A challenging approach for renewable energy market development

Abstract

This study demonstrates a challenging production-based and market-driven approach for the development of renewable energy (RE) market. The organized data in our research show that the countries that adopt more RE policies appear to generate more RE products. Among those instruments, incentives/subsidies for production are common and decisive to the popularization of RE products. Recently, the primary RE policy goal for governments is to promote RE products by removing various barriers. However, the energy market should be liberalized as RE products are ubiquitous and able to compete with fossil products. The priority of instruments that governments are supposed to take in order are to remove incentives/subsidies for fossil products, to tax fossil products for the sake of reduction of greenhouse gases emissions, and then, to remove all incentives/subsidies for both fossil and RE products. Furthermore, RE products may have adverse resource and environmental consequences and this dilemma can be averted by taking net energy output as a standard in incentives/subsidies instruments. It was suggested that RE markets are supposed to be classified into three market phases – undeveloped, developing and developed markets. As a promising policy approach, governments have to adopt suitable and flexible instruments to achieve policy goals in different RE market phases.