Renewable Energy Incentives and the Role of the State and Federal Governments

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1 Renewable Energy Incentives and the Role of the State and Federal Governments

2 Renewable Energy Need for renewable energy policies Role of the states State based success Need for federal policy International lessons Conclusions

3 Need for Renewable Energy Policies Energy shortages Growing energy demand Fossil fuel pollution Dependence on foreign suppliers Renewable energy does not currently compete well

4 Role of the States Diverse regions Geographical Geological Ecological Federal regulations would be unproductive States are more knowledgeable twins.free.fr

5 Role of the States Sunlight abundance Texas Arizona New Mexico

6 Role of the States Wind abundance Wyoming New York Iowa Massachusetts

7 State Based Success Combination of multiple programs Strengths and Weakness Market-push incentives Reduce costs Increase revenue Market-pull incentives Create market for alternatives

8 Market-push Incentives Reason for Market-push incentives Reduce risk, Increase benefits Different types Production incentives Capital reimbursement incentives- grants, loans, rebates, buy-downs Example- New Jersey $26.6 million in solar rebates in % increase in solar installations

9 Market-push Incentives More Market-push incentives Income increasing incentives-tax exemptions, credits for personal, corporate, sales, and property taxes Net metering Buy from grid Sell surplus alternative energy to grid

10 Market-pull Incentives Reason for Market-pull incentives Creates market Removes barriers for entry Reduce risk Types of Market-pull incentives Government purchases Commitment to purchase set amount

11 Market-pull Incentives Types of Market-pull incentives Renewable Energy Standards (RES) or Renewable Portfolio Standards (RPS) Require certain percentage to come from renewable energy forms Establishes infrastructure

12 Renewable Energy Standards State California Renewable Energy % 20 % Time Period By 2017 Texas 3 % By 2009 Iowa 2 % Current

13 Market-pull/Market-push Integration Combination is most efficient One policy's strength is another policy s weakness Market-push creates initial incentive Market-pull creates long-run security Example- California Tax credits Resource availability studies 30 year power purchase contract

14 Need for Federal Policy Ensures all states are moving along together California has extensive incentive programs Alabama lacks net metering (essential program) Arkansas only market-push incentive Small Business Revolving Loan Fund Roles of Federal government External supporter Consequences for apathetic or hostile populations

15 Need for Federal Policy Current Federal policies only use market-push incentives Lack of Market-pull Interaction with state programs Current Federal tax credit bill= two year lifetime Causes uncertainty Need federal Renewable Energy Standards

16 International Lessons Australia emits 27% more CO 2 than the U.S. Low electricity prices Growing population Reliance on coal Largest coal exporter Fifth largest coal producers

17 International Lessons Measures addressing implementation of renewable energy Mandatory Renewable Energy target (MRET) quota system requiring large-scale energy producers to supply increasing amounts of renewably generated energy certificates in conjunction with qualifying generation or purchases of energy displacing technologies. sell surplus credits to underperforming counterparts, providing incentive for continued innovation and development Safeguarding the Future develop renewable energy and assisted help for MRET.

18 International Lessons MRET achievements - a market-pull strategy 92% of liable entities met obligations during the first year Questions still remaining and a lack of support Cost effectiveness? Inability to produce adequate development increases on its own Few policies and no funding from the federal level Complex bureaucracy and inefficiency have been a stumbling block Top down strategy Create Market Lack of buyers Direction for Success in Australia s Future Build on MRET Decentralization to provinces who are more willing to invest Increase market-push policies Avoidance of top down strategies

19 International Lessons Germany far greater renewable energy development than Australia or the US similar resources to US German Social norms lean toward renewables Sensitive to global warming Fear of nuclear energy since the Chernobyl disaster Therefore, little opposition to renewables German Measures for Renewable energy Feed-in Law- similar to American production incentives Energy firms pay renewable energy generators a tariff amounting to 90% of average electricity rate Increases income for producers Lowers market price and financial incentives

20 International Lessons Great success and positive feedback no provision for wind disadvantaged areas limited solar industry due to high costs By 2003, Wind Turbine industry second largest in the world What about solar? Eco-tax to make renewables more competitive Renewable Energy Sources Act polluters pay principle prices added security for investors Now valid investment option Germany leads world in roof integrated solar energy systems

21 International Lessons Perfect example of federal market-push schemes impact on investment Address region specific with tax incentives State policies may have reduced number of tax and tariff laws U.S. lacks majority government support and social norms policymakers Germany s success to support strong federal policies and justify the need for state based policies.

22 Conclusions Integration of strategies and incentives Market-push incentives Market-pull incentives Combination of State policies Federal policies that allow the states to utilize region-specific resources

23 Any Questions?

24 US DOE Energy Efficiency and Renewable Energy Website