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Effectiveness of policy instruments in stimulating renewable energy production in the European Union : room for improvement in the Netherlands

Warbroek, B. (2013) Effectiveness of policy instruments in stimulating renewable energy production in the European Union : room for improvement in the Netherlands.

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Abstract:One of the means included in the Europe 2020 strategy to achieve growth in the European Union (EU) is to stimulate the share of Renewable Energy Sources (RES). Studies indicate that the Netherlands lack ambitious and effective policy instruments for stimulating RES (Ecofys, 2011; Dinica & Arentsen, 2001; Agnolucci, 2007; Verbong, et al., 2008). The goal of this study is to construct a systematic overview of what empirical studies report on the degrees of effectiveness in operated policy instruments to support the production of green energy in the EU. This overview is supported by an analysis and evaluation of the collected data. Subsequently, recommendations are made for the case of the Netherlands and for policy makers in general. The study will contribute to an umbrella EU project; COMPLEX. The role of public policies in promoting renewable energy sources is a significant one; studies have indicated that public policies are effective in deploying green energy. This finding justifies the importance of looking into the current literature that report on the effectiveness of policy instruments stimulating renewables and present the findings in one comprehensive research. Policy makers will be able to derive conclusions and recommendations based on the performed literature evaluation. Policy instruments for the production of RES are a means for achieving the Europe 2020 target, overcoming the negative externalities inherent to climate change and carbon emission and transiting to a low-­‐carbon economy. Findings of this paper show that the current empirical literature mainly focuses on the effectiveness of feed-­‐in tariffs (FIT) and quota-­‐based mechanisms (such as Renewable Portfolio Standards, Renewable Energy Certificates, Tradable Green Certificates), while governments have a wide array of different instruments at their disposal as denoted by the theory. Policy mixtures are not extensively examined. In addition, there is a lack of reliable and comprehensive data, and as a consequence the field of study mainly consists of case studies. This implies that there is a lack of profound quantitative analysis in this field of research. The literature widely reports about various factors that influence the effectiveness of policy instruments. Certainty, legitimacy, risk mitigation, continuity, reliable commitment of the government, policy stability, and lobby pressures of existing industries have an impact on the effectiveness of policy instruments. Most studies indicate that the FIT is effective in stimulating green energy since the tariff successfully (not in all cases) reduces the influence of some of these variables. FIT’s mitigate risk, provide certainty, give stability, enhance investment security, provide access parity, encourage faster and more widespread deployment of RES, and induce investments. Moreover, various authors find out that the context (policy environment, oil price, electricity market, etc.) and the policy design are of a significant influence as well. Results show that the effectiveness of policy instruments varies in terms of different types of renewable energy sources.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:88 social and public administration
Programme:European Studies BSc (56627)
Link to this item:http://purl.utwente.nl/essays/63288
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