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Feed-in Tariffs Right for California and the Nation

Article by: Paul Gipe


After months of deliberation, with testimony from all sectors of the economy, the California Energy Commission is expected to soon call for a new policy intended to pump renewed vigor into the state’s lagging development of renewable energy.

The policy, called feed-in tariffs, is a simple idea: “If you pay for it, they will come.” If we pay what it costs to put solar cells on our rooftops, homeowners and small businesses will willingly, gladly, install solar systems on their rooftops. If we pay what it costs to build wind turbines that serve our communities, we will install wind turbines.

Earning a profit is a powerful idea, one that has launched Germany, France, and Spain to the forefront of renewable energy development. Yes, even France, that bastion of nuclear power, has one of the world’s most aggressive policies for the rapid development of renewable energy: feed-in tariffs.

Without feed-in tariffs, we’ll continue to fall further behind our rhetoric. The Energy Commission concluded that something must be done, and soon, or California will not meet its emission reduction targets by an embarrassingly wide margin.

The sad reality is that California’s reputation has been resting on its success earned long ago. Nearly all the new sources of renewable energy operating in the state were built during the 1980s!

Our failure to meet our renewable energy targets–despite our pious pronouncements-will send a damning signal to the international community that we’re not serious about our commitments to attack global warming. It will also discourage those companies and manufacturers that want to do business here that we’re not eager for the jobs and commerce that they would create.

Fortunately, the Energy Commission says there is a way out of the morass of failed policies that have strangled renewable energy development in the state. They suggest we emulate European success with feed-in tariffs.

With a fraction of California’s abundant sunshine, Germany installed ten times more solar systems last year than the sunshine state. Spain, with a population about that of California, installed ten times more wind energy last year than the state that pioneered commercial wind development.

That feed-in tariffs work at rapidly developing the massive amounts of renewable energy needed to meet our climate protection targets is no longer in doubt. That these payments for renewable energy generation are less costly and more egalitarian than the policies California currently uses is less well known.

In Germany, unlike California, anyone with a rooftop can install their own solar power plant. Because the payments for solar energy in Germany are designed to produce a profit–if all works as intended–any homeowner can with a usable roof can find low-cost financing.

It might be expected that the German, French, Spanish and a host of other European governments say that their sophisticated polices make more economic sense, are more environmentally beneficial, and equally as important, create more jobs than alternative policies. But it’s less likely those organizations not known for their knee-jerk liberal credentials, such as the International Energy Agency and accountants Ernst & Young, reach similar conclusions.

Ernst & Young and noted British economist Sir Nicholas Stern have both concluded that feed-in tariff policies not only produce the results desired, the rapid growth of renewable energy, but that they do so at the lowest cost to the ratepayer. And in so doing, these policies stimulate dynamic markets that continually push advances in the technology for all forms of renewable energy.

What does it cost consumers in Germany, the world’s leader not only in wind energy but in solar and biomass as well? About half a loaf of bread per week. Most Germans think that’s a good deal for creating a quarter million new jobs and 90 billion kilowatt-hours of electricity per year. If those renewable generators were located in California, itself once a world leader long ago, they would provide one-third of California’s consumption-equivalent to our emission reduction target in AB 32.

The state, rightly or wrongly, is considered a bellwether for not only the nation, but also the world. If we move forcefully and intelligently to adopt the best lessons from European experience with feed-in tariffs, we can again lead the continent in renewable energy policy instead of being an also ran.