USA: Evidence from renewable energy

Recent debates about renewable energy consumption manifest two main expectations. Firstly, renewable energy consumption should contribute to economic growth and secondly, it should not cause damage on environment. This study focuses on the first issue by applying Toda–Yamamoto procedure and bootstrap-corrected causality test for the US since empirical literature criticizes the Toda–Yamamoto test which bases on asymptotic distribution. The models consist of real GDP, employment, investment and kinds of renewable energy consumption. Only one causal relationship was found from biomass-waste-derived energy consumption to real GDP. No causal relationship was found between real GDP and all of the other renewable energy kinds—total renewable energy consumption, geothermal energy consumption, hydro-electric energy consumption, biomass energy consumption and biomass-wood-derived energy consumption. That is using of energy from waste cause not only solving the dumping problems but also it contributes to real GDP. For policy purpose, the results of this study suggest that countries should concentrate on energy producing from waste as an alternative energy resource.     

Energy policy and the energy economy in FR Germany : An overview

The article reports on the current status of West German energy policy, and in a sense it is a case study of a predominantly, though not purely, market-oriented approach. It presents some interesting facts and figures on the West German energy economy, and although written in an introductory fashion, leads the reader into the heart of current energy policy issues. The short retrospective demonstrates the remarkable success of the market-oriented approach to energy policy. The main current problems are the implementation of stricter environmental standards and the structural adjustments of the domestic coal and refining industries. A short discussion on future perspectives shows that total primary energy demand up to the end of the century is likely to remain stagnant, while further marked progress in energy efficiency can be expected.     

The link between political decision-making and energy options: Assessing future role of renewable energy and energy efficiency in Finland

European Union and Finland are confronted with much the same kind of challenges in energy policy. Because of much higher importance on energy, these issues escalated earlier in Finland including vital political decision-making. Several alternative energy paths to the future can be identified with fairly similar projected costs. The more in-depth analysis in the Finnish case suggests that, e.g., an integrated approach consisting of renewable energy sources and energy efficiency measures would be one competitive alternative to satisfy both increasing energy demand and CO₂ emission reductions already by 2020. The study shows that meeting environmental, energy security and economical targets may not as such be adequate for the future success of an energy option. There is a more profound link between the energy options and the political decision-making, implying a much broader range of criteria than just the 3 Es reflecting thus politicians’ priorities and concerns. For example, in the Finnish case renewable energy sources and energy efficiency did not match optimally the parliamentary majority's preferences when deciding on future electricity direction in 2002. The methodology suggested here can be used to improve the strategic positioning of alternative energy paths.     

Hydrogen generation by electrolysis and storage in salt caverns: Potentials,economics and systems aspects with regard to the German energy transition

The Plan-DelyKaD project focused on an in-depth comparison of relevant electrolysis technologies, identified criteria for and selected most relevant salt cavern sites in Germany, studied business case potentials for applying hydrogen taken from storage to different end-users and engaged in identifying the future role of hydrogen from large scale storage in the German energy system. The focus of this paper is on the latter three topics above. The bottom-up investigation of most suitable salt cavern sites was used as input for a model-based analysis of microeconomic and macroeconomic aspects. The results identify dimensions and locations of possible hydrogen storages mostly in Northern Germany with ample potential to support the integration of fluctuating renewable electricity into the German power system. The microeconomic analysis demonstrates that the most promising early business case for hydrogen energy from large scale storage is its application as a fuel for the mobility sector. From a system perspective the analysis reveals that an optimized implementation of hydrogen generation via electrolysis and storage in salt caverns will have a positive impact on the power system in terms of reduced curtailments of wind power plants and lower residual peak loads.     

Heating technology and energy use: a discrete/continuous choice approach to Norwegian household energy demand

The aim of this paper is to describe the structure of the household’s energy demand as a discrete/continuous choice and, on this basis, establish an econometric model suitable for the data available in the Norwegian Energy Surveys. The discrete appliance choice is specified as a multinomial logit model, with a mixture of appliance attributes (operating costs) and individual characteristics (income, housing unit characteristics, etc.) as explanatory variables. In the next step the continuous choice of energy use is modelled conditional on the appliance choice. The energy prices turn out to be significant both when estimating the appliance choice and the conditional energy demand. The estimated price elasticity for energy exceeds minus unity. The paper discusses how this relatively strong price response should be interpreted in the context of other econometric analysis with no explicit appliance dependence. Finally, the significance of the many household characteristics at both stages of the model signals a high degree of heterogeneity within the households, which justifies the use of detailed micro-data in the modelling of the energy demand.