Indiana University Dean's Council Meeting September 2010

Indiana University Dean's Council Meeting September 2010

Global Expansion of Renewable Energy Generation: An Evaluation of Policy Instruments Sanya Carley USAEE Conference July, 2013 2 Renewable Energy Production, 1990 - 2010 4500 4000 Billion kwhs 3500 3000 2500 2000 OECD 1500 World 1000 500 0 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00

20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 Non OECD Renewable Energy Production Excluding Hydroelectricity, 1990 - 2010 800 700 Billion kwhs 600 500 400 OECD 300 World 200 100 0 19 90 19 91 19 92

19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 Non OECD 5 No. of countries

70 Global Policy Adoption, 1990 - 2010 60 50 40 30 FIT RPS Subsidies 20 10 0 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 2 2 2 2 2 2 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 005 006 007 008 009 010 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 Independent Variables Policies RPS FIT Framework*RPS

Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 9 Non-hydro Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002 -0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014***

0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065*** -0.003 -0.00003 12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784) Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 10 Non-hydro Renewable Energy (billion kWhs) -1.315

-2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002 -0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014*** 0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065*** -0.003 -0.00003 12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003**

1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784) Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 11 Non-hydro Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002

-0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014*** 0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065*** -0.003 -0.00003 12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784) Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports

Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 12 Non-hydro Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002 -0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014*** 0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065*** -0.003 -0.00003

12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784) Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) Model 2: 13 Non-hydro Renewable Energy (billion kWhs) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409*

(1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** (0.370) -0.033* (0.017) 7.194*** (2.020) -0.032** (0.016) 0.0002 (0.0002) -0.00000001** (0.000000005) -0.767*** (0.214) 0.285*** (0.068) -0.024*** (0.004) -0.409 (0.284) -0.014*** (0.004) 0.0002*** (0.00004) 2.246* 0.065*** -0.003 -0.00003 12.964*** 2896 0.9311 -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.244*** (0.085) (0.312) (0.005) (0.0009) (0.00001) (0.784) 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 Carley Assistant Professor School of Public and Environmental Affairs, Indiana University [email protected] 812-856-0920 Collaborators: Elizabeth Baldwin, Lauren MacLean, Jennifer Brass Variable Total RE Total non-hydro RE Percent RE Percent nonhydro RE FIT Non-hydro FIT RPS Subsidies Non-hydro subsidies Freedom Framework Commercial finance CDM FDI/GDP GDP per capita Description Mean Annual renewable electricity generation (billion kwhs) Annual non-hydroelectric RE generation (billion kwhs) Renewable electricity as % of annual electricity generation Non-hydroelectric renewable electricity as % of annual electricity generation Feed-in tariff exists for any renewable resource Feed-in tariff exists for any non-hydroelectric renewable resource Renewable Portfolio Standard or mandatory renewable quota obligation in place Country provides subsidies for RE as tax reductions or production/investment incentives Country provides subsidies for non-hydro RE as tax reductions or production/investment incentives Freedom House rating (political freedom and civil liberties) Legal and regulatory framework for RE in place Private sector share of financial sector, divided by 100 Country has hosted Clean Development Mechanism projects Foreign direct investment as a % of gross domestic product, divided by 1000 Gross domestic product per capita (thousand $US) Annual population growth 19.180 Population growth Electricity growth Annual change in electricity consumption Oil exports Annual oil exports (barrels per day) NG exports Annual natural gas exports (million cubic feet) Standar Minimum Maximum

16 d Deviatio n 60.421 0 770.9 2.001 9.282 0 167.2 0.356 0.355 0 1 0.022 0.054 0 0.4 0.087 0.080 0.282 0.271 0 0 1 1 0.037 0.188 0 1 0.234 0.540 0 1 0.233 0.539 0 1 3.497 1.859 0 6.0 0.151 0.809

0.358 0.211 0 0.03 1 1 0.073 0.260 0 1 0.004 0.008 -0.08 0.1 6.857 11.170 0.06 70.6 1.584 1.377 -7.3 14.8 0.047 0.085 0.131 0.108 0.223 0.634 -0.8 0 0 1.5 2.3 8.4 Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth

Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 17 Non-hydro Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306*** 2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002 -0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014*** 0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065***

-0.003 -0.00003 12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784) Independent Variables Policies RPS FIT Framework*RPS Framework*FIT Framework Tax subsidies Political and Economic Factors Political freedom Commercial finance CDM FDI/GDP GDP per capita GDP per capita squared Population growth Energy Market Characteristics Electricity growth Oil exports NG exports Coal exports Constant No. observations Adjusted R2 Model 1: All Renewable Energy (billion kWhs) Model 2: 18 Non-hydro Renewable Energy (billion kWhs) -1.315 -2.564 25.757** 22.449*** -6.390** 6.562*** (3.440) (2.283) (12.841) (5.620) (2.504) (1.952) 0.213 -0.765 7.306***

2.946*** -1.848*** 0.409* (1.307) (0.531) (1.866) (0.814) (0.542) (0.222) 0.731** -0.033* 7.194*** -0.032** 0.0002 -0.00000001** (0.000000005) -0.767*** (0.370) (0.017) (2.020) (0.016) (0.0002) 0.285*** -0.024*** -0.409 -0.014*** 0.0002*** (0.068) (0.004) (0.284) (0.004) (0.00004) (0.214) -0.244*** (0.085) 2.246* 0.065*** -0.003 -0.00003 12.964*** 2896 0.9311 (1.190) (0.015) (0.003) (0.0001) (3.019) -0.084 0.023*** 0.0009 -0.00003** 1.779** 2896 0.8835 (0.312) (0.005) (0.0009) (0.00001) (0.784)

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