University of Groningen Faculty of Arts Master of International Relations and International Organization International Political Economy Master Thesis

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University of Groningen

Faculty of Arts

Master of International Relations and International Organization

International Political Economy

Master Thesis

How do Feed-In-Tariffs encourage the rapid and sustained deployment of renewable energy? A comparative analysis of Germany and Lithuania

Professor: Student:

Dr. Nadine Voelkner Gabija Venclovaitė Naugarduko 8-6, Vilnius, Lithuania

s2329867 +370-611-35251

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DECLARATION BY CANDIDATE

I hereby declare that this thesis, “How do Feed-In-Tariffs encourage the rapid and sustained deployment of renewable energy? A comparative analysis of Germany and Lithuania”, is my own work and my own effort and that it has not been accepted anywhere else for the award of any other degree or diploma. Where sources of information have been used, they have been acknowledged.

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This study analyses renewable energy policy in two European Union countries. Integrating elements of energy policy analysis, International Relations studies and environmental governance theory, this thesis contributes to the understanding of Feed in Tariffs policy model globally and in the region, as well as to the questions of policy implementation and effectiveness, transferability of governance approaches.

The thesis is structured in four parts. In the first part, a theoretical framework and a brief review of International Relations evolution to green economy is introduced. This is followed by a discussion of renewable energy in the second part. Feed-In-Tariffs (FITs) global situation, the role of the European Union and the issues concerning the effectiveness of FITs policy situation are explained in the third part. The fourth part introduces a comparative analysis of Germany and Lithuania. Subsequent analysis focuses primarily on (1) the government; (2) the role of interest groups and civil society; (3) main priorities and expectations in light of the EU energy policy and the country’s position on the introduction of political conditionality in the EU renewable energy goals; and finally, (4) the dimension of state’s foreign energy policy.

The examination of the questions mentioned above results into the conclusion that Lithuania lacks effectiveness in its FITs policy arena, though it follows a successful example of Germany. However, the country does not fail to become a beneficiary of and contributor to the EU’s normative renewable energy power. The progress is rapid and, considering the fact that the country went through the transition period more than 20 years ago, the rising numbers of FITs deployment are surprisingly pleasant. Under the normative facade of its energy policy, Lithuania’s actions on international arena are now determined by the European Union standards, but with a slight post-soviet way of thinking. Lithuania is slowly moving towards the EU normatives.

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Introduction

If you think Climate Change won’t hurt our economy, think again. Think Climate. Think Change. We can’t afford not to.1

The Australian Government campaign

Background to the research

Climate change is the greatest challenge of our time. It threatens our planet, our only home, said Thomas F. Stocker, co-chairman of the Intergovernmental Panel on Climate Change during the United Nations' Intergovernmental Panel on Climate Change in September 2013.2 There are opinions that climate change is also the greatest market failure the world has seen. These may only seem to sound as impressive statements, but no one could deny that energy is the most important factor in human development and our present dependence on fossil fuels is in danger of causing untold harm to future generations. Renewable energy (RE) is the best overall solution to climate, energy and economic security. The complex problem of global warming provides an especially illuminating illustration of the diverse ways in which ‘real-world’ environmental problems are refracted through different theoretical lenses in the discipline of IR. 3

Environmental problems have never been a central preoccupation in the discipline of International Relations (IR), which has traditionally focused on questions of ‘high politics’ such as security and interstate conflict. However, the escalation in transboundary ecological problems from the 1970s onwards saw the emergence of a dedicated sub-field

1_{Authorised by the Australian Government, Capital Hill, Canberra. EcoGeneration, Winds of Change,} September/ October, Issue (48), 2008, Melbourne, Australia, P.33.<http://ecogeneration.com.au/pdfs/eco_sepoct08_web.pdf>

2_{Justin Gillis, “U.N. Climate Panel Endorses Ceiling on Global Emissions”, September 27, 2013. The New} York Times.Environment<http://www.nytimes.com/2013/09/28/science/global-climate-change-report.html?pagewanted=all&_r=1&>

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of IR concerned with international environmental cooperation, which focused primarily on the management of common pool resources such as major river systems, the oceans, and the atmosphere.4_{Green IR theory, drawing on more radical green discourses from}

outside the discipline of IR, has helped to expose what might be called the ecological blindness of IR theory.5

In June 1992, Rio de Janeiro in Brazil hosted the United Nations Conference on Environment and Development (UNCED,) also known as the Rio Earth Summit. Being noted the largest environmental conference ever held, it attracted over 30,000 people including more than 100 heads of state. The objectives of the conference were to agree major treaties on biodiversity, climate change and forest management. For the first time, a major environmental conference adopted a more nature-centered approach towards environmental problems.6 This was significant, as the first two decades of UN work in this area lacked success and led to Rio Summit, which sought to give new impetus to these efforts. By that time, the Soviet Block collapsed, many countries became independent, and therefore it was important to recognize each nation’s right to pursue social and economic progress. Before that, environmental problems were not considered as a global issue, as objectives like peacekeeping, security and human rights were still considered as the priority. The spirit of the conference was captured by the expression "Harmony with Nature," brought into the fore with the first principle of the Rio Declaration: "Human beings are at the centre of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature".7

As the development of renewable energy and supporting technologies was accelerated, it seemed entirely feasible to wean ourselves of our systemic dependence on fossil fuels. In Europe, forward-looking policies like Feed-In Tariffs were introduced and the scale of the creation of new jobs and businesses was simply astounding.

