Determinants of energy subsidies and their impact on technological change of energy use

This thesis investigates consumer energy subsidies, their persistence due to institutional and political barriers and how they affect the technological advancement of renewable energy. Results from an econometric analysis of a panel data from 194 countries during the period 1990-2012 show that the ability of citizens to be heard by their government and the supply of untargeted public goods correlate with lower fossil fuel subsidies. More subsidies to fossil fuels are provided in countries with higher levels of power concentration and larger income inequality. A meta-analysis of the existing empirical literature on the effects of energy policy on wind energy innovation shows that policies seeking to make innovation more profitable i.e. demand-pull policies, have had a larger impact than policies oriented to reduce the cost of innovation i.e. supply-push policies. The results from the investigation of the effect of the price structure of electricity on renewable energy innovation show that reducing government support to large energy users provides a clear incentive to increase inventions in renewable energy technologies, particularly in solar power, which does not experience lock-in barriers due to grid inflexibility. Political and institutional forces maintain energy subsidies in place that not only have huge economic and environmental costs but also affect negatively the renewable energy innovation that governments want to stimulate.