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Do economic instruments matter? Wind turbine investments in the EU(15)

Arjen Mulder

Energy Economics, 2008, vol. 30, issue 6, 2980-2991

Abstract: This paper analyses how governments in the EU(15) countries have succeeded in stimulating investments in wind turbines between 1985 and 2005. I use four different evaluation criteria (Tobin's Q, Euler equation estimation, investment accelerator model, and the effective marginal tax rate) to describe the observed investment patterns. After a period of rapid growth in capital stock (1985-2000), a period of modest growth (2001-2005) can be observed even though the economic attractiveness of investing increases modestly. This pattern cannot be explained by the evaluation criteria unless we accept economic attractiveness is a necessary condition and not a necessary and sufficient condition. When analysing which policy has worked best, the policies of Germany, Denmark and Spain stand out. Their early and consistent support has been based on feed-in tariffs combined with subsidies.

Keywords: E62; H23; Q48; Subsidies; Fiscal; investment; incentives; Renewable; energy (search for similar items in EconPapers)
Date: 2008
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