National Recovery and Resilience Plan (NRRP), Energy Transition and Climate Change: An Alternative Incentive Mechanism for an Efficient Allocation of Public Resources
Donato Morea;
2021-01-01
Abstract
The awareness to protect and safeguard our planet is growing rapidly among most developed countries which indeed have adopted a progressive use of green resources. In this context, several policies have been set by European Union and in particular different forms of incentives have been adopted to make renewable energy production more profitable. Considering the commitment of the European Union and the limited presence of the resources, we want to investigate whether the incentive mechanism currently adopted to promote sustaianble development is the most effective or, with the same resources, there may be an alternative that can lead to better results for Member States and enterprises as well. Indeed, to start projects to produce green energy, a significant support of long-term credit capital is required but, in many European countries, companies tend to be undercapitalized and often encounters some resistance from the banking system in receiving long-term capital. For this reason, we want to verify whether an alternative incentive mechanism can allow a greater involvement of small and medium-sized enterprises in the energy transition and verify whether there can be an alternative that can lead to better results for both investor and companies’ financial structures. To analyze the impact of incentives on entrepreneurs and companies, we carry out a scenario analysis on a hypothetical wind farm with size and capacity in line with the European average and evaluate the potential costs and revenues by varying the key underlying variables. Specifically, a comparison was made between two alternative scenarios: the one currently adopted by the main European countries, which consists of ensuring a certain price for those who produce energy from renewable sources, and the one proposed in this paper, characterized by a different logic of public support that significantly reduces the minimum price, with the double effect of making the investment profitable for the energy producer (van levered = 0) and reducing the public burden. The article offers important reflections for scholars and policy makers who have long been committed to promoting sustainable development and is also relevant under the context of the new plan Next Generation European Union adopted by the European Commission.File | Size | Format | |
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