The Benefits of Short-Termism? Political Incentives for Renewable Energy

• In Event: Incumbents and Veto Players in the Politics of Climate Change

Abstract

Over the first two decades of the twenty-first century, wind and solar energy became economically viable for the first time. Yet, only some countries chose to significantly incorporate them into their electricity supply. Under what conditions do incumbent governments have incentive to select for these technologies? I argue that wind and solar have temporal cost/benefit distributions that explain much observed variation. Compared to conventional power plants, wind and solar can be constructed relatively quickly—often in the span of weeks to months—meaning the benefits of increased electricity supply are more immediately available. At the same time, wind and solar have no fuel costs, meaning a much greater share of the lifetime costs are realized up front, exacerbating the holdup problems common to power sector investments in developing countries. Using a formal model, I hypothesize that incumbent governments in developing countries facing short time horizons will therefore plan for greater wind and solar when consumers prefer greater supply over subsidies—namely, in the context of an imminent or ongoing electricity supply crisis. The argument is then evaluated using new data through three research designs which operationalize time horizons for democratic and nondemocratic regimes.

Author

• Johnathan James Guy, University of California, Berkeley