A Free-Market Environmentalist Transition toward Renewable Energy: The Cases of Germany, Denmark, and the United Kingdom

Abstract

Renewable energy (RE) is one of the most popular public policy orientations worldwide. Compared to some other countries and continents, Europe has gained an early awareness of energy and environmental problems in general. At the theoretical level, free-market environmentalism indicates that based on the principle of private property rights, with fewer state interventionist and regulation policies, entrepreneurs, as the driving force of the market economy, can provide better services to meet the necessity of offering RE to protect the environment more effectively. Previous studies have revealed that Germany, Denmark, and the United Kingdom have made some progress in using the market to develop RE. However, this research did not analyze the three countries’ RE conditions from the perspective of free-market environmentalism. Based on our review of the principles of free-market environmentalism, this paper originally provides an empirical study of how Germany, Denmark, and the United Kingdom have partly conducted free-market-oriented policies to successfully achieve their policy goal of RE since the 1990s on a practical level. In particular, compared with Germany and Denmark, the UK has maintained a relatively low energy tax rate and opted for more pro-market measures since the Hayekian-Thatcherism free-market reform of 1979. The paper also discovers that Fredrich A. Hayek’s theories have strongly impacted its energy liberalization reform agenda since then. Low taxes on the energy industry and electricity have alleviated the burden on the electricity enterprises and consumers in the UK. Moreover, the empirical results above show that the energy enterprises play essential roles in providing better and more affordable RE for household and industrial users in the three sampled countries. Based on the above results, the paper also warns that state intervention policies such as taxation, state subsidies, and industrial access restrictions can impede these three countries’ RE targets. Additionally, our research provides reform agendas and policy suggestions to policymakers on the importance of implementing free-market environmentalism to provide more efficient RE in the post-COVID-19 era.

Impact of the COVID-19 Pandemic to the Sustainability of the Energy Sector

“…Andiappan et al [53] analyzed the challenges for biomass energy development in the post COVID-19 era. Wang et al [54] provided policy suggestions for the implementation of freemarket environmentalism in order to achieve the development of more efficient renewables in the post-COVID-19 era. De Blasis and Petroni [120] investigated price and volatility linkages between renewable energy and oil firms during the pandemic.…”

“…The review and analysis of empirical studies dealing with the measurement and identification of the COVID-19 pandemic to the sustainability of the energy sector allows us to provide a broad map of the problem and gives solid background for further research. The analysis of the papers also allowed us to identify papers, which proposed the policy measures adopted for mitigating the negative impacts of the COVID-19 pandemic, e.g., [20,38,54,121,123]. Therefore, future energy policy should pay particular attention to the changes in energy sector and recent achievement of scientific studies in the field.…”

The Subsidized Green Revolution: The Impact of Public Incentives on the Automotive Industry to Promote Alternative Fuel Vehicles (AFVs) in the Period from 2010 to 2018

“…Accordingly, several nations intend to reduce their dependence on fossil fuels, and particularly a wide range of western countries intend to reduce their reliance on the crude oil-producing OPEC countries [1,19,25]. Consequently, throughout the past decade, a notable transition towards renewable energies was incentivized by governments and multinational institutions [2,30,84,85]. Moreover, the impact of the transport sector on climate change and energy-related greenhouse gas (GHG) emissions has become a major aspect of political discussion throughout the past years [1,4,84].…”

“…Throughout the past decade, several fiscal incentives were launched in Europe, Asia, North America and other regions to minimize the consumer's total cost of ownership (TCO) of AFVs with the aim to increase their competitiveness and market share [2,28]. However, the currently seen transition has caused significant economic costs and an important distortion of the market [1,4,85].…”

From the Great Recession to the COVID-19 Pandemic: The Risk of Expansionary Monetary Policies

“…By the end of 2021, CPI data surpassed 6% in the US and stands at 5% for the Eurozone. The component that has risen the most is energy, a highly regulated sector that has been affected by the costs of the ecological transition that many countries have developed (Wang et al 2021). Although it is true that after the period of confinement, activity was reactivated and there have been many bottlenecks in international trade, the increase in prices is due to the fact that aggregate demand exceeds aggregate supply because of the fiscal and monetary stimulus policies we are analysing.…”