Economic Impacts of Renewable Power Generation Technologies and the Role of Endogenous Technological Change
ABSTRACT
This paper brings together the debate on economic impacts of renewable energy (RE) deployment and the discussion on modelling endogenous technological change on the global markets for the different renewable power generation technologies. Economic impacts of RE deployment are still mostly discussed on national level, where different effects have been identified. Recent research for Germany shows positive effects on the macro level and different distributional impacts. High investment in solar photovoltaics (PV) from 2010 to 2012 and induced increases in the RE sur-charge are the main drivers. At the same time, cost reductions for wind and solar PV take place on global markets, with global learning curves explaining the cost reductions very well. This calls for better including the international dimension into the modelling. The complex feedback loops between global cost curves and national policies, which react to global learning with some time lags, are not yet integrated into complex economic models. These models have to capture different RE technologies, different industries, either delivering the RE technologies or strongly depending on electricity prices, which are influenced by national support policies and macroeconomic development. As a first step to better understand the role of international markets, assumptions on RE exports based on global scenarios can be used. Results show the importance of global markets at least for the German RE industries. If the international dimension is taken into account, mainly positive economic impacts of further RE deployment can be observed.
This paper brings together the debate on economic impacts of renewable energy (RE) deployment and the discussion on modelling endogenous technological change on the global markets for the different renewable power generation technologies. Economic impacts of RE deployment are still mostly discussed on national level, where different effects have been identified. Recent research for Germany shows positive effects on the macro level and different distributional impacts. High investment in solar photovoltaics (PV) from 2010 to 2012 and induced increases in the RE sur-charge are the main drivers. At the same time, cost reductions for wind and solar PV take place on global markets, with global learning curves explaining the cost reductions very well. This calls for better including the international dimension into the modelling. The complex feedback loops between global cost curves and national policies, which react to global learning with some time lags, are not yet integrated into complex economic models. These models have to capture different RE technologies, different industries, either delivering the RE technologies or strongly depending on electricity prices, which are influenced by national support policies and macroeconomic development. As a first step to better understand the role of international markets, assumptions on RE exports based on global scenarios can be used. Results show the importance of global markets at least for the German RE industries. If the international dimension is taken into account, mainly positive economic impacts of further RE deployment can be observed.
Cite this paper
Lutz, C. , Flaute, M. , Lehr, U. and Wiebe, K. (2015) Economic Impacts of Renewable Power Generation Technologies and the Role of Endogenous Technological Change. Open Journal of Applied Sciences, 5, 696-704. doi: 10.4236/ojapps.2015.511069.
Lutz, C. , Flaute, M. , Lehr, U. and Wiebe, K. (2015) Economic Impacts of Renewable Power Generation Technologies and the Role of Endogenous Technological Change. Open Journal of Applied Sciences, 5, 696-704. doi: 10.4236/ojapps.2015.511069.
References
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http://dx.doi.org/10.5547/01956574.35.SI1.2 [3] Jaccard, M. and Goldberg, S. (2014) Technology Assumptions and Climate Policy: The Interrelated Effects of U.S. Electricity and Transport Policy. The Energy Journal, 35, 89-99.
http://dx.doi.org/10.5547/01956574.35.SI1.5 [4] Edenhofer, O., Lessmann, K., Kemfert, C., Grubb M. and Koehler J. (2006) Induced Technological Change: Exploring Its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the Innovation Modeling Comparison Project. Energy Journal, 27, 57-122.
http://dx.doi.org/10.5547/issn0195-6574-ej-volsi2006-nosi1-3 [5] GWS, EWI and Prognos (2014) Gesamtwirtschaftliche Effekte der Energiewende. Study Commissioned by the German Ministry of Economic Affairs and Energy, Osnabrück. [6] Maier, T., Mönnig, A. and Zika, G. (2015) Labour Demand in Germany by Industrial Sector, Occupational Field and Qualification until 2025—Model Calculations Using the IAB/INFORGE Model. Economic Systems Research, 27, 19-42. http://dx.doi.org/10.1080/09535314.2014.997678 [7] Lutz, C. (2011) Energy Scenarios for Germany: Simulations with the Model Panta Rhei. In: Mullins, D., Viljoen, J. and Leeuwner, H., Eds., Interindustry Based Analysis of Macroeconomic Forecasting. Proceedings of the 19th INFORUM World Conference, STN Printers, Pretoria. [8] Lindenberger, D., Lutz, C. and Schlesinger, M. (2010) Szenarien für ein Energiekonzept der Bundesregierung. Energiewirtschaftliche Tagesfragen, 60, 32-35. [9] Nagl, S., Fürsch, M., Paulus, M., Richter, J., Trüby, J. and Lindenberger, D. (2011) Energy Policy Scenarios to Reach Challenging Climate Protection Targets in the German Electricity Sector until 2050. Utilities Policy, 19, 185-192. http://dx.doi.org/10.1016/j.jup.2011.05.001 [10] Lehr, U., Lutz, C. and Edler, D. (2012) Green Jobs? Economic Impacts of Renewable Energy in Germany. Energy Policy, 47, 358-364. http://dx.doi.org/10.1016/j.enpol.2012.04.076 [11] Lutz, C., Lehr, U. and Ulrich, P. (2014) Economic Evaluation of Climate Protection Measures in Germany. International Journal of Energy Economics and Policy, 4, 693-705. [12] IEA (2014) Capturing the Multiple Benefits of Energy Efficiency. IEA, Paris. [13] West, G.R. (1995) Comparison of Input-Output, Input-Output + Econometric and Computable General Equilibrium Impact Models at the Regional Level. Economic Systems Research, 7, 209-227.
