Renewable Energy Policy Outside the United States
Why Are They Doing It? |
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Europe's interest in renewable energy policy seems to go well beyond current U.S. policy. Why? First, it stems from collective environmental concerns, especially for climate change and urban air pollution. In addition, since Europe has fairly modest fossil fuel resources, coal and oil firms hold less political influence than they do in the U.S. Just as important, many electricity suppliers do not generate their own power, and thus have no vested interest in maximizing the use of a particular fuel. The European Union has reinforced individual nation's attitudes with tight emissions standards, policy positions advocating aggressive responses to climate change, and prohibitions on subsidies for fossil fuels. In Japan, the main impetus for renewable energy development has the pursuit of energy independence, though climate change and the Kyoto Protocol has been added to the Japanese government's list of concerns. Japan has pursued nuclear energy even more vigorously than renewables to meet these needs. National Policies Denmark Denmark's government has designed programs that coaxed its wind industry and wind technologies into commercial maturity — so much so that the Danish wind industry is the most competitive in the world with over half the world's sales and 16,000 domestic jobs. The government began with vigorous research and development (R&D) for wind, followed shortly by safety and quality certification with the input of utilities, insurers and turbine manufacturers. As the technology matured, the government provided subsides for up to 30% of the investment costs of a turbine. The subsidy program lasted 10 years before its repeal. Now, the government requires Danish power companies to pay 85% of the retail electricity price of wind energy. The latest incentives, albeit indirect, involve energy taxes on fossil fuels for their air emissions. Wind energy receives rebates in the taxation scheme. But the government was not alone in its efforts. The nation's wind guilds, or owners' co-operatives, helped to make wind turbines more palatable to communities and heightened confidence in the technology. Accordingly, insurance against the failure of the technology and the manufacturer became more affordable. Denmark is embarking on a more competitive program, similar to the Renewable Portfolio Standard first developed in the U.S. This new direction is driven for several reasons-—liberalization of Danish electricity markets, removal of trade barriers in the EU, and a desire to push cost-effective development of renewables by a maturing domestic industry. Germany Germany has relied principally on a combination of cheap loans and subsidies coupled with higher fixed payments for electricity produced by renewables. The 1990 Stromeinspeisungsgesetz , or Electricity Feed Law (EFL), requires medium to large utilities to pay 90% of the retail residential price for electricity produced by wind, solar, hydropower, and biomass resources. For wind energy, the German government provides subsidies based on electricity output or capital costs. National banks also offer loans at 1-2% below market levels to fund 75% of project costs for renewables. German wind development experienced a slight setback in mid-1990's when the very success of the EFL program was concentrated in the windy North, thereby placing disproportionate costs on northern utilities and their ratepayers. Subsequent protests fueled uncertainty over the future of the program, and chilled wind power's growth into 1996. However, by the end of 1997 Germany had an installed wind capacity of 2,081 MW—first in the world. For solar, the EFL's impact is also dramatic - 450% increase in PV installations from 1991 to 1997, with a 37% drop in prices. Investment in PV grew, making German firms such as Siemens lead the world in sales, and German PV factories a more frequent landmark. Building upon the EFL, Germany has begun a "100,000 Roofs" program for PV. The new program will include cheap loans issued by private banks directly to consumers, with little bureaucratic hassle. The program promises to be the largest single PV subsidy program in the world. Japan Until 1997, Japan's renewable energy policies focused on public-private collaboration for R&D, primarily for PVs and wind power. The only significant non-R&D program before 1997 was the "10,000 Roofs" Program, a successful subsidy program funded by electricity surcharges to pay one-third the installation costs of household PVs, with utilities purchasing any excess power at the retail price of electricity. The New Energy Law of 1997 focuses on technology deployment so that 3.1% of Japan's primary energy supply comes from renewables by 2010. The primary method of implementation features powerful "requests" from the government to energy suppliers to buy electricity generated by renewables. Suppliers will have to pay the retail price of electricity paid by the facility that is generating the power. Generators can require contract periods for up to 15 years, with the price to be paid varying according to the contract period. Japan's special push for PV—including a goal of 5,000 MW capacity by 2010—builds upon the 10,000 Roofs program with a 7-fold increase in program funding from 1994 ($20 million to $147 million). One of the aims of the program is to spur mass production of PV systems. So far, it is a major reason that Japanese PV firms shipped 35 MW in 1997. The Netherlands The Dutch government has worked with industry to develop compatible renewable energy policies that both protect the environment and strengthen the nation's trade balance. By 2020, the government aims for renewables to provide 10% of the nation's energy supply—a jump from 1% today. Dutch policy combines an impressive array of elements that:
United Kingdom Unlike the nations discussed above, the UK's primary renewable energy policy is the Non-Fossil Fuel Obligation (NFFO). The NFFO was not created primarily to advance renewables, but to protect a nuclear power industry that would have collapsed if it had to compete with coal power in a new open market for power. Still, the NFFO has spurred 840 MW worth of power delivered from wind plants. Within the NFFO, electricity providers must purchase a certain quantity of non-fossil power. If the non-fossil power costs more than fossil-derived electricity, revenues from a special tax on coal power (about $160 million in 1995-96) would fund the difference. The government funds generators using non-fossil fuels through revenues from a tax on all electricity. Generators qualify for government funded through competition within technology bands, such as bands for wind or small hydro. Winners receive long-term power contracts up to 15 years. Competition is completed in rounds, with five rounds completed by 1999. The latest round may spur the installation of over 1,000 MW of new renewable energy capacity over the next 20 years. The likelihood of this is still in question, as many firms may wait until the end of their allotted commissioning period to install capacity. Perhaps the biggest question for the NFFO is whether it can be credited with lowering renewable energy prices and minimizing costs for consumers, or whether it is merely squeezing profits and hindering the development of a healthy domestic renewable energy industry, which must rely on markets in nations with more nurturing policies in order to serve the British market. As is the question of total installation, these questions are also unresolved. Have the Policies Worked? A Look At the Photovoltaic Market The experiences of the nations discussed above generally point to the ability of concerted policies to spur the domestic installation of renewable energy capacity. Internationally, it appears that those nations with vigorous deployment strategies are capturing greater shares of the world PV market, with Japan and Germany leading the way in shipments. In addition, these nations are driving the global PV market—PV shipments worldwide have clearly responded to their new demand, which are helping to make PV a common commodity and not a high-cost niche product reserved for the space program. Lessons for the United States The experiences of industrial nations overseas yields several lessons for the U.S.:
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Renewable Energy Policy Outside the United States |
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