ABSTRACT
During the past few decades, renewable energy (RE) has been disseminated globally, and the promoting policies have been implemented around the world. Some Asian countries such as China and India have played a significant role in supplying the RE components.
Previous studies have analyzed the effect of RE promoting policies on the trade of RE in exporting countries but paid little attention to the policies in importing countries. They have not considered the mixed effect of policies and other factors that influence exports.
Against this backdrop, this chapter analyzes the effect of feed-in tariff (FiT) and renewable energy portfolio (RPS) in both exporting and importing countries on the exports of solar photovoltaics (PV) and wind energy components from Asian countries. It also employs matching econometrics to control the confounding between factors examined in the model.
As a result, FiT and RPS in the exporting countries have a negative effect on PV and wind energy component exports, implying that manufacturers prioritized supplies to home countries. Conversely, both FiT and RPS in importing countries show a positive effect on exports, suggesting that they responded to the policy-induced profit opportunities in importing countries. The positive effect of PV export price indicates that Asian manufacturers have upgraded quality of the components.
Upgraded quality indicates the growing technological capability of Asian countries on their solar PV manufacturing, coupled with the positive effect of knowledge stock. If those countries acquire the capability through the investment from other countries, it can be a part of the carbon halo effect. However, FiT and RPS implementation may not lead to the carbon halo effect, as the growing demand for the components might be fulfilled by the Asian countries’ exports.