http://dx.doi.org/10.1080/09535319500000021 [14] Almon, C. (1991) The INFORUM Approach to Interindustry Modeling. Economic Systems Research, 3, 1-7.
http://dx.doi.org/10.1080/09535319100000001 [15] IIASA (2009) GHG Mitigation Potentials in Annex I Countries. Comparison of Model Estimates for 2020. Interim Report 09-034, Laxenburg. [16] OECD and IEA (2009) National and Sectoral GHG Mitigation Potential: A Comparison across Models. COM/ENV/ EPOC/IEA/SLT(2009)7, Paris. [17] Johnstone, N., Hascic, I. and Popp, D. (2010) Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts. Environmental & Resource Economics, 45, 133-155.
http://dx.doi.org/10.1007/s10640-009-9309-1 [18] Schwark, F. (2010) Economics of Endogenous Technical Change in CGE Models—The Role of Gains from Specialization. ETH Economics Working Paper Series, Working Paper 10/130.
http://dx.doi.org/10.2139/ssrn.1666766 [19] Löschel, A. (2002) Technological Change in Economic Models of Environmental Policy: A Survey. Ecological Economics, 43, 105-126. http://dx.doi.org/10.1016/S0921-8009(02)00209-4 [20] Acemoglu, D., Aghion, H., Bursztyn, L. and Hemous, D. (2012) The Environment and Directed Technical Change. The American Economic Review, 102, 131-166. http://dx.doi.org/10.1257/aer.102.1.131 [21] Popp, D., Newell, R.G. and Jaffe, A.B. (2010) Energy, the Environment, and Technological Change. In: Hall, B.H. and Rosenberg, N., Eds., Handbook of the Economics of Innovation, Elsevier, Amsterdam, 873-937.
http://dx.doi.org/10.1016/S0169-7218(10)02005-8 [22] Löschel, A. and Schymura, M. (2013) Modeling Technological Change in Economic Models of Climate Change: A Survey. ZEW Discussion Paper No. 13-007, Mannheim. [23] Kahouli-Brahmi, S. (2008) Technological Learning in Energy-Environment-Economy Modelling: A Survey. Energy Policy, 36, 138-162. http://dx.doi.org/10.1016/j.enpol.2007.09.001 [24] Wiebe, K.S. and Lutz, C. (2013) The Renewable Power Generation Module (RPGM)—An Extension to the GWS Model Family to Endogenize Technological Change in the Renewable Power Generation Sector. GWS Discussion Paper 13/7, Osnabrück. [25] Lutz, C., Meyer, B. and Wolter, M.I. (2010) The Global Multisector/Multicountry 3E-Model GINFORS. A Description of the Model and a Baseline Forecast for Global Energy Demand and CO2-Emissions. International Journal of Global Environmental Issues, 10, 25-45.
