Governance and renewable energy investment in MENA countries:How does trade matter?

The Middle East and North Africa (MENA) countries have recently developed renewable energy (RE) markets. However, their rate of investment in renewable energy remains small compared to other regions in the world despite their relatively abundant endowments, particularly in wind and solar. While the literature identifies some barriers to investment in renewable energy, we assume that the investment of MENA countries could be impeded by specific governance factors. Furthermore, we consider recent literature showing that trade openness reduces the negative effects of weak governance. In this paper, we empirically investigate the link between governance, openness, and renewable energy investment in the MENA region using panel data for 15 MENA countries over the period 1996-2013. Our results prove that a higher institutional quality is associated with RE investment in MENA countries. In addition, this relationship seems to be conditional on the trade regime. Our results are robust to several measures of renewable energy investment and governance as well as to an alternative econometric set-up.     

What drives renewable energy development?

This viewpoint reviews renewable energy development in 14 markets that differ in market structure (restructured vs. not restructured), use of feed-in-tariff (FIT) (yes vs. no), transmission planning (anticipatory vs. reactive), and transmission interconnection cost allocated to a renewable generator (high vs. low). We find that market restructuring is not a primary driver of renewable energy development. Renewable generation has the highest percent of total installed capacity in markets that use a FIT, employ anticipatory transmission planning, and have loads or end-users paying for most, if not all, of the transmission interconnection costs. In contrast, renewable developers have been less successful in markets that do not use a FIT, employ reactive transmission planning, and have generators paying for most, if not all, of the transmission interconnection costs. While these policies can lead to higher penetration of renewable energy in the short run, their high cost to ratepayers can threaten the economic sustainability of renewable energy in the long-run.     

Does energy efficiency improve technological change and economic growth in developing countries?

Does a trade-off exist between energy efficiency and economic growth? This question underlies some of the tensions between economic and environmental policies, especially in developing countries that often need to expand their industrial base to grow. This paper contributes to the debate by analyzing the relationship between energy efficiency and economic performance at the micro- (total factor productivity) and macro-level (countries' economic growth). It uses data on a large sample of manufacturing firms across 29 developing countries to find that lower levels of energy intensity are associated with higher total factor productivity for the majority of these countries. The results are robust to a variety of checks. Suggestive cross-country evidence points towards the same relation measured at the macro-level as well.     

Does there exist energy congestion? Empirical evidence from Chinese industrial sectors

Data envelopment analysis as a nonparametric frontier approach has gained increasing popularity in assessing total factor energy efficiency performance. Earlier studies often assume that production activity lies in the economic area, and energy inefficiency associated with energy congestion has seldom been examined. This paper contributes to energy efficiency assessment by developing a decomposition model to examine the energy inefficiency driven by energy congestion and empirically examining whether the energy use in Chinese industrial sectors shows evidence of congestion. It is found that energy congestion does exist in Chinese industrial sectors but varies across different provinces. The provinces with high energy intensities are more likely to suffer from energy congestion. Our empirical results also show that energy congestion could be a main driving force of energy inefficiency. Some policy implications towards energy conservation in China are finally discussed.     

Which renewable energy policy is a venture capitalist's best friend? Empirical evidence from a survey of international cleantech investors

Governments around the world have adopted ambitious targets to increase the share of renewable energy and reduce greenhouse gas emissions. They pursue a variety of policy approaches to achieve these targets. It has been a popular theme for contributions in Energy Policy to investigate the effectiveness of such policies. This article adds a new perspective to the debate, namely looking at the policy preferences of private investors in innovative clean energy technology firms. We surveyed 60 investment professionals from European and North American venture capital and private equity funds and asked them to assess the effectiveness of various policies, in terms of stimulating their interest to invest in innovative clean energy technologies. In addition to quantitative rankings, we use qualitative interview data to capture additional information on why investors prefer some policies over others. The combined analysis compensates for the inherent limitations of a quantitative ranking using generic policy types. The results of this exploratory analysis demonstrate that, all other things being equal, investors in our sample perceived feed-in tariffs to be the most effective renewable energy policy. The overall preference for feed-in tariffs is even more pronounced among investors based in Europe and with higher exposure to clean energy.     

Is economic growth good or bad for the environment? Empirical evidence from Korea

The effects of economic growth on the environment in Korea, for a given level of energy consumption, and fossil fuels and nuclear energy in electricity production, are examined in a dynamic cointegration framework. To that end, the autoregressive distributed lag (ARDL) approach is used. We find empirical evidence supporting the existence of the environmental Kuznets curve (EKC) hypothesis for Korea; that is, economic growth indeed plays a favorable role in influencing environmental outcomes. It is also found that, in both the short- and long-run, nuclear energy has a beneficial effect on environmental quality, whereas fossil fuels in electricity production and energy consumption have a detrimental effect on the environment.     

