Date & Time: Thursday 25 Ausust, 2022, 11:00-12:00(JST)
Title: Can Auctions Foster Renewable Energy under Institutional and Macroeconomic Instability?
Authors: Pablo Mac Clay1,2, Jan Börner1,3 and Jorge Sellare1
1Center for Development Research (ZEF), Universität Bonn, Germany
2Centro de Agronegocios y Alimentos, Universidad Austral, Argentina
3Institute for Food and Resource Economics, Universität Bonn, Germany
Moderators: Jordi Cravioto C. and Julie de los Reyes
Topic: DASU Seminar
Time: Aug 25, 2022 11:00 AM Osaka, Sapporo, Tokyo
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Meeting ID: 844 6732 4529
Brief Bio: Pablo Mac Clay. Bachelor’s degree in Economics (Universidad Nacional de Rosario, Argentina) and Master’s Degree in Agribusiness (Universidad Austral, Argentina). Currently Ph.D. candidate at the University of Bonn and Junior Researcher in the project Transformation and Sustainability Governance in South American Bioeconomies (SABio Project).
Abstract: The decarbonization of the global energy matrix through investments in renewable energy (RE) is considered a pathway to mitigate the effects of global climate change. Auctions have become an increasingly popular policy instrument for this purpose, as they can be flexibly designed to provide the appropriate business atmosphere for the deployment of RE. Previous research has used data from higher-income countries and two-way fixed effects models (TWFE) to estimate the effects of auctions on RE, mostly with favorable results. However, given their data and methodological choices, these studies could neither explore the role of the business environments in the success of auctions nor account for heterogeneous treatment effects across time. In this paper, we study if auctions are an appropriate policy mechanism to foster RE in countries facing macroeconomic instability or poor institutional quality. For this purpose, we have drawn from multiple publicly available databases to build a panel dataset covering 98 countries for the period 2000-2020. Our definition of RE includes solar, wind, and biomass sources, and we present results for each source and all of them combined. We cluster countries in terms of their economic and institutional characteristics and then perform a differences-in-differences analysis considering staggered treatment adoption. Our results show that, overall, auctions have a positive effect on RE capacity, but the average treatment effects are higher for countries with better business environments. Thus, caution is needed in the adoption of tendering systems, especially in countries exposed to macroeconomic or institutional instability. At the same time, the presence of dynamic treatment effects suggests there is a learning curve so the policy needs time to show results.