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How do electoral competition and special interests shape the stringency of renewable energy standards?

Abstract

In this article, I provide a new political rationale for stringent renewable energy standards, such as portfolio requirements and feed-in tariffs. A game-theoretic analysis demonstrates that if a green politician (concerned about environmental quality) adopts a stringent renewable energy standard, thus creating artificial profits for the renewables industry, she can induce the industry to support her in elections. This political mobilization improves the green politician’s electoral fortunes, and thus increases the probability that the renewable energy standard will be implemented. In contrast to previous arguments for renewable energy standards, my argument applies even when the renewables industry is disorganized at the time of environmental policy formation.

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Fig. 1

Notes

  1. “New Energy Powers Up Lobbying.” Huffington Post April 22, 2010.

  2. “What Green Jobs?” Newsweek July 28, 2009.

  3. “Renewable and Alternative Energy Portfolio Standards.” Pew Center on Global Climate Change December 14, 2009. See http://www.pewclimate.org/what_s_being_done/in_the_states/rps.cfm. Accessed May 20, 2011.

  4. “EU Climate Package Explained.” BBC April 9, 2010.

  5. In the total absence of barriers to entry, this argument does not apply because relentless competition drives rents to zero.

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Acknowledgments

I thank Michaël Aklin, Christopher Marcoux, the anonymous reviewers, and the editor of Environmental Economics and Policy Studies for comments and advice.

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Correspondence to Johannes Urpelainen.

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Urpelainen, J. How do electoral competition and special interests shape the stringency of renewable energy standards?. Environ Econ Policy Stud 14, 23–34 (2012). https://doi.org/10.1007/s10018-011-0020-4

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  • DOI: https://doi.org/10.1007/s10018-011-0020-4

Keywords

  • Renewable energy
  • Special interests
  • Policy instruments
  • Game theory
  • Political economy

JEL Classification

  • L50
  • Q54
  • Q58