Recent experience from around the world suggests that Feed-In Tariffs are the most effective policy to encourage the rapid and sustained deployment of renewable

4_{Robyn Eckersley, “Green theory,” p. 248} <http://asrudiancenter.files.wordpress.com/2010/01/green-theory.pdf>

5_{Robyn Eckersley, p. 248.}

6_{“Rio Earth Summit“ <http://www.sustainable-environment.org.uk/Action/Earth_Summit.php>}

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energy.8 As of 2012, 65 countries have implemented some form of a Renewable Energy Feed in tariff (REFiT), driving 64% of global wind installations and 87% of global photovoltaic installed capacity. The majority of these installations have occurred in industrialised countries, particularly Europe.9 REFIT simply means Renewable Energy Feed in Tariff10 and in the European Renewable Energy Council and Greenpeace energy report, Feed-in Tariff Support Mechanism is outlined as the best one, which would enable the expansion of new renewable energy projects both faster and with secure financial support.11REFiTs encourage investment in renewable energy generation – from individual home owners and communities to big companies – by guaranteeing to buy and pay for all the electricity produced.12

Topic and problem definition

The European Union is one of the most energy dependent regions of the world, currently importing over 80% of its oil, close to 60% of its gas and approximately 97% of its uranium.13 That is why renewables have had a transformative effect on the economies of countries such as Germany, Spain and Portugal. There, very rapid renewable energy development – encouraged by appropriate government policies – has become a spur to technological innovation that, in turn, increases the plausibility of renewables becoming the basis for future human endeavour. While having a FIT Tariff, particularly Germany

8_{Toby Couture, Yves Gagnon, “An analysis of feed-in tariff remuneration models: Implications for} renewable energy investment”, Energy Policy (38), 2010, P. 955. <http://www.sciencedirect.com/science/article/pii/S0301421509007940>

9_{“Powering Africa Through Feed-In Tariffs. Advancing renewable energy to meet the continent’s} electricity needs”. A Study for the World Future Council, the Heinrich Böll Stiftung and Friends of the

Earth & Northern Ireland. 2013,

P.1.<http://www.worldfuturecouncil.org/fileadmin/user_upload/PDF/Feed_in_Tariff/Powering_Africa_thro ugh_Feed-in_Tariffs.pdf>

10_{“A Competition For electricity generation – from Biomass Technologies 2010-2015.REFIT 3,” Dublin:} The Department of Communications, Energy and Natural Resources, 2012.

<http://www.dcenr.gov.ie/NR/rdonlyres/718E8541-7ADD-4FB2-A471-B6081C435625/0/REFIT3BiomassTermsandConditions2012.pdf>

11_{The European Renewable Energy Council and Greenpeace, “The energy (r)evolution - A sustainable} World Energy Outlook,” Amsterdam: Primavera Quint, 2007, P. 19.<http://www.energyblueprint.info/fileadmin/media/documents/energy_revolution.pdf>

12_{“Powering Africa Through Feed-In Tariffs. Advancing renewable energy to meet the continent’s} electricity needs,” P.4.

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achieved great successful results. Along with Spain, and formerly Denmark, it is the most commonly cited example of successful renewable energy policy. As of 2008, Spain’s employment figure is around 100,000, and they produce 7.5% of primary energy and 20% of electricity from renewables.14

Lithuania is among the few EU newcomers, implementing various European standards. Despite the fact that the country has begun an active Renewable Energy Campaign only recently, the outcomes are already promising. The amount of biomass per capita in Lithuania at the moment is the second highest in the European Union and it is estimated that in 2020 Lithuania will be the first in the EU according to the quantity of available biomass for biofuel production.15 Both Germany and Lithuania provided successful advancement numbers in renewable energy generating efectiveness. Even though the main actors driving change in these countries were the governments and active lobbying groups, a more in-depth analysis of policy implementation provides a great difference in the state actors interferance'. An example of FITs policies was chosen to illustrate this difference and it has a dual reasoning.16

First, both Germany and Lithuania have ratified the Kyoto Protocol and, as mentioned, are members of the European Union. According to Jess M. Keppley, “Germany has been a leader in environmental policies and poses an authoritative position within the European Union itself.” (p.2.)17 Secondly, both countries chose the model of Feed-in-Tariffs as a way to promote new renewable capacity. In each case, there are strengths and weaknesses to this relationship and an analysis of both models can provide policymakers with a useful benchmark for evaluating the complex interaction between competing interests and the institutions within which they operate.

Literature review and theory

14_{Herbert Girardet, Miguel Mendonça, A Renewable World. Energy, Ecology, Equality, London: Green} Books,2009, P. 77.

15_{Mecys Palsauskas, Tadas Mauricas, “Use of Mixed Biofuel For Pellet Production.” 12}th_{International} Scientific Conference Engineering for Rural Development, May 2013. Kaunas: Aleksandras Stulginskis University, P. 369.

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The importance of FITs while implementing renewable energy and fighting climate change is well recognised in IR and political science literature. Currently, most of the work within this domain has focused on case studies and FITs mechanism assessment. Two main approaches to addressing renewable energy and FITS effectiveness can be seen as emerging in this literature. Numerous studies have established the importance of FITs implementation design options, costs, consumer prices (Pablo del Rio, Gual, 2007) and effectiveness, choosing one particular country (Bürer, Wüstenhagen, 2009.) The second ones tend to focus on assessing the best renewable energy policy to ensure reduction of greenhouse gas emissions. Toby Couture and Yves Gagnon provided an overview of various feed-in tariff remuneration models for electricity generated from renewable energy sources and stated that, as renewable energy continues to develop to meet the combined challenges of mitigating climate change, increasing energy security, and reducing exposure to fossil fuel price volatility, it is expected that FIT policies will continue to be used as a policy option to drive renewable energy development.18

