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Renewable energy policies in federal government systems

Author

Listed:
  • Jasper Meya

    (University of Oldenburg, Germany)

  • Paul Neetzow

    (Humboldt-Universität zu Berlin, Germany)

Abstract

Renewable energy (RE) policies are widely used to decarbonize power generation and implemented at various governance levels. We use an analytically tractable two-level model to study the eects of overlapping RE policies from the federal and state governments. We find that there are contrasting incentives for states to support RE deployment, depending on whether the federal government implements a feed-in tari (FIT) or an auction system. Under federal FIT, states that bear a greater burden in nancing the federal policy under-subsidize RE in order to reduce nationwide RE deployment and thereby lower their costs. Under federal auction, states that bear a greater burden to nance federal policy oversubsidize RE to drive down the quota price, and thereby also their costs. In an application to Germany, we illustrate that the recent shift from FIT to auctions increases incentives for state governments to support RE in the demand-intensive south, while decreasing them in the wind-abundant north.

Suggested Citation

  • Jasper Meya & Paul Neetzow, 2019. "Renewable energy policies in federal government systems," Working Papers V-423-19, University of Oldenburg, Department of Economics, revised Jul 2019.
    • Handle: RePEc:old:dpaper:423
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    Keywords

    auction; feed-in tariff; multi-level governance; fiscal federalism; overlapping regulation; energy transition;
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