Policy Dismantling and Policy Inertia: Renewable Energy Policy in Germany and Italy

Why do renewable energy policies persist in some jurisdictions and are dismantled in others? To answer this question, Gürtler et al. (2019) have proposed a framework that combines elements of policy design, political economy, institutional constraints and macro-level factors. This paper further refines and tests this framework on the contrasting cases of Germany and Italy. Despite a similar explosion of costs in the late 2000’s, the German policy has proven robust, while Italian policy was successively dismantled and finally terminated in 2013/2014. Both countries are characterized by a high level of institutional inertia and corporatist forms of consensus-building, yet present differing responses to similar policy challenges. These similarities make the comparison particularly relevant for further refinement and validation of the framework, enabling the isolation of key distinguishing factors. In particular, the paper provides further elaboration of the interplay between the various elements of the framework and how this influences policy dismantling or policy inertia, respectively. Moreover, drawing on the literature on the role of ideational processes in facilitating or constraining policy change (Beland, 2009), the paper further elaborates the conceptual underpinnings for understanding the mechanisms that mediate between immediate policy outcomes and their feedback effects within the process of decision-making. Empirically, the paper provides a review of the two cases following the four elements suggested in Gürtler et al. (2019). Within this context, it provides a detailed analysis of the decision-making process at critical junctures in each country. Based on the transcripts of parliamentary hearings, the paper compares the arguments brought forth by stakeholders during the process of policy deliberation and traces how these arguments were translated into final policy decisions in the two countries. It relates the outcomes of this analysis to the broader political economy and its interactions with policy design and institutional constraints. The paper highlights two central findings. Firstly, in Germany, the paper reveals a significant discrepancy between the broader public debate and the more technical policy discussions that took place in parliamentary hearings. While the broader public debate included a strong focus on policy costs, parliamentary hearings focused on the adjustment of policy design to changing market and technology conditions. Moreover, actors from the renewable energy industry were dominant in parliamentary hearings. In Italy, policy debates in parliament were dominated by incumbent actors and focused primarily on policy cost. Secondly, in Germany, the upper chamber of parliament (Bundesrat) acted as an important moderating factor in the decision-making process. In Italy, on the other hand, the institutional constraints that are typical to Italy’s parliamentary system were temporarily suspended, due to the country’s severe macro-economic instability, due to the global financial crisis. The caretaker government led by Mario Monti, a professor of economics, had a free reign to take strong policy action to safeguard economic and financial stability. This highlights the potential link not only between macro-level factors and the political economy of the policy field but also between macro-level factors and institutional aspects of the policy dismantling process.