The political economy of financing climate policy – Evidence from the solar PV subsidy programs

Olivier De Groote, Axel Gautier and Frank Verboven

No 17359, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyze the political impact of a generous solar panel subsidization program. Subsidies far exceeded their social benefit and were partly financed by new taxes to adopters and by electricity surcharges to all consumers. We use local panel data from Belgium and find a decrease in votes for government parties in municipalities with high adoption rates. This shows that the voters’ punishment for a costly policy exceeded a potential reward by adopters who received the generous subsidies. Further analysis indicates that punishment mainly comes from non-adopters, who change their vote towards anti-establishment parties.

Keywords: Financing climate policy; Photovoltaic systems; Retrospective voting; Buying votes (search for similar items in EconPapers)
JEL-codes: C23 D72 H23 Q48 (search for similar items in EconPapers)
Date: 2022-06
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