An Interest Groups and Partisan Politics Model for Renewable Energies

Renewable electricity development has taken different paths across countries. With few exceptions, the recent literature has focused on different policy frameworks for renewable energy development, for example, the differences between feed-in tariffs (FIT) and renewable portfolio standards (RPS). This study brings politics back in to the study of renewable energies. Feed-in tariffs, renewable portfolio standards, and many other renewable energy policies are ultimately forms of state support to an industry that still is largely uncompetitive compared to conventional energies. We assume a country’s renewable energy production is a positive function of the size of its state support. Two factors are important determinants for the size of the state support: 1) the weight that a government places on subsidizing industries against other objectives, and 2) the relative strength of the green sector (vs. the brown sector). We posit that partisanship matters for government’s preferences towards industry-support with right parties associated with higher level of state support to industries. Moreover, when the government “trades” state industry aid for financial and other support from interest groups, the stronger sector is more likely to reap a larger share of the state aid. Therefore, government partisanship and relative strength of the green (brown) sector affect renewable energy production in an interactive way. We model geographical and temporal variation in non-hydro renewable electricity generation using panel data on the OECD member states from 1980 to 2004. The empirical findings support the theory. Explaining Renewable Electricity