External publications

Rent management and policy learning in green technology development: the case of solar energy in India

Altenburg, Tilman / Oliver Johnson / Tobias Engelmeier
External Publications (2014)

in: Anna Pegels, Green industrial policy in emerging countries, London: Routledge, 104-125

ISBN: 978-0-415-87067-2
Information

In order to avoid irreversible damage to global ecosystems, new ‘green’ technologies are needed, some of which are nowhere near commercial maturity. In these cases, governments may create temporary rents to make investments ‘artificially’ attractive, but the creation of such rents involves risks of faulty allocation and political capture. This article first highlights the importance of managing rents effectively in promoting ‘green’ technologies; it then shows how India's National Solar Mission has been remarkably effective in triggering solar investments and managing the necessary subsidies, e.g. through a process of competitive reverse bidding for tariffs. Policy design and implementation also reflect considerable experimentation and learning. Some risks remain, especially regarding the enforceability of renewable energy quotas at the level of Indian states. Local content policies failed to achieve the expected results, leading to rent capture without societal benefits.