Pictured:  A wind farm in Neuenkirchen, Germany
(click to expand)

Despite the advances in clean energy technologies from solar to wind power to biofuels, fossil fuels still provide the vast majority of our energy needs.  The reasons are complex yet fundamentally simple:  despite their rising prices, oil, natural gas, and coal are still cheap.  Meanwhile, complex regulations coupled with prohibitive prices make technologies like solar panels expensive for both businesses and families.  In the United States, the various layers of government makes it difficult for clean energy to complement or replace fossil based fuels.  Tax credits at one level may not work if local regulations make it difficult for homeowners to install solar panels, for example--and power purchase agreements are often problematic if someone wants to sell his or her home or commercial building to another owner.

The feed-in tariff would be the best method for cleaner forms of energy to scale.  Under such a system, utilities would be obligated to purchase renewable energy produced by individual homes or businesses.  Solar power generated on top of a home or warehouse in Los Angeles, for example, could then become a revenue stream for the individual who invested in that wind turbine or solar arrays.  The utility, in turn, could recoup that cost and spread the price differential across its customer base.

Feed-in tariffs are the reason why Germany--hardly known for a sunny climate--has become a world leader in solar technology.  While feed-in tariffs will cause a small rise in utility bills (in Germany the average household paid about 4 Euros more monthly), the long-term effect was to lower electricity rates.  Renewable technologies are allowed to scale, which brings down their costs while utility consumers gain more protection from spot prices which can spike at the slightest hint of political turmoil abroad.

The fact is that oil will only become more expensive and difficult to extract.  Fossil fuels will never go away--but we need to add to our nation’s energy portfolio, and the time to start is now.  A feed-in tariff would allow clean energy technologies to become even more mainstream while encouraging more innovation and of course, jobs.

This posting was featured on The Enviance Blog on April 22 as part of its Earth Day series.

About The Author

Leon Kaye
