Renewable energy hybrid subsidy combining input and output subsidies
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RESEARCH ARTICLE
Renewable energy hybrid subsidy combining input and output subsidies Zi-rui Chen 1
&
Xu Xiao 2 & Pu-yan Nie 2
Received: 14 July 2020 / Accepted: 21 October 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract With respect to sustainable development, how to promote renewable energy is a major issue. Here, we introduce a hybrid subsidy mechanism that considers both input and output subsidies. Hybrid subsidies are analyzed with stochastic optimization approaches. An outstanding advantage of hybrid subsidies is the flexibility to adjust the intensity between the input and output subsidies. Our study shows that input-biased subsidies advance outputs and improve environmental efficiency (EE), while output-biased subsidies reduce risk and boost producer subsidy equivalents (PSEs). Therefore, the policy implication of this research is that different subsidy intensities should be employed according to preferences or social requirements. Keywords Renewable energy . Hybrid subsidy . Environmental efficiency
Introduction In recent years, as climate change threatens human survival and development, global climate change (GCC) has attracted widespread attention (Jarke and Perino 2017). Renewable energy is globally regarded as an efficient way to reduce emissions and to cope with GCC (Nie and Yang 2016; Nie et al. 2018a, b, c; Nie 2015; Nie et al. 2018a, b, c). Therefore, developing renewable energy is extremely important. As of 2016, renewable energy policies have been launched in 173 countries (Adib et al. 2016). In addition, 146 countries subsidize renewable energy development (Nie and Chen 2016). The International Energy Agency (IEA 2018) has highlighted policy and market improvements that can unlock further growth in renewable energy in energy-dependent industries. To promote renewable energy, various subsidy programs have been launched worldwide to efficiently reduce Responsible Editor: Nicholas Apergis * Zi-rui Chen [email protected] * Xu Xiao [email protected] 1
Guangdong Academy of Social Sciences, Guangzhou, China
2
School of Finance, Guang-dong University of Finance & Economics (GDUFE), Guangzhou, China
carbon emissions (Jarke and Perino 2017; Nie and Wang 2019). In general, these subsidies can be classified into two categories: direct and indirect. The existing indirect subsidies can be classified as follows: carbon tax (Chen and Nie 2016), the feed-in tariff (Böhringer et al. 2017; BMU 2011; Martin and Rice 2017), renewable portfolio standard policy (Sun and Nie 2015; Upton Jr and Snyder 2017), fossil energy cessation subsidy policy (Steenblik and Coroyannakis 1995; Yang et al. 2018) and so on. Some countries directly subsidize renewable energy, such as India (Acharya and Sadath 2017), China (Chen et al. 2017a, b; Nie et al. 2017; Wang et al. 2017; Nie et al. 2018a, b, c) and other countries (Cullen 2017; Yang et al. 2019). With the flexible application of government subsidies, the subsidy methods have been varied, and input subsidies and output subsidies are the two
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