http://dx.doi.org/10.1504/IJGENVI.2010.030567 [26] Lutz, C. and Wiebe, K.S. (2012) Economic Impacts of Different Post-Kyoto Regimes. International Journal of Energy Science, 2, 163-168. [27] Eurostat (2008) Eurostat Manual of Supply, Use and Input-Output Tables. Eurostat, Luxembourg. [28] Wiesenthal, T., Dowling, P., Morbee, J., Thiel, C., Schade, B., Simoes, S., Peteves, S., Schoots, K. and Londo, M. (2012) Technology Learning Curves for Energy Policy Support. EUR-Scientific and Technical Research Reports. JRC73231. [29] Wiebe, K.S. and Lutz, C. Endogenous Technological Change and the Policy Mix in Renewable Power Generation. Paper Submitted to Renewable & Sustainable Energy Reviews. (unpublished) [30] Lehr, U., Ulrich, P., Lutz, C., Thobe, I., Edler, D., O’Sullivan, M., Simon, S., Naegler, T., Pfennig, U., Peter, F., Sakowski, F. and Bickel, P. (2015) Beschäftigung durch erneuerbare Energien in Deutschland: Ausbau und Betrieb, heute und morgen. Study Commissioned by the German Ministry of Economic Affairs and Energy, Osnabrück, Berlin, Stuttgart. [31] Greenpeace, EREC, GWEC, Teske, S., Muth, J., Sawyer, S., Pregger, S.T., Simon, S., Naegler, T., O’Sullivan, M., Schmid, S., Graus, W., Zittel, W., Rutovitz, J., Harris, S., Ackermann, T., Ruwahata, R. and Martensen, N. (2012) Energy [R]evolution—A Sustainable World Energy Outlook. Greenpeace International, European Renewable Energy Council (EREC), Global Wind Energy Council (GWEC), Amsterdam, Deutsches Zentrum für Luft- und Raumfahrt (DLR). [32] Lehr, U. and Flaute, M. Export Opportunities along the RE Value Chain. GWS Discussion Paper, Forthcoming, Osnabrück. (unpublished) [33] IEA (2013) World Energy Outlook 2013. IEA, Paris. [34] IEA (2015) Energy Technology Perspectives 2015 Mobilising Innovation to Accelerate Climate Action. IEA, Paris.
[1] REN21 (2014) Renewables 2014 Global Status Report. REN21 Secretariat, Paris. [2] Clarke, L.E., Fawcett, A.A., Weyant, J.P., McFarland, J., Chaturvedi, V. and Zhou, Y. (2014) Technology and U.S. Emission Reduction Goals: Results of the EMF24 Modeling Exercise. The Energy Journal, 35, 9-31.
http://dx.doi.org/10.5547/01956574.35.SI1.2 [3] Jaccard, M. and Goldberg, S. (2014) Technology Assumptions and Climate Policy: The Interrelated Effects of U.S. Electricity and Transport Policy. The Energy Journal, 35, 89-99.
http://dx.doi.org/10.5547/01956574.35.SI1.5 [4] Edenhofer, O., Lessmann, K., Kemfert, C., Grubb M. and Koehler J. (2006) Induced Technological Change: Exploring Its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the Innovation Modeling Comparison Project. Energy Journal, 27, 57-122.
http://dx.doi.org/10.5547/issn0195-6574-ej-volsi2006-nosi1-3 [5] GWS, EWI and Prognos (2014) Gesamtwirtschaftliche Effekte der Energiewende. Study Commissioned by the German Ministry of Economic Affairs and Energy, Osnabrück. [6] Maier, T., Mönnig, A. and Zika, G. (2015) Labour Demand in Germany by Industrial Sector, Occupational Field and Qualification until 2025—Model Calculations Using the IAB/INFORGE Model. Economic Systems Research, 27, 19-42. http://dx.doi.org/10.1080/09535314.2014.997678 [7] Lutz, C. (2011) Energy Scenarios for Germany: Simulations with the Model Panta Rhei. In: Mullins, D., Viljoen, J. and Leeuwner, H., Eds., Interindustry Based Analysis of Macroeconomic Forecasting. Proceedings of the 19th INFORUM World Conference, STN Printers, Pretoria. [8] Lindenberger, D., Lutz, C. and Schlesinger, M. (2010) Szenarien für ein Energiekonzept der Bundesregierung. Energiewirtschaftliche Tagesfragen, 60, 32-35. [9] Nagl, S., Fürsch, M., Paulus, M., Richter, J., Trüby, J. and Lindenberger, D. (2011) Energy Policy Scenarios to Reach Challenging Climate Protection Targets in the German Electricity Sector until 2050. Utilities Policy, 19, 185-192. http://dx.doi.org/10.1016/j.jup.2011.05.001 [10] Lehr, U., Lutz, C. and Edler, D. (2012) Green Jobs? Economic Impacts of Renewable Energy in Germany. Energy Policy, 47, 358-364. http://dx.doi.org/10.1016/j.enpol.2012.04.076 [11] Lutz, C., Lehr, U. and Ulrich, P. (2014) Economic Evaluation of Climate Protection Measures in Germany. International Journal of Energy Economics and Policy, 4, 693-705. [12] IEA (2014) Capturing the Multiple Benefits of Energy Efficiency. IEA, Paris. [13] West, G.R. (1995) Comparison of Input-Output, Input-Output + Econometric and Computable General Equilibrium Impact Models at the Regional Level. Economic Systems Research, 7, 209-227.
http://dx.doi.org/10.1080/09535319500000021 [14] Almon, C. (1991) The INFORUM Approach to Interindustry Modeling. Economic Systems Research, 3, 1-7.
