Feed-in Tariffs in America: Driving the Economy with Renewable Energy Policy that Works
Around the world there is growing recognition to address the economic and climate crises together rather than separately. President Barack Obama has touted a green energy sector as the best chance of jumpstarting the economy, putting Americans back to work, and securing the country’s standing in a post-carbon world.
In the last decade there has been progress in renewable energy development in the United States, particularly at the state level. There are currently 26 states with mandatory renewable portfolio standards (RPS) and other policy incentives. But despite these efforts and the huge potential of U.S. renewable energy market growth, the gains of new installations are so far modest. Looking at Europe suggests that a simpler, more comprehensive policy achieves greater renewable energy investments with less costs, but more economic benefits: a feed-in tariff. Under this policy, renewable energies are guaranteed access to the grid, and are paid a long-term premium rate that is designed to generate an adequate profit for investors. These schemes have driven rapid renewable energy growth across Europe with Germany and Denmark at the forefront. Also, this policy resulted in large-scale local ownership, with near half of German wind turbines and over 80 percent of Danish ones owned by local residents.
In 2009, one Canadian province (Ontario) and one US municipal utility (Gainesville, FL) have enacted a feed-in tariff. As many as 11 U.S. state legislatures are seriously considering adopting the system as a complement to their renewable electricity mandates. This paper by John Farrell from the Minnesota based Institute for Self-Reliance explores why state and federal policy makers should strongly consider turning to a feed-in tariff as the key mechanism for encouraging renewable energy development. Its fairness, simplicity, and stability can help the United States maximize the benefits of the renewable energy revolution.
Download the paper (pdf, 932 KB, 36 pages)