Thus, Herman Scheer and Peter Droege go even further and state that 100 per cent renewable energy is an essential target for sustainable society,19 and that some schemes are more efficiently focused on renewable electricity introduction than others. According to the authors, the FiT has been seen as the most efficiently focused, effective and equitable way so far, of not only achieving rapid greenhouse gas abatements, but also producing renewable electricity at the lowest rate of all policy frameworks available.20

An influential author for this thesis, Miguel Mendonca highlights the importance of FITs and particularly the case of Germany in his books Feed-in Tariffs: accelerating the

deployment of renewable energy, and Powering the Green Economy: The Feed-In Tariff Handbook. Together with Gerbert Hirardet, the often called world’s leading urban

ecologist and consultant on sustainable development, M. Mendonca argues that nowadays it is a must to take advantage of the positive economic opportunities that are offered by the industrial transformation, which must occur to move to a low-carbon society and

18_{Toby Couture, Yves Gagnon, “An analysis of feed-in tariff remuneration models: Implications for} renewable energy investment,” P. 956.

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enable the protection and restoration of the carbon-absorbing ecosystems. (A Renewable

World: Energy, Ecology, Equality, 2009.)21_{This statement goes along with the main}

theory chosen for this paper – ecological modernization. The theory and its proponents argue that economic competition and constant technological innovation produce economic growth that uses less energy, resources and produces less waste per unit of gross domestic product (GDP).22 This particular theoretical approach was chosen in order to prove that moving towards environmental policies and implementing FiTs in Germany and Lithuania was beneficial to these governments, and in Lithuania’s case, it was a requirement from the EU.

While talking about comparative studies in this topic, Jess M. Keppley’s research paper “A Comparative Analysis of California and German Renewable Energy Policy. ACTORS AND OUTCOMES” was a good starting point for this paper. J. M. Keppley compares Germany and California claiming that policymakers have long been interested in promoting renewable energy development. Over the last two decades that interest has fully bloomed, leading to new policy instruments designed to promote increased generation in an economically efficient manner. Environmental leader, Germany, is identified as a model in this field.23 Dennis Kumetat provides a comparative analysis in another region - hydrocarbons-wealthy Arab states. He addresses theory-related outcomes of the case studies with regards to the transfer of Western policy design models to Arab states.24

Even though there is comparatively little written about the case of Lithuania, recent studies are very up to date and suitable for comparative analysis because of their empirical focus (J. Poderis, 2012) As the topic is new and changing every day, Lithuanian studies analyse recent policies and their outcomes. The author of this paper also wrote a bachelor thesis regarding the RE lobbying in Lithuania, which focused on interviews with

21_{Herbert Girardet, Miguel Mendonça, A Renewable World. Energy, Ecology, Equality, P. 11.} 22_{Robyn Eckersley, P. 249.}

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the key actor players (politicians, Presidents of associations, independent lobbyists) in Lithuanian RE field.

The Gap. Research method

Overall, no IR study has systematically examined the effectiveness of existing FiT schemes in two particular European countries. In this paper, it is intended to fill the gap in the literature by estimating the renewable investment to FiT subsidies, while also taking into account other nuanced policy characteristics. Generalized methods are used to address empirical challenges related to the dynamic correlation among FIT integration and policies, investment costs and the actors involved in FiT implementation. The ultimate goal of this work is to contribute to the growing theory and research on adaptation to climate change, specifically the institutional and policy implementation part. Researcher J.M. Keppley states, that “in any comparative policy analysis, understanding the institutional framework within which actors operate is crucial”(p.6).25 Therefore, this study focuses on the implementation of the policies.

This paper discusses both models (Lithuania and Germany) in detail, exploring the ways political interests became involved in the policymaking process. It then evaluates relevant political institutions and their corresponding role in shaping the formulation of renewable energy policy. Taken together, this analysis demonstrates how policy models can diverge based on the institutional frameworks within which they operate. The economic scope of green industry and FITs is usually analysed in the research of the topic, this paper focuses on the role of actors and institutions involved while implementing the political process.26

To sum up, this paper improves and expands on the existing literature in three key ways. Firstly, it focuses on a policy type and field that have been largely ignored in previous IR studies. Secondly, it accounts for unique policy design features that have often been ignored in analyses of RES-E policies in general. In addition, it examines in which way and whether these policies are related to awareness about climate change.

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Third, a detailed literature review and summary of trends in specific countries, which have not been compared before in energy topic/ RES-E policy analysis, with a focus on methodology is provided.

While the stated research goals of this thesis do not necessarily imply a qualitative approach, it is the nature of the primary data used in this study that warrants a qualitative approach. It is important to add that this thesis does not discuss and compare various renewable energy types, advantages and disadvantages of the general RE model, but concentrates on FITs analysis. Therefore, this study does not consider itself a technical study on grids, energy pricing in general or engineering-related aspects of renewable electricity generation as usual. Instead, it is particularly focused on the actors involved and policies implemented. The perceptions and judgments about governance concepts and the role of the EU are of empirical interest.

Objectives and research questions

The objective of the research contained in this thesis follows like this: (Considering the problem of global climate change,) how do Feed-In-Tariffs (FITs) encourage the rapid and sustained deployment of renewable energy? A comparison between FITs in Germany and Lithuania.

The FIT situation in countries is going to be compared following these indicators/questions:

• The role of local government (Which actors were involved in creating RE policies for FITs as the major policy drivers?)

• The role of interest groups and civil society (What has the role of civil society been in pushing for, designing and implementing the FITs in these countries?) • The role of the European Union.

Subquestions:

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• Do FITs stand as an empirical practice of ecological modernization theory?

• Where do Germany and Lithuania stand in the scope of FITs and ecological modernization theory?