How does manufacturing agglomeration affect green economic efficiency?

It is the theme of today to develop green economy and improve green economic efficiency (GEE). Adopting the panel data of 287 cities in China between 2003 and 2016, this research investigates the nonlinear impact and its action path of Manufacturing Agglomeration (MA) on GEE theoretically and empirically via adopting dynamic spatial panel Durbin model and mediating effect model. The results suggest the existence of a significant positive “U-shaped” relationship between MA and GEE, no matter in the short-term or long-term. However, for traditional economic efficiency, in the short-term, MA first inhibits it and then promotes it; while in the long-term, there is no significant positive “U-shaped” relationship between the two. In addition, industrial structure upgrading plays an important mediating role between MA and GEE, which accounts for 31.992%. Therefore, this paper believes that in order to improve green economic efficiency, it is necessary to dynamically adjust regional related policies, eliminate the congestion effect caused by manufacturing agglomeration, and achieve high-quality development of manufacturing agglomeration through industrial structure transformation and upgrading.     

Who invests in renewable electricity production? Empirical evidence and suggestions for further research

Transforming energy systems to fulfill the needs of a low-carbon economy requires large investments in renewable electricity production (RES-E). Recent literature underlines the need to take a closer look at the composition of the RES-E investor group in order to understand the motives and investment processes of different types of investors. However, existing energy policies generally consider RES-E investments made on a regional or national level, and target investors who evaluate their RES-E investments according to least-cost high-profit criteria. We present empirical evidence to show that RES-E investments are made by a heterogeneous group of investors, that a variety of investors exist and that their formation varies among the different types of renewable sources. This has direct implications for our understanding of the investment process in RES-E and for the study of motives and driving forces of RES-E investors. We introduce a multi-dimensional framework for analyzing differences between categories of investors, which not only considers to the standard economic dimension which is predominant in the contemporary energy literature, but also considers the entrepreneurship, innovation-adoption and institutional dimensions. The framework emphasizes the influence of four main investor-related factors on the investment process which should be studied in future research: motives, background, resources and personal characteristics.     

Do renewable energy technology innovations promote China's green productivity growth? Fresh evidence from partially linear functional-coefficient models

Renewable energy technology innovation can benefit the environment by promoting green productivity, as proposed by existing theoretical studies. However, recent uneven developments of both environmental performance and renewable energy technology among regions in China remind us to revisit the above theoretical link. In this paper, we relax the hypothesized homogeneity and linearity in traditional empirical models to investigate the effects of renewable energy technology innovation on China's green productivity. The results of the partially linear functional-coefficient models show that the effect of renewable energy technological innovation on green productivity is significant only when the relative income level of a province passes a critical turning point. Beyond the turning point, such an effect increases with the growth of relative income levels. Finally, we provide provincial specific policy implications based on the estimated nonparametric relationship between renewable energy technology innovation and green productivity.     

Overcoming problems in Turkey's renewable energy policy: How can EU contribute?

Fossil fuels cover most of the energy demand in the world, and this creates significant social, economic and environmental problems. Many countries have taken measures to increase the share of renewable energy sources (RES), especially in electricity generation, and the review of literature shows that the success of a country in RES diffusion depends on a comprehensive renewable energy policy which combines political commitment with stable and long-term support measures that stimulate technological innovation. As the largest economy in the world, EU has also taken steps to increase RES usage in electricity generation in member states. Similar to other developing countries, Turkey is learning lessons from EU experiences regarding RES policies, and Turkey is also reforming its legal framework in line with acquis communautaire as a candidate country. As a result, EU has a multiway impact on Turkey's renewable energy policy. An overview of Turkey's renewable energy policy showed that EU has significantly contributed to Turkey in shaping its renewable energy policy, and Turkey should increase cooperation with EU in order to utilize its renewable energy potential.     

Why does renewable energy diffuse so slowly? A review of innovation system problems

In this paper we present a literature review of studies that have analysed the troublesome trajectory of different renewable energy technologies (RETs) development and diffusion in different, mainly European countries. We present an overview of typical systemic problems in the development of innovation systems around RETs. We make use of the literature on innovation system failures to develop a categorisation of typical systemic problems that hamper the development and diffusion of RETs. Based on this categorisation the paper suggests several policy recommendations to overcome the systemic problems and accelerate the diffusion and implementation of RETs.     

