What works and who pays?

Today, the world is dependent on coal, oil and gas for transport, industrial activities as well as for electricity and heat production. In order to achieve the emission reductions required to meet the climate goals set in the Paris Agreement, new technologies are needed that can meet society's needs for electricity, heat, transport, etc., without emitting greenhouse gases. Fortunately, a large number of such technologies already exist and are growing rapidly. 

One of the big challenges for new technologies has been that they cost too much. Historically, it has been much more expensive to produce electricity from solar cells than from coal and it has been cheaper to buy a petrol car than an electric car, etc. A crucial component in the growth of technologies such as solar cells, wind power and electric cars has therefore been to make them more economical attractive. This has happened in a large number of countries through various types of financial subsidies. Some of the most common types of subsidies are feed-in tariffs, also known as "feed-in" tariffs, green electricity certificates, which we have in Sweden, investment support and tax breaks, for example when buying electric cars. 

Economic subsidies have had a decisive impact on the growth of new technologies, but they have not been without controversy. A common criticism is that subsidies are too costly and that the subsidies mainly end up with high income earners. However, there are different models for how subsidies for new technologies can be financed. The subsidies can be based on market-based instruments, like the green electricity certificates in Sweden, where the cost ultimately ends up with electricity consumers, but they can also be financed directly from the treasury or via specific climate funds. 

In order for subsidies to be defensible and accepted in society, it is important that they lead to a positive change, for example that new technologies grow, and that the costs and benefits they entail are fairly distributed. The goal of this project is to study the effectiveness and distributional effects of different types of financial subsidies given to new technologies with the potential to reduce greenhouse gas emissions. Since it is likely that subsidies will continue to play an important role in introducing new technologies, it is important that they are designed in the best possible way. 

In the project a large amount of historical data from existing policy programs where subsidies are used within EU countries is collected, to see which types of subsidies have worked well, respectively less well, and which groups in society have been "winners" and " loser". The results will be used to evaluate how future financial subsidies in the energy sector can be designed, financed and eventually phased out, to be effective in reducing emissions while being economically fair and socially acceptable. This can be based on highlighting subsidies that have worked well in the past, but can also mean that proposals for new designs of subsidies are put forward, based on results from the project.