The static and dynamic efficiency of instruments of promotion of renewables

Results of a comparative analysis of the economic and social efficiency of the instruments used to promote renewable energy sources are discussed. The analysis was carried out first from a static point of view and then using dynamic criteria, to ascertain the ability of the instruments to stimulate technological progress and cost reduction. The first part of the analysis is devoted to characterization of the rationale of these policies in a cost-efficiency framework, followed by an analysis of the instruments in relation to the classic discussion of environmental policy that opposes price-based approaches versus quantity-based approaches. The final part of the analysis examines the incentives to invest and innovate in the context of each framework in relation to the surplus allowed by each policy instrument and its effects on the tendency of manufacturers and renewable energy producers to innovate. The evidence shows that in terms of installed capacity price-based approaches have been superior to the quantity-based approaches that have been used until recently. In contrast, quantity-based approaches have been found to be more efficient for defining and adjusting the overall goals. Adjusting the quotas also provides an indirect way of controlling overall costs. 22 refs., 3 tabs., 6 figs