Hypothesis

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1. Introduction, research objectives and thesis structure

1.1. Theoretical framework. International Relations and Green Theory

Environmental problems are sometimes described by policy analysts as ‘wicked problems’ because of their complexity, variability, irreducibility, intractability, and incidental character. Green IR theory emerged primarily out of a critique of mainstream rationalist approaches (firstly neo- or structural realism and neoliberalism), the theory has simultaneously drawn upon, and critically revised and extended, neo-Marxist inspired international political economy (IPE) and normative international relations theories of a cosmopolitan orientation.27

The new wave of green scholarship has reinterpreted some of the central concepts and discourses in IR and global politics, and challenged traditional understandings of security, development, and international justice with new discourses of ecological security, sustainable development (and reflexive modernization), and environmental justice. Improving distributive justice while simultaneously curbing ecologically destructive economic growth has emerged as the central political challenge of green theory and practice, both domestically and internationally.28

The late 1980s and early 1990s was a time when ecological consciousness erupted throughout Europe to such an extent that borders no longer mattered and those systems reliant upon strong artificial borders disintegrated. The role of environmentalism in the politics of transformation, revolution, and transition in Eastern Europe was well established as well. 29

The general framing of environmental problems has significantly changed during recent decades and three ‘master frames’ can be distinguished. The first one dates back to the late nineteenth century (‘nature conservation’), the second to the 1960s (‘environmental protection’), and the third to the 1990s (‘sustainable development’). Whereas conservationism aims at the preservation of attractive parts of nature and

27_{Robyn Eckersley, p. 248 - 249.} 28_{Ibid, p. 252.}

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‘wilderness’, modern environmentalism is preoccupied with the harmful effects of industrialisation on natural human environments, with pollution and technical risks, the exhaustion of resources, and the limited ‘carrying capacity’ of the earth. Sustainable development, again, relates the ecological discourse systematically with social and economic aspects of development.30

Main theory: Ecological modernization

The belief that environmental protection and technologically more efficient and sustainable capitalist development has been emphasized by the theory of ecological modernization. Not surprisingly, the ideology is mostly European-led and supported by Western European countries and governments in the Organization for Economic Cooperation and Development, actively expanding the use of market-based instruments in environmental policy. Far from acting as a break on growth, proponents of Ecological modernization advocates claim that “stronger domestic environmental regulation can act as a spur to further environmental/technical innovation, which enhances national economic competitiveness and forces an upward ratcheting of environmental standards.” (p.252).31

Ecological modernization theory looks at relative (but significant) changes into more environmentally sound directions, in contrast to the “absolute” sustainability sought by neo-Marxist scholars.32 Criticizing ecological modernization theory for its rather naive ideas on environmental improvements, neo-Marxist scholars claim that all, or the majority of production and consumption practices are still governed by treadmill logics, and that ecological, environmental or sustainability criteria will seldom, if ever, become dominant in the organization and design of production and consumption.33

Most neo-Marxist studies display a major gap between the quite advanced and detailed theoretical analyses of the immanently destructive character of the treadmill of

30_{Karl – Wener Brand, Fritz Reusswig,“The social embeddedness of global environmental governance,”ed.} Gerd Winter, Multilevel Governance of Global Environmental change. Perspectives from Science, Sociology and the Law. Cambridge: Cambridge University Press, 2006, p.93.

31_{Robyn Eckersley, p.254.}

32_{Arthur P. J. Mol „Ecological Modernization and The Global Economy, p. 97} <http://www.vedegylet.hu/okopolitika/Mol%20-%20Ecological%20Modernization.pdf>

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global capitalist production, on the one hand, and the suggestions made for concrete trajectories towards social change, on the other. David Pepper, James O’ Connor and Goldfrank’s world-system theory volume put forward detailed and renewed neo-Marxist analyses of the destructive pattern of the capitalist world economy, but rather “meager” and utopian countervailing strategies for environmental reform. Arthur P. J. Mol states that the strategies for change developed within neo-Marxist inspired perspectives have not been improved in step with their analyses of environmental disruption. They are founded only marginally on existing patterns of social transformation and thus have a highly “utopian” character. In contrast, within ecological modernization theory there is a closer link between the analyses of existing changes-in-the-making in the main institutions and social practices, and the design of “realist-utopian” trajectories for environmental reform for the near future.34

Green critics believe that the technologically oriented discourse of sustainable development and ecological modernization has overrated them. Technological innovations are seen as a correct tool for environmental efficiency improvement, but gains in environmental efficiency are seen as stimulators for further consumption and production. According to Robyn Eckersley, “green critics argue that a strategy of technologically driven ecological modernization provides no means of addressing the deeply skewed distribution of ecological risks among different social classes and nations.”(p.254).35

Despite favourable framework conditions, the strategy of ecological modernisation faces a number of inherent limitations. These include the unavailability of marketable technological solutions for all environmental problems, the neutralisation of incremental environmental improvements through economic growth (the dilemma of the N-curve) as well as power-based resistance by “modernisation losers“.36

Ecological modernisation, as propounded by Mol and others involves industry making key technological choices to 'green' business. Yet in the case of renewable energy the 'industry' was first invented by a social movement and even today is sustained as an

34_{Ibid,.p. 98.}

35_{Robyn Eckersley, p. 254.}

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industry different from other energy industries.37 This means that due to its nature – using not fossil fuel it is different and questionable. While looking from the environmental law perspective, Professor Robert George acknowledges this new natural law and assumes that human actions must be worth doing for human beings; they must provide a benefit or they would not have an intelligible point.38 This explains the current shift towards environmentalism in our nowadays society and the fact that globally, the language of a green economy is being promoted as a means to develop a ‘win-win’ for the economy and the environment.39

1.2. Methodology. Secondary analysis of quantitative data

To accomplish the intended objectives and answer the proposed research questions, this study has considered a mixed methods approach, which could be defined as a secondary analysis of quantitative data using a comparative research methodology. This section will introduce the methods that were used for data analysis.

