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Policy legacies and energy transitions: Greening policies under sectoral reforms in Argentina and Chile

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  • Cunial, Santiago

Abstract

Under what conditions do greening policies lead to a fast deployment of solar and wind energies? Environmental economics assume that market factors and technological innovations are the main drivers of energy transitions. While these assumptions sometimes hold for well-functioning markets; in emerging economies, the combination of scarce capital, weak institutions, and market distortions creates specific challenges that make their paths to clean energies different from those of developed states. I analyze greening reforms of the electricity sector in Argentina and Chile, exploring instances of success and failure. Using archive data and interviews to stakeholders, I explain how previous sector structures created different market distortions that hindered an effective electricity transition even in the context of significant cost-savings from investment in new technologies. Successful greening policies entailed broader electricity-sector reforms that removed previous binding constraints and restructured incentives for key private-sector stakeholders. I corroborate this argument by employing synthetic control methods to evaluate policies’ impact. I show that broad greening policies led to a significant penetration of renewable energies: by 2020 the share of solar and wind energies in Argentina and Chile were about 7.3% and 13.6% higher than in the counterfactual scenarios in which the greening reforms had not occurred.

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  • Cunial, Santiago, 2024. "Policy legacies and energy transitions: Greening policies under sectoral reforms in Argentina and Chile," Energy Policy, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:enepol:v:188:y:2024:i:c:s030142152400079x
    DOI: 10.1016/j.enpol.2024.114059
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