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

Author

Listed:
  • Olivier de Groote

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Axel Gautier

    (HEC Liège, Université de Liège)

  • Frank Verboven

    (Department of Economics [Leuven] - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

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 on adopters and by electricity surcharges for 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 the potential reward by adopters who received generous subsidies. Further analysis indicates that punishment mainly comes from non-adopters, who change their vote towards anti-establishment parties.

Suggested Citation

  • Olivier de Groote & Axel Gautier & Frank Verboven, 2024. "The political economy of financing climate policy – Evidence from the solar PV subsidy programs," Post-Print hal-04547811, HAL.
    • Handle: RePEc:hal:journl:hal-04547811
    DOI: 10.1016/j.reseneeco.2024.101436
    Note: View the original document on HAL open archive server: https://hal.science/hal-04547811
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