What Drives States to Support Renewable Energy?

Why do states support electricity generation from renewable energy sources (RES-E)? Lyon and Yin (2010) have answered this question for the U.S. states. This article supplements their work by testing the hypotheses on the EU27 sample. Isolating the driving factors of policy adoption, the study conducts two logistic time series cross-section regression analyses that run on a hazard model. Evidence in support of Lyon and Yin is provided. First, (a) the existence of a solar energy association, (b) farmers'' interest (c) high solar radiation and (d) the EU Directive 2001/77/EC increase the probability of a state to adopt regulation that promotes investment in RES-E systems, given the state did not introduce this kind of policy in previous years. Second, (e) high coal industry employment, (f) high natural gas consumption, (g) high unemployment rates and (h) high hydroelectric power capacities reduce the probability of transition.