The political economic of financing climate policy : evidence from the solar PV subsidy programs

Working Paper N° 389

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Abstract

To combat climate change, governments are taking an increasing number of technologyspecific measures to support green technologies. In this paper, we look at the very generous subsidy policies to solar PVs in the three regions of Belgium to ask the question of how voters responded to these programs. We provide evidence that voters did not reward the incumbent government that was responsible for the program, as predicted by the ‘buying-votes’ hypothesis. Instead, we find that voters punish the incumbent government because of the increasing awareness of the high financing costs.

These did not only affect the non-adopting electricity consumers who did not benefit from the programs, but also the adopting prosumers, who saw unannounced new costs such as the introduction of prosumer fees to get access to the grid.