The political economy of financing climate policy – Evidence from the solar PV subsidy programs

Résumé

We analyze the political impact of a generous solar panel subsidization program. Subsidies far exceeded their social benefit and were partly financed by new taxes to adopters and by electricity surcharges to all consumers. We use local panel data from Belgium and find a decrease in votes for government parties in municipalities with high adoption rates. This shows that the voters’ punishment for a costly policy exceeded a potential reward by adopters who received the generous subsidies. Further analysis indicates that punishment mainly comes from non-adopters, who change their vote towards anti-establishment parties.

Mots-clés

financing climate policy; photovoltaic systems; retrospective voting, buying votes;

Codes JEL

C23: Panel Data Models • Spatio-temporal Models
D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies
Q48: Government Policy