It Is All about Political Incentives: Democracy and the Renewable Feed-in Tariff

Abstract

Demand for renewable energy is booming. Scholars often attribute this success to feed-in tariffs (FITs), which mandate that energy utilities pay a premium to renewable electricity producers and guarantee grid access for them. Why have so many countries, including least developed ones, adopted these policies? We hypothesize that democratic governments have political incentives to adopt the FIT because it improves environmental quality, promotes rural development, and distributes electricity generation profits from large utilities to independent producers. We analyze global data on FIT adoption, 1990FIT adoption, -2012, and find that the association between democratic regime type and FIT adoption overwhelms all other covariates. The effect is specific to the FIT and does not exist for renewable portfolio standards or public competitive bidding for renewable energy contracts. Consistent with theories of distributive politics, among democracies, institutional malapportionment in favor of rural political constituencies favors FIT adoption.

The power of process: State capacity and climate policy

“…The strong support in parliament for subsidizing renewable energy reflected a broad renewable energy advocacy coalition in Germany, which included environmental groups, farmers, and increasingly cleantech industries (Laird & Stefes, ). The design of the feed‐in tariff supplied benefits to a broad set of politically important constituencies (Bayer & Urpelainen, ). With societal support, the legislature could thus implement the government's policy goal for the electricity sector.…”

Many voices in the room: A national survey experiment on how framing changes views toward fracking in the United States

“…We study this question in the context of fracking, one of the most controversial energy policies in recent decades, not only in the United States but also in the United Kingdom. In democracies, energy policy depends on popular support, although it is only one influencing factor among others, including industrial composition and regulatory capacity (Bayer and Urpelainen, 2016;Hughes and Urpelainen, 2015). In the case of fracking, public opinion has been linked to different policy responses across U.S. states, ranging from outright bans to strong policy support (Rabe and Borick, 2013;Rinfret, Cook, and Pautz, 2014).…”

Political Institutions and Pollution: Evidence from Coal‐Fired Power Generation

“…These same dynamics have been identified in the movement from fossil fuels to renewable energy. Bayer and Urpelainen () show that democratic governments have political incentives to adopt feed‐in tariffs (FITs), which require that energy utilities pay a premium to renewable electricity producers and guarantee them grid access. The key theoretical insight is that democracies adopt FITs because they improve environmental quality, promote development in rural areas, and redistribute electricity profits from large utilities to independent producers.…”

“…Somewhat surprisingly, the role of political institutions as a factor in the growth of coal‐fired power generation has not been explored in the literature. Although scholars have explored the correlation between democratic institutions and air pollution (Neumayer, ), renewable energy (Bayer & Urpelainen, ), and environmental policy in general (Ward, ), the literature has not extensively examined how regime types shape governments’ incentives to manage air pollution from the power sector. For policy makers, the challenge lies in determining the balance between two public goods that are difficult to reconcile in countries where coal is a primary source of energy: greater access to electricity and increased economic growth that is fueled by new coal power plants on the one hand, and improved air quality on the other.…”