After more than a year of researching and writing on feed-in tariffs (FITs), I’m still amazed at how many people haven’t heard of them — especially people who by right should be shouting the subject from the rooftops. I refer in general to environmental campaigners, but also to the “can-do” types who see in renewable energy a personal economic opportunity and/or a chance to relieve the pressure on the climate system.
These groups, among many others, should have gotten hold of the concept by now and demanded government action. It is worth noting though, especially for the U.S. audience, that the original feed-in law, PURPA, was invented in the U.S.
Before going further, a brief explanation of FIT laws for the uninitiated: they place a legal obligation on utilities to purchase electricity from renewable energy installations. The tariff rate is guaranteed, and in the best examples, for a long period — say 20 years. The tariff rate is scientifically determined for each technology, to ensure profitable operation of the installation.
There are different design options for the law, including tariff degression; this reduces the rates each year — meaning for example that PV gets a lower rate if you install next year than if you install this year. One, it encourages swift take-up; two, it encourages manufacturers indirectly to increase design efficiency. If you are going to receive a lower rate, you want to generate more electricity. This drives innovation, making renewable energy a more rapidly evolving field — which is precisely what we all need.
The costs of the scheme should be shared among all end-users, so that no-one is overly burdened. In Germany (perhaps the most effective system, developed and supported politically since 1990), their law has made them a world leader in renewable energy, generated billions of dollars a year in exports, created in the region of a quarter of a million jobs, saved towards 100m tons of CO2 annually in recent years, and set records for installed capacity across many technologies — all at the cost of around $1.80 per household, per month.
These results are staggering, especially in contrast with the results of other policies, in other countries.
So, how do we stimulate discussion? How do we present energy and the environment in a context which moves people to actually act? For the organization I work for, the World Future Council, it is the moral and ethical case — although we have no hesitation about dangling the economic carrot. The ethical factor has been critical in many of the major social and political changes that have occurred in modern history, affecting slavery, suffrage, warfare, labor and human and civil rights.
The link between ethics and renewable energy is short and clear: we do not have the right to destroy the conditions for life on earth by continued use of climate-damaging energy sources; we must replace them with clean, safe, abundant and geopolitically-benign renewable energy; the mechanism proven to deliver the fastest, lowest-cost renewable energy deployment is the feed-in tariff (FIT), often referred to in the U.S. as the advanced renewable tariff (ART).
We have clear problems (environmental protection, energy security, etc.) and a clear solution. It works extremely well for the European countries who have become world leaders in renewables, and the law has helped to raise awareness, participation and support for renewables. See Craig Morris’s recent ‘RE Insider’ piece on Former U.S. Vice-President Al Gore’s proposed ‘electranet’: Gore is essentially endorsing the concept of FITs, by another name.
The alternatives to FITs are poor by comparison. In this context, they tend to be one or all of the following: inefficient, inequitable, ineffective and expensive. The UK scheme is, sad to say, embarrassingly replete in terms of these shortcomings. In a recent documentary made for BBC World on feed-in tariffs, entitled “Pay-back Time”, the UK government was invited to comment, comparing the systems and performance of the two countries. They declined.
Certain German utility companies that have relentlessly fought the German law — because it threatens their market domination — were invited to state their case. They declined. Despite this, the documentary provides a whirlwind tour of how the system has succeeded in Germany, as well as in Mauritius, where it is used to provide the sugar industry with funds from burning waste ‘bagasse’ to generate electricity.
So, why have more countries not pursued this course? The reasons are open to conjecture, but a common suggestion concerns the preference in certain countries for market-based solutions to — everything.
While it is true that markets are often excellently self-organizing, with many concomitant benefits, fossil fuels are not sufficiently required to address the damage that they cause to life on earth, and they continue to attract large subsidies — in itself a market distortion. Ernst Ulrich von Weizsacker, founder of Germany’s Wuppertal Institute, referred to this as “telling the ecological truth”.
Hitherto, the market has indeed been deafeningly silent on this issue. Such subsidies run against all sense — in terms of health and survival. Instead of the polluter paying appropriately, we are paying the polluters. If conventional energy was priced in terms of environmental externalities, it would in all likelihood be simply uneconomical. Thus, the market ideology is often self-deceiving and arbitrary.
But why do governments choose not to take the decision to end climate damaging subsidies, even if emissions reduction targets demand it? How many opposition governments even have this as part of their manifesto? Conventional energy still provides many jobs. The subsidies are entrenched. The energy infrastructure is built around conventional energy. Energy companies are extremely powerful entities who brook no competition. The market and regulation environments are still set up to reward them for their behavior. However, recent legislative moves in the U.S. on the EPA regulating CO2 emissions may well help the push in the opposite direction.
But — what will the response be from the energy industry? ‘Clean’ coal? Nuclear — greenwashed into appearing to be an environmental saviour? The quote that “for fifty years, nuclear has been a solution in search of a problem” is as pertinent as ever. How could the environmental movement have spawned such an opportunity for people to throw money at its old enemy? The irony is deeply felt, and with one eye on the attractiveness of large, controllable, centralized solutions — certain governments are only too delighted to get on board.
The UK would probably be a world leader in renewables today if Thatcher had not gone nuclear in the 1980s. We had the intellectual and institutional resources, and a manufacturing sector desperate for product as the Tories sold off national industries and privatized everything possible — including public transport, the repercussions of which are still felt daily. If you’ve tried to get around on British trains in particular, you’ll be aware of the outrageous expense, overcrowding and poor service compared to the rest of Europe.
It seems inconceivable that Prime Minister Tony Blair is desperate to make the same mistake again — despite the recent court decision that showed that the consultation process was “misleading” and “deeply flawed”.
Nuclear, or for that matter the resurgence of the coal industry, will cost a great deal of money. Should those sums of money seriously be invested in areas that are so destructive and dangerous, and counter to every scientific imperative of our times?
Even at present rates of use, Uranium reserves are likely to be dry by mid-century. Why should countries throw money at projects with such obvious shortcomings and low life-expectancy? Could it be that power, influence and the reach of the industry, backed by the International Atomic Energy Agency (IAEA), is a more persuasive force than the smaller-scale, decentralized renewables industry, with its image of smiley-faced vegetarian entrepreneurs?
Should we be working harder to bring into being IRENA — the International Renewable Energy Agency — as a counterweight to the IAEA? Could it be that we still haven’t cracked the marketing to the public at large? The moral high ground, even in combination with scientific necessity, has not overcome the real world of politics yet. It is unlikely that we even have the time to use new nuclear build as a solution.
However, Silicon Valley and its equivalents in Germany, Spain, China, India and elsewhere are working around the clock on the real energy innovations. Renewables will be the biggest business in the world — if we are to seriously address the needs of future generations, never mind their wants. With so much at stake, and such a clear moral duty to these future generations, the natural place to start is with the best method of deploying renewables — and that is proven to be FITs.
Miguel Mendonca has studied and trained in forestry, landscape management, journalism, geography and history, and is now undertaking an MA in Environment, Policy and Society. He is a research associate for the Schumacher Institute for Sustainable Systems, a visiting fellow at Bristol University, a consultant to Artists Project Earth and a freelance writer on sustainability issues. Miguel has been working as a World Future Council researcher since January 2006, producing the first WFC policy publication, ‘Policies to Change the World’ and the 2007 book ‘Feed-in Tariffs: Accelerating the Deployment of Renewable Energy’.