Does environmental regulation affect energy efficiency in China's thermal power generation? Empirical evidence from a slacks-based DEA model

Data envelopment analysis (DEA) has gained much popularity in performance measurement of power industry. This paper presents a slack-based measure approach to investigating the relationship between fossil fuel consumption and the environmental regulation of China's thermal power generation. We first calculate the total-factor energy efficiency without considering environmental constraints. An environmental performance indicator is proposed through decomposing the total-factor energy efficiency. The proposed approach is then employed to examine whether environmental regulation affects the energy efficiency of China's thermal power generation. We find that the environmental efficiency plays a significant role in affecting energy performance of China's thermal generation sector. Decreasing the discharge of major pollutants can improve both energy performance and environmental efficiency. Besides, we also have three main findings: (1) The energy efficiency and environmental efficiency were relatively low. (2) The energy and environmental efficiency scores show great variations among provinces. (3) Both energy efficiency and environmental efficiency are of obvious geographical characteristics. According to our findings, we suggest some policy implications.     

Electricity consumption and economic development: Are countries converging to a common trend?

This paper studies the dynamic behavior of electricity consumption with special emphasis on their convergence patterns. Individual electricity indicators are modeled by allowing for apparent heterogeneous transitions. Log t convergence test results indicate that all 109 countries converge to a common stochastic trend for electricity intensity while per capita electricity consumption is better explained by a multiple-component model. In the case of 24 advanced economies, there is a strong tendency towards a common component for both indicators. The application of clustering algorithm confirms the presence of club convergence for per capita electricity consumption. In terms of clustering pattern, per capita electricity consumption appears to be remarkably similar to per capita income, widely used measure of economic development.     

Are global warming and economic growth compatible? Evidence from five OPEC countries?

In this paper, we investigate the relationship between carbon emissions, income, energy and total employment in selected OPEC countries for the period of 1971–2002. We mainly focus on the link between energy use and income. Employing the autoregressive distributed lag (ARDL) approach, we find that there is a cointegrating relationship between the variables in Saudi Arabia only. The long run forcing variables for income are determined to be employment and energy for Saudi Arabia. In Indonesia, Algeria, Nigeria, and Venezuela, there is no cointegration between income and energy. Secondly we question the long run Granger causality between carbon emissions, energy use, and income. Our results suggest that none of the countries need to sacrifice economic growth to decrease their emission levels. Indonesia and Nigeria may contribute to emissions reduction via energy conservation without negative long run effects on economic growth.     

How does wind farm performance decline with age?

Ageing is a fact of life. Just as with conventional forms of power generation, the energy produced by a wind farm gradually decreases over its lifetime, perhaps due to falling availability, aerodynamic performance or conversion efficiency. Understanding these factors is however complicated by the highly variable availability of the wind.This paper reveals the rate of ageing of a national fleet of wind turbines using free public data for the actual and theoretical ideal load factors from the UK's 282 wind farms. Actual load factors are recorded monthly for the period of 2002–2012, covering 1686 farm-years of operation. Ideal load factors are derived from a high resolution wind resource assessment made using NASA data to estimate the hourly wind speed at the location and hub height of each wind farm, accounting for the particular models of turbine installed.By accounting for individual site conditions we confirm that load factors do decline with age, at a similar rate to other rotating machinery. Wind turbines are found to lose 1.6 ± 0.2% of their output per year, with average load factors declining from 28.5% when new to 21% at age 19. This trend is consistent for different generations of turbine design and individual wind farms. This level of degradation reduces a wind farm's output by 12% over a twenty year lifetime, increasing the levelised cost of electricity by 9%.     

How to stimulate renewable energy power generation effectively? – China's incentive approaches and lessons

The renewable energy power generation (REPG) in China has experienced tremendous growth in the last decade. To understand this rapid growth, it is necessary to explore how Chinese government triggers the remarkable development of the industry. This paper offers a systematic analysis of the incentive policy system for REPG in China, covering wind power, solar photovoltaic, small hydropower (single-unit power generation capacity less than 50 MW), biomass power and geothermal power. The incentive system contains laws, regulations, policies and industrial plans issued during the 11th and 12th “Five-year Plan” periods (2006–2015). Four major incentive strategies of the Chinese government are identified: research and development incentives, fiscal and tax incentives, grid-connection and tariff incentives, and market development incentives. The results show these incentive methods have played a significant role in promoting the development of REPG in China, but still there are some problems associated with them. International comparisons of the incentive policies with those of Denmark, Germany and US, as well as the strategies to further improve the Chinese incentive approaches are discussed. This comprehensive analysis of China's incentive policy system for REPG helps to understand China's experience in promoting renewable energy, contributing to better decision-making in policy.     