Many papers analyse support schemes according to different criteria in an abstract setting, but not empirically by referring to specific countries and policy implementation instruments.

The methodology used in the quantitative analysis is a hybrid model, which combined quantitative and qualitative methodologies. This modeling framework allows evaluating interactions in an integrated and consistent way and has not been applied before to assess the effects of the FITs policies on political economy.

37_{Dr David Toke, “Ecological Modernisation and Climate Change Strategies,” Birmingham: University of} Birmingham, 2012.<http://isa-easysite-01.aston.ac.uk/lss/research/academic-groups/crsps/seminars/2011-12-seminars/seminar-abstracts/>

38_{Herwig Unnerstall, “The principle of full cost recovery in the EU-Water Framework Directive – Genesis} and content.” Journal of Environmental Law, Vol. 19, No. 1, Oxford: Oxford University Press, 2007, P. 93. 39_{Anna R. Davies, Sue J. Mullin, “Greening the economy: interrogating sustainability innovations beyond} the mainstream,” Department of Geography: Trinity College, Dublin, Ireland 2010.

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1.3. Methodological design and data analysis of the study

The data for this study was gathered over the course of a year through review of various FiT publications from all over the world, compiling program documentation, international governmental sources, using an analysis from the author’s bachelor thesis research and during a half-year-long internship in an international non-governmental organisation World Future Concil, based in Hamburg, Germany.

Feed in tariff policy design model is the main emphasis in this comparative study.

Mainly the energy (policy) data is going to be analysed in this study, focusing on energy-specific national data and various data sources for renewable energy.

precise policy focus empirical data

The secondary data sources used to compare Lithuania and Germany:

• Statistical information from governments and international organizations • German laws

• Lithuania Renewable Energy laws

• Academic research of other scholars and the author • Reports from international agencies

• Up-to-date technical data

This approach has been identified as the most fruitful and most viable one for the purpose of this comparative study.

1.4. Comparative research method

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methodology. In an influential article on comparative politics, Lijphart situated the comparative method as a basic method in its own right, alongside the experimental, statistical and case study methods.40

1.5. Few-country comparison

Comparing few countries requires a precise selection of these countries for comparison. It may involve between 2 to more than 20 countries, there is no specific distinction between number and it can be any country. Studies using this method can be more intensive and less extensive, as each country is unique. Professor Todd Landman says that “the political outcomes that feature in this type of comparison are often seen to be ‘configurative,”(p.27) because multiple factors are acting together. It has also been referred to as ‘case-oriented,’ because the country is usually the unit of analysis, and the similarities and oppositions among countries are the main focus area. 41_{This type of}

comparison is chosen for this research paper.

Contrary, in case-oriented studies a single country or a small number of countries is studied. The focus is on the individual country in its historical specificity and its full context. Each case is considered as a whole, taking into account the total configuration or constellation of factors and conditions.42 As professor Robert E. Stake states, case studies have become popular means of inquiry in recent years. However, this does not imply that the selection of the case study method comes as a “natural” choice. Case studies can help to identify trends and patterns within certain developments or phenomena. By distinguishing the particular from the general, case study research can go beyond a merely descriptive level and add to theory formulation.43

Whereas comparison of few countries allows rival explanations to be ruled out and hypotheses derived from certain theoretical perspectives to be tested through examining cross- national similarities and differences. The most similar systems design

40_{Peter Lor, “Methodology in comparative studies,” International and Comparative Librarianship, Chapter} 4 draft, 2011, p.2. <http://pjlor.files.wordpress.com/2010/06/chapter-4-draft-2011-04-20.pdf>(accessed 11 January, 2014.)

41_{Todd Landman ,Issues and Methods in Comparative Politics: An Introduction, 3}rd_{ed. London: Talylor &} Francis, 2008, p. 27.<http://downloads.pavroz.ru/files/IssandMethinComparative.pdf>

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(MSSD) is used to achieve focused comparison of few countries. The MSSD framework seeks to control for those factors that are similar across the countries in the study, while focusing on only those factors that are different that account for the outcome.44

1.6. Secondary analysis of quantitative data

There are certain methods that are more common than others in comparative studies.

Secondary analysis of quantitative data is a widespread example in comparative research.45 According to Tracy Long-Sutehall, Magi Sque, Julia Addington-Hall, “secondary analysis of qualitative data is the use of existing data to find answers to research questions that differ from the questions asked in the original research” (p.336). Performing secondary analysis of quantitative datasets has been well known within quantitative social research and policy analysis, but not with qualitative datasets. The idea of re-using archived data and secondary analysis has gained interest recently.46

Secondary analysis differs from approaches that seek to critically assess the theory, methods and findings from existing qualitative research in an attempt to generate meanings from multiple studies, for example, the study of qualitative data, meta-ethnography, meta-sociology, as the aim of a secondary analysis is to address new research questions by analysing previously collected data.47_{Qualitative researchers}

investigating various sensitive topics also prefer secondary analysis.48

2. Climate change and the evolution of renewable energy

44_{Todd Landman, p.30}

45_{Dr. Vidhu Gaur, “Social research and comparative education”, International Journal of Physical and} Social Sciences3, vol.3.2013.<http://www.academia.edu/4772362/www.ijmra.us>

46_{Tracy Long-Sutehall, Magi Sque, Julia Addington-Hall, “Secondary analysis of qualitative data: a} valuable method for exploring sensitive issues with an elusive population?” p. 336. Journal of Research in Nursing<http://www.wlv.ac.uk/pdf/Secondary%20analysis%20JRN3815531.pdf>

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2.1. Climate change

The Intergovernmental Panel on Climate Change is a worldwide committee of hundreds of scientists, sponsored by the United Nations, that issues major report every five or six years, advising governments on the latest knowledge on climate change. 49

The figures below, presented by the Working Group I Contribution to the IPCC Fifth Assessment Report show multiple observed indicators of a changing global carbon cycle: “(a) atmospheric concentrations of carbon dioxide from Mauna Loa (19°32’N, 155°34’W – red) and South Pole (89°59’S, 24°48’W – black) since 1958; (b) partial pressure of dissolved CO2 at the ocean surface (blue curves) and in situ pH (green curves), a measure of the acidity of ocean water” (p.12) 50. It is seen that the annual Co2 emissions rose significantly throughout the latest years.

