Renewable Heat Incentive in Northern Ireland: Devolved government policy failure

IMPACTNorthern Ireland’s (NI) devolution model has been much discussed and the issues regarding consociational political institutions have often been to the fore in such discussions. This article takes a different, more economistic approach in order to provide insights for practitioners (for example those concerned with the devolution of economic levers). The article revisits the case of the Renewable Heat Incentive (RHI) scheme in NI and connects this policy failure to more general design issues involving political decentralization. A range of factors—including soft budget constraints and strategic behaviour by beneficiaries—went into explaining why imitating the design of the RHI scheme in Great Britain would have been superior to what transpired. The case illustrates once again that any alleged economic dividends from devolution are far from automatic. Practitioners need to become more aware of industry lobbying and on consultants distorting policy.