What makes people adopt improved cookstoves? Empirical evidence from rural northwest Pakistan

Large dependence of the world population on biomass fuels for domestic energy consumption is one of the major anthropogenic causes of deforestation worldwide. The use of biomass in inefficient ways in rural areas increases fuelwood demand of a household. Development of the improved biomass stove programs in the 1970s has been one of the efforts to reduce burden on biomass resource base through reliable and efficient methods of energy consumption. However, despite having multiple economic, social, environmental, and health benefits; the improved stove dissemination programs failed to capture worldwide recognition. A wide array of socio-cultural, economic, political, and institutional barriers contributes to the low adoption rate of such programs. Drawing on field work surveys in rural northwest Pakistan, this paper provides empirical evidence of individual, household, and community level variables that play a vital role in the adoption of improved cookstoves. The study is based on primary data collected from 100 randomly selected households in two villages of rural northwest Pakistan. Using regression analysis, the study depicts that education and household income are the most significant factors that determine a household willingness to adopt improved biomass stoves. The study concludes that the rate of adoption could substantially be improved if the government and non-governmental organizations (NGOs) play a greater role in overcoming the social, economic, cultural, political, and institutional barriers to adopting improved cooking technologies.     

When do energy-efficient appliances generate energy savings? Some evidence from Canada

Improvements in the energy efficiency of household appliances have the potential to decrease residential energy use, but these reductions accrue gradually over time as newer appliances replace older models. SHEU-2003 data are used to examine appliance replacement patterns in Canada for refrigerators, freezers, dishwashers, clothes washers and clothes dryers. The data indicate that the ages at which appliances are replaced tend to be lowest for dishwashers and highest for freezers, with over 40% of freezers in use for more than 20 years before being retired. The life spans of Canadian appliances are compared to the underlying assumptions regarding appliance lifetimes used in models of residential energy demand. We find that Canadian appliance retirement patterns differ from those assumed in the previous literature. Socioeconomic factors related to appliance replacement are also examined. We find that replacement patterns can be sensitive to household characteristics such as income, providing evidence that there may be scope for targeted policies aimed at inducing earlier replacements of older household appliances with new energy-efficient models.     

Is per capita electricity consumption stationary? Time series evidence from OECD countries

This study examines the stationary properties of per capita electricity consumption in which the endogenously determined break points are incorporated in 23 high income OECD countries by using annual data over 1960-2005 period. We utilize Lagrange Multiplier (LM) unit root test that endogenously determines structural breaks in level and/or trend. We find that 21 country series reject the unit root null hypothesis at the 5% significance level, except for 2 country series. Thus, our empirical findings provide significant evidence that per capita electricity consumption is stationary in almost all countries considered in the study. The stationarity of per capita electricity consumption indicates that it should be possible for the series to forecast future movements in the energy consumption based on the past behaviors of the series. Important policy implications emerge from our empirical results of the unit root test with multiple structural breaks.     

Global warming mitigation and renewable energy policy development from the Kyoto Protocol to the Copenhagen Accord—A comment

Global warming is a grave environmental issue that has caught the attention of the globe. Due to the consequences of global warming, UNFCCC has established the Kyoto Protocol and the Copenhagen Accord as measures of combating climate change due to the emission of greenhouse gases. It has been three years since the first commitment period of the Kyoto Protocol and the Copenhagen Accord was just newly established. Therefore, there is a necessity to evaluate the performance of the Kyoto Protocol and to comment upon the Copenhagen Accord in its contributions toward climate change mitigation. Major greenhouse gas (GHG) emitters who are among the Kyoto Protocol ratifying developed nations exhibit the potential to achieve the desired Kyoto pledges through the aid of Clean Development Mechanisms (mainly from using renewable energy), as proposed in the Kyoto Protocol. However, the nullifying effects from non-ratified major emitters like the US and ratified but still developing countries have difficulties in adhering to the Kyoto Protocol. The Copenhagen Accord, on the other hand, is considered to be less ambitious and provides limited financial aid through the Copenhagen Green Climate Fund. The formulation of such a document indicates that modern societies continues to waste time in negotiations that emphasize on individual economic and political advantages, rather than taking into account true global considerations. It raises questions regarding how much time is needed before we decide to fully commit to the effective and collective efforts of climate change mitigation.