49_{Justin Gillis.}

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Source: Twelfth Session of Working Group I Approved Summary for Policymakers, P. 3051.

2.2. Renewable energy situation

Renewables Global Futures Report 2013 indicates that sceptics have always challenged the concept of renewable energy and its technologies. RE was seen as too costly, requiring never-ending public subsidies and supportive governmental policy platform.52

The definition of renewable energy includes any type of energy generated from natural resources that is infinite or constantly renewed. Examples of renewable energy include solar, wind, and hydropower. Most renewable energy comes from the sun. Solar energy is produced from the constant heat and light provided by the sun. Among other things, solar energy is used for heating and lighting homes and buildings, generating electricity, and heating hot water. 53

According to the International Energy Agency (IEA) second annual Medium-Term Renewable Energy Market Report (MTRMR), despite a difficult economic context, renewable power is expected to increase by 40% in the next five years. Renewables are now the fastest-growing power generation sector and will make up almost a quarter of the global power mix by 2018, up from an estimated 20% in 2011. The share of non-hydro sources such as wind, solar, bioenergy and geothermal in total power generation will double, reaching 8% by 2018, up from 4% in 2011 and just 2% in 2006. IEA Executive Director Maria van der Hoeven said that as their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation. This is good news for a global energy system that needs to become cleaner and more diversified, but it should not be an excuse for government complacency, especially among OECD countries.54

51_Ibidem.

52_{REN21, “Renewables Global Futures Report 2013,” REN21: Paris, 2013, P.11.}

53_{Guiltless Green Living, “Understanding Green Energy: The Definition of Renewable} Energy”<http://www.going-green-challenge.com/definition-of-renewable-energy.html>

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Investments in clean energy can generate twice, as many jobs per dollar are invested compared with traditional fossil fuel-based energy. In addition, studies suggest that improvements in energy efficiency and investments in green power have longer lasting employment gains than tax cuts or traditional infrastructure investments that generate jobs only as long as projects’ funds last (UNEP/ILO/IOE/ITUC, 2008). Specific labour intensive environmental clean-up operations, which give productivity benefits that are based on improvements of human health, are also favoured by theory. Support of renewables generates less employment than building insulation and other energy efficiency programmes. But there are also large variations on the impact of different renewable technologies on labour. E.g. Employment in photovoltaics requires a higher level of education, while employment in biomass production will most likely generate jobs in low skilled agriculture55.

Various green stimulus programmes have been endorsed by higher-income countries, as well as some middle-income countries. Although the amounts of funds and outlays vary from country to country, nearly two thirds of all green spending globally supports energy efficiency (EC-IILS, 2011.)56

2.3. Energy efficiency and Green power

The Renewables Global Futures Report 2013 presents the opinion of the experts stating that in the era of global warming, the need of RE is unquestionable. When comparing the costs of other technologies, such as energy efficiency, carbon capture for fossil fuels, and nuclear power, the last one is seen as becoming too expensive, whereas energy efficiency is considered the cheapest one.57

Although green power sales are setting new records, it is still a tiny fraction of total power sales. This situation is compared to the early years of organic foods wondering whether households and companies would dramatically scale up their <http://ren21.net/Portals/0/documents/Resources/2013MTRMR_FINAL_ES.pdf> (accessed 15 March, 2014.)

55_{Green growth: from labour to resource productivity. Best Practice examples, initiatives and policy} options. Vienna: United Nations Industrial Development Organization & AFD, 2013, P.80.

56_{Ibidem, P.80.}

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purchases from green power suppliers. It is noted that this also depends on the existence of policies that allow consumer choice of electricity supplier at the retail level.

Experts pointed to corporate purchases of green power as an encouraging trend, noting green power purchases among many leaders in corporate sustainability. One corporate watcher stated that corporate governance is heading towards climate and sustainability goals and that green power would increasingly fit those goals. However, some experts still question whether other types of corporate models for renewable energy investment would become more significant than green power.58

Nowadays it is even being talked about the concept of 100% renewables, when all our energy is produced from renewable resources. According to Frances Moore Lappé, co-founder of three national organizations that explore the roots of hunger, poverty and environmental crises, the power industry is bound to change as renewables make more sense economically (G.V. - ecological modernization principle), climate change becomes harder to deny, and consumers gain more control of power generation. Some people think that the industry won’t be recognizable by 2050. In moving beyond our set views, people may realize that there is more possible than society thinks. It was believed that wasn’t technically possible to integrate as much renewable power into the grid as Germany has done - and yet it was done, with no adverse effects.59

Renewable energy expert and scholar Eric Martinot states that we need strong, stable policies like Germany’s feed-in tariff, which has led to 40% of renewables there being owned by individuals. This also means that power needs to be decentralized and controlled more by individuals and communities.60

2.4. The importance of policies

A brief review of the empirical literature on the effects of policy measures to promote renewable energy sources shows that, as would be expected, the extent of impacts depends critically on the type of policy instrument adopted and their design as

58_{Ibidem, P.37.}

59_{Cleantechnica,} _“Biggest _barrier _to ₁₀₀ _% _renewables _is _in _our _heads.” _2013.

