Time Series Properties of the Renewable Energy Diffusion Process: Implications for Energy Policy Design and Assessment

Abstract

Confronted by increasingly tight budgets and a broad range of alternative options, policy makers need empirical methods to evaluate the effectiveness of policies aimed at supporting the diffusion of renewable energy sources (RES). Rigorous empirical studies of renewable energy policy effectiveness have typically relied on panel data models to identify the most effective mechanisms. A common characteristic of some of these studies, which has important econometric implications, is that they assume that the contribution of RES to total electricity generation will be stationary around a mean. This paper reviews such assumptions and rigorously tests the time series properties of the contribution of RES in the energy mix for the presence of a unit root. To that end, we use both individual and panel unit root tests to determine whether the series exhibit non-stationary behavior at the country level as well as for the panel as a whole. The analysis, applied to a panel of 19 OECD countries over the period 1990-2012, provides strong evidence that the time series of the renewable share of electricity output are not stationary in 17 of the 19 countries examined. This finding has important implications for energy policy assessment and energy policy making, which are discussed in the paper.

Does Economic Growth Matter? Technology-Push, Demand-Pull and Endogenous Drivers of Innovation in the Renewable Energy Industry

“…8 Interestingly, the push and pull mechanisms discussed in the innovation management literature resonate well with two of the environmental policy pillars proposed by Grubb et al (2014): pricing and markets (a demand-pull mechanism) and strategic investments in technological innovation (a clear push mechanism aimed at supporting R&D). 9 See Basher et al (2015) for a more comprehensive review of this literature.…”

Adoption of solar and wind energy: The roles of carbon pricing and aggregate policy support

“…Pfeiffer and Mulder (2013) used a two-stage approach to separately consider the adoption of and quantity of renewable energy used by a panel of developing countries. Basher et al (2015) note that the renewable energy share of electricity generation is not stationary in many OECD countries, which poses a challenge for empirical studies that focus on time-series variation.…”

“…Yet there is a lack of empirical studies assessing the impact of carbon pricing on renewable energy adoption. For instance, the paper by Basher et al (2015) includes a table (Table 1) that summarizes empirical studies on the impact of policy on renewable energy diffusion. The table mentions feed-in tariffs and renewable portfolio standards, but not carbon pricing.…”

Oregon’s biomass producer tax credit—impacts of land ownership on woody bioenergy use

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