http://dx.doi.org/10.1080/09535319100000001 [15] IIASA (2009) GHG Mitigation Potentials in Annex I Countries. Comparison of Model Estimates for 2020. Interim Report 09-034, Laxenburg. [16] OECD and IEA (2009) National and Sectoral GHG Mitigation Potential: A Comparison across Models. COM/ENV/ EPOC/IEA/SLT(2009)7, Paris. [17] Johnstone, N., Hascic, I. and Popp, D. (2010) Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts. Environmental & Resource Economics, 45, 133-155.
http://dx.doi.org/10.1007/s10640-009-9309-1 [18] Schwark, F. (2010) Economics of Endogenous Technical Change in CGE Models—The Role of Gains from Specialization. ETH Economics Working Paper Series, Working Paper 10/130.
http://dx.doi.org/10.2139/ssrn.1666766 [19] Löschel, A. (2002) Technological Change in Economic Models of Environmental Policy: A Survey. Ecological Economics, 43, 105-126. http://dx.doi.org/10.1016/S0921-8009(02)00209-4 [20] Acemoglu, D., Aghion, H., Bursztyn, L. and Hemous, D. (2012) The Environment and Directed Technical Change. The American Economic Review, 102, 131-166. http://dx.doi.org/10.1257/aer.102.1.131 [21] Popp, D., Newell, R.G. and Jaffe, A.B. (2010) Energy, the Environment, and Technological Change. In: Hall, B.H. and Rosenberg, N., Eds., Handbook of the Economics of Innovation, Elsevier, Amsterdam, 873-937.
http://dx.doi.org/10.1016/S0169-7218(10)02005-8 [22] Löschel, A. and Schymura, M. (2013) Modeling Technological Change in Economic Models of Climate Change: A Survey. ZEW Discussion Paper No. 13-007, Mannheim. [23] Kahouli-Brahmi, S. (2008) Technological Learning in Energy-Environment-Economy Modelling: A Survey. Energy Policy, 36, 138-162. http://dx.doi.org/10.1016/j.enpol.2007.09.001 [24] Wiebe, K.S. and Lutz, C. (2013) The Renewable Power Generation Module (RPGM)—An Extension to the GWS Model Family to Endogenize Technological Change in the Renewable Power Generation Sector. GWS Discussion Paper 13/7, Osnabrück. [25] Lutz, C., Meyer, B. and Wolter, M.I. (2010) The Global Multisector/Multicountry 3E-Model GINFORS. A Description of the Model and a Baseline Forecast for Global Energy Demand and CO2-Emissions. International Journal of Global Environmental Issues, 10, 25-45.
http://dx.doi.org/10.1504/IJGENVI.2010.030567 [26] Lutz, C. and Wiebe, K.S. (2012) Economic Impacts of Different Post-Kyoto Regimes. International Journal of Energy Science, 2, 163-168. [27] Eurostat (2008) Eurostat Manual of Supply, Use and Input-Output Tables. Eurostat, Luxembourg. [28] Wiesenthal, T., Dowling, P., Morbee, J., Thiel, C., Schade, B., Simoes, S., Peteves, S., Schoots, K. and Londo, M. (2012) Technology Learning Curves for Energy Policy Support. EUR-Scientific and Technical Research Reports. JRC73231. [29] Wiebe, K.S. and Lutz, C. Endogenous Technological Change and the Policy Mix in Renewable Power Generation. Paper Submitted to Renewable & Sustainable Energy Reviews. (unpublished) [30] Lehr, U., Ulrich, P., Lutz, C., Thobe, I., Edler, D., O’Sullivan, M., Simon, S., Naegler, T., Pfennig, U., Peter, F., Sakowski, F. and Bickel, P. (2015) Beschäftigung durch erneuerbare Energien in Deutschland: Ausbau und Betrieb, heute und morgen. Study Commissioned by the German Ministry of Economic Affairs and Energy, Osnabrück, Berlin, Stuttgart. [31] Greenpeace, EREC, GWEC, Teske, S., Muth, J., Sawyer, S., Pregger, S.T., Simon, S., Naegler, T., O’Sullivan, M., Schmid, S., Graus, W., Zittel, W., Rutovitz, J., Harris, S., Ackermann, T., Ruwahata, R. and Martensen, N. (2012) Energy [R]evolution—A Sustainable World Energy Outlook. Greenpeace International, European Renewable Energy Council (EREC), Global Wind Energy Council (GWEC), Amsterdam, Deutsches Zentrum für Luft- und Raumfahrt (DLR). [32] Lehr, U. and Flaute, M. Export Opportunities along the RE Value Chain. GWS Discussion Paper, Forthcoming, Osnabrück. (unpublished) [33] IEA (2013) World Energy Outlook 2013. IEA, Paris. [34] IEA (2015) Energy Technology Perspectives 2015 Mobilising Innovation to Accelerate Climate Action. IEA, Paris.