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well as of the magnitude of the underlying policy targets to be achieved. Therefore, and also due to the variety of assumptions in different modelling frameworks, the corresponding results should not be compared directly. In particular, with regard to FITs systems, empirical evidence suggests that feed-in tariffs have proven to be an effective and cost-efficient policy instrument for promoting electricity generation from renewable energy sources, as acknowledged by the European Commission and confirmed by recent research studies, such as Sovacool (2009), Butler and Neuhoff (2008), and IEA (2008).

A well-coordinated portfolio of market-based, regulatory and information-based policy measures is essential to promote an effective and fair shift to a sustainable economy. Many examples illustrate the positive economic and environmental effects of environmental tax reforms in a broad sense, thus shifting the tax bur-den from labour to material, water and land use or greenhouse gas emissions.

Currently environmental and resource taxes have only a minor role to play in many countries, but could potentially make an important contribution. At the same time, environmentally harmful subsidies, such as subsidies for fossil fuel use, need to be phased out. Green economy is likely to depend crucially on innovation (in particular eco-innovation) and investments in green technologies. Therefore, public finance has also an extremely important role to play, e.g. in order to provide incentives for private investors.

As shown by numerous additional examples, (e.g. green public procurement, emission trading, regulations to name only a few) there is evidence that existing green growth strategies and policies present a strong basis on which to build new approaches that balance economic, social and environmental considerations. Overall, the right policy mix has the potential to directly and indirectly stimulate economic growth, competitiveness, employment and environmental improvements.61

According to Jan Abrell and Hannes Weigt, environmental policies seek to incorporate the external costs of global warming. In the case of FITs, the amount of RE production can be regulated via governmental financial aids and support for RE technologies and manufacturing.62 They can be successful either by setting a price or by

61_{Green growth: from labour to resource productivity, P. 15.}

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fixing the quantity. Policies like emission reduction and renewable support schemes, may often have overlapping objectives and interact to a specific degree.63

Regulatory policy approaches to promote renewable energy technologies (RETs) have taken on increasing importance in many countries. Although the relative weight given to underlying reasons for accelerating RET development may vary (e.g., reducing global climate change, a desire to reduce dependence on imported fossil fuels, increased portfolio diversity, local economic development, etc.), ultimately policy instruments used to promote renewables must necessarily balance several competing objectives, including:

1. Specific positive environmental impacts, such as reduced emissions of air pollutants and greenhouse gases, versus perceived negative impacts on bird populations and landscape aesthetics (e.g. in the case of wind turbines.)

2. Reduced dependence on fossil fuels, greater portfolio diversity, and lower exposure to fuel price volatility, versus adverse economic impacts of higher retail electric rates, including lessened economic competitiveness and lack of affordability.64

Consideration of the trade-offs within each of these objectives is unavoidable, and there are a number of multi-objective methodologies that can be employed to this end, which are both efficient and consistent. Regardless of how policymakers evaluate such trade-offs, however, the policies they implement to encourage accelerated RET development should be as economically efficient as possible. In other words, while economic theory may not be able to fully answer whether government-mandated RET development or development of specific RETs are themselves Pareto-superior policies, economic theory can help determine the most efficient, “least-cost” approaches to achieve the chosen policy goals.65_{In their paper, Jonathan A. Lesser and Xuejuan Su even}

claim that Germany has been especially aggressive about FIT implementation.66

Even as the role of renewables increases across all sectors, the MTRMR (Medium-Term Renewable Energy Market Report published by the International Energy Agency, G.V.) cautions that renewable development is becoming more complex and

63_{Ibidem, P.2.}

64_{Jonathan A. Lesser, Xuejuan Su, “Design of an economically efficient feed-in tariff structure for} renewable energy development”, Energy Policy, 2008, (36). P.981.<http://www.sciencedirect.com.proxy-ub.rug.nl/science/article/pii/S0301421507004983>

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faces challenges – especially in the policy arena. In several European countries with stagnating economies and energy demand, debate about the costs of renewable support policies is mounting. In addressing these issues, the Executive Director of the IEA Ms. Van der Hoeven warned that policy uncertainty is public enemy number one for investors as many renewables no longer require high economic incentives, but they still need long- term policies that provide a predictable and reliable market and regulatory framework compatible with societal goals. Worldwide subsidies for fossil fuels remain six times higher than economic incentives for renewables.67

The Renewables Global Futures Report 2013 presented the interviews of some policymakers expressing their opinion that environmental transformational change is not necessarily run mainly by policies. The existing policies are considered supportive already. They state that so called “policy bridges may include energy policies emphasizing financial risk-return metrics and risk-reducing energy portfolio approaches rather than more common cost-based ones” (p.62).68

One of the most urgent questions for policy makers dealing with FITs is how to get the tariff level right. A tariff that is too low will not spur any investment in the field of renewable energies while a tariff that is too high might cause unnecessary profits and higher costs for the final consumer. In their Feed-in Tariff Handbook Miguel Mendonça, David Jacobs and Benjamin K. Sovacool recommend developing a joint analytical framework for all technologies eligible under the FIT scheme in order to guarantee transparency and comparability.69

2.5. Renewable energy policy types

Renewable Energy Sources for Electricity (RES-E) are renewable (non-fossil) and can help diversification and security of electricity supply, environmental protection and

67_{The International Energy Agency, “Renewables to surpass gas by 2016 in the global power mix.” Paris:}

The International Energy Agency, 2013.

<http://ren21.net/Portals/0/documents/Resources/EMBARGOED%20MTRMR%202013%20Press%20Rele ase.pdf>

68_{“Renewables Global Futures Report,” P.61 – P. 62.}

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sustainable development, social and economic cohesion (e.g. new local employment.)70In principal there is a large variety of different support mechanism for RES.

