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Market and Non-market Policies for Renewable Energy Diffusion: A Unifying Framework and Empirical Evidence from Chinas Wind Power Sector

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  • Yang Liu and Taoyuan Wei
Abstract
We provide a comprehensive framework of analyzing the diffusion process of renewable technology, incorporating epidemic and pecuniary effects. Relying on a panel dataset consisting of information from 1207 CDM wind projects in thirty provinces over the period 2004-2011, we find strong evidence on the dominant role of the epidemic effect and new evidence on pecuniary effects that generate a diminishing marginal effect of profitability in inducing technology adoption. Our numerical simulation demonstrates that the epidemic effect can play a quantitatively important role in the spread of renewable energy technology and markedly enhance the optimal social welfare. Our findings convey important policy implications for regulators when choosing policy instruments to enhance the diffusion and adoption of clean technology. Price instruments should be complemented by a wide range of non-market instruments to address non-market barriers. Policy interventions should be taken using a systemic approach.

Suggested Citation

  • Yang Liu and Taoyuan Wei, 2016. "Market and Non-market Policies for Renewable Energy Diffusion: A Unifying Framework and Empirical Evidence from Chinas Wind Power Sector," The Energy Journal, International Association for Energy Economics, vol. 0(China Spe).
    • Handle: RePEc:aen:journl:ej37-si1-liu
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    References listed on IDEAS

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    Cited by:

    1. Teresa Romano & Tim Mennel & Sara Scatasta, 2017. "Comparing feed-in tariffs and renewable obligation certificates: the case of repowering wind farms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(3), pages 291-314, September.
    2. Azhgaliyeva, Dina & Liu, Yang & Liddle, Brantley, 2020. "An empirical analysis of energy intensity and the role of policy instruments," Energy Policy, Elsevier, vol. 145(C).

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