The two most commonly used demand-side policies are price-based feed-in tariffs (FiTs) and quantity-based quota obligations, also referred to as renewable portfolio standards (RPS).71 Jan Abrell and Hannes Weigt state that “they are mostly popular in Europe, as in the US production tax credits are applied as well” (p.5).72 This analysis is focused on the first method.

Renewable Portfolio Standard is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. Other common names for the same concept include Renewable Electricity Standard (RES) or Renewable Energy Certificate (RECs) at the United States federal level and Renewables Obligation in the UK. A Green Certificate or Tradable green certificate systems (TRCs) is a terminology used in Europe. RPS-type mechanisms have been adopted in several countries, including Great Britain, Italy, Poland, Sweden, Belgium (Wallonia and Flanders), and Chile, as well as in 30 of 50 U.S. states. Regulations vary from state to state, and there is no federal policy. Together these thirty states account for more than 42 percent of the electricity sales in the United States.

The Renewables Obligation (RO)is designed to encourage generation of electricity from eligible renewable sources in the United Kingdom. The RO places an obligation on licensed electricity suppliers in the United Kingdom to source an increasing proportion of electricity from renewable sources, similar to a renewable portfolio standard.

Under a FiT scheme, governments set prices often at a premium for different types of renewable power to compensate producers for the higher cost of producing clean energy. Utilities are required to purchase power from renewable resources at this price, but can either spread the additional costs across their entire customer base or receive compensation from the government to recover the incremental costs. Essentially, FiTs work as subsidies to renewable energy to make it cost competitive to fossil fuel based

70_{Christian Steinreiber, “Green Electricity Support in Austria and the Czech Republic. Expectations and} Facts”, 2004, P. 4. <http://www.ieep.cz/editor/assets/projekty/oze/oze_steinreiber1.pdf>

71_{Fan Zhang „How Fit are Feed-in Tariff Policies? Evidence from the European Wind Market.” 2013. “The} World Bank Europe and Central Asia

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technologies.

In contrast, a quota obligation creates a market for tradable green certificates (TGCs), which are awarded to renewable producers based on their renewable energy output. Electricity suppliers must purchase certificates or otherwise supply renewable energy for a certain percentage of their total end-use deliveries. The market value of a TGC thus reflects the balance between the supply of renewable energy and the quantity demanded by the regulation.73

In case of emission control, either price of greenhouse gas emission is set using a tax instrument or the quantity is regulated by a classical cap-and-trade system.74 Several other types of RES-E policies have emerged in the EU in the last two decades. These include:

• Tax incentives or investment grants • Net-metering policies

• Tendering schemes.75

3. Corporate governance and global society 3.1. Lobbying – global civil society

As various actors can be involved policy making, this chapter talks about the main ones addressed in most IR environmental topics research sources.

Even new sustainable governance cases emerged, such as common-pool resources, often managed by a combination of governments and markets. A common-pool resource (CPR), also called a common property resource, is a type of good consisting of a natural or human-made resource system (e.g. an irrigation system, fishing

73_{Fan Zhang, “How Fit are Feed-in Tariff Policies? Evidence from the European Wind Market.” 2013.} Washington, DC: The World Bank, Europe and Central Asia Region,<http://elibrary.worldbank.org/docserver/download/6376.pdf?expires=1369656439&id=id&accnam e=guest&checksum=83F5F9A6DF6B86234CE2EBA61C27555A>

74_{Jan Abrell and Hannes Weigt, P.3.}

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grounds, forest) whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use76_{. Unlike pure public}

goods, common pool resources face problems of congestion or overuse, because they are subtractable. The management of common-pool resources is highly dependent upon the type of resource involved. An effective strategy at one location, or of one particular resource, may not be necessarily appropriate for another. In the Challenge of CPR, Ostrom makes the case for adaptive governance as a method for the management of common-pool resources. Adaptive governance is suited to dealing with problems that are complex, uncertain and fragmented, as is the management of CPR.77

The term ‘global civil society’ typically refers to a variety of non-state actors, which are also very important, including many forms of voluntary associations, most prominently NGOs. There is a tendency to define the members of global civil society as ‘non-profit entities’, by that excluding all forms of economic actors. Giving special attention to environmental cooperation, author Asher Alkoby states that NGOs receive most of the attention in recent studies, given their increasing involvement in international politics and law-making. Their number is difficult to establish, but it is estimated that the twentieth-century witnessed a two-hundred-fold increase in the number of international NGOs. Broadly speaking, NGOs are associations of individuals or groups of individuals with an organisational structure, who are engaged in legal, political, or social action to promote different goals and objectives at the global level.78

Even new sustainable governance cases emerged, such as common-pool resources, often managed by a combination of governments and markets. A common-pool resource (CPR), also called a common property resource, is a type of good consisting of a natural or human-made resource system (e.g. an irrigation system, fishing grounds, forest) whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use79. Unlike pure public goods, common pool resources face problems of congestion or overuse, because they are

76_{Investopedia.} _{“Definition} _of _Common _Pool _Resource _– _CPR” <http://www.investopedia.com/terms/c/common-pool-resource.asp>

77_{Wikipedia, “Common-pool resource“< http://en.wikipedia.org/wiki/Common-pool_resource>}

78_{Asher Alkoby, “Globalising a green civil society: in search of conceptual clarity,” ed. Gerd Winter,} Multilevel Governance of Global Environmental change. Perspectives from Science, Sociology and the Law. Cambridge: Cambridge University Press, 2006, P.109.

University of Groningen Faculty of Arts Master of International Relations and International Organization International Political Economy Master Thesis