Do you think Feed-in Tariffs will work to fast track our economy to a clean energy industry?

Question

I have read a lot about the Feed-in Tariff and it seems to be working in Germany. I do not completely understand the economics behind it. I'm sure there are pros and cons but can this work quickly because that is what we need? I am a Geosystems Engineering student at the University of Texas at Austin and I continually hear that we need to be heading to a clean energy future. I have been to guest lectures where scientists that are on the IPCC say that dangerous climate change will occur if temperatures rise between 2 and 3 degrees Fahrenheit. Now, new timelines have emerged and we have even less time than they thought. We need a fast solution to avoid this calamity.

T. Boone Pickens proposes that we use wind to replace the electricity produced by natural gas and use that natural gas toward relieving the transportation sector from foreign imports. Although I believe he is looking in the right direction, I do not believe another carbon based fuel source is the answer.

What do you think? I would like to support the "we can solve it campaign" but I do not know what I need to do. We as Americans can solve this problem but I just don't know where to start.

Any Ideas?

Answer 1

There is no doubt that feed-in tariffs, production tax credits and other financial incentives are essential to the majority of the clean energy industry.  The solar and wind industries are highly dependent on tax credits to make them competitive with fossil fuels. Tax credits have a major drawback because these incentives reward particular technologies in an attempt to skew the market towards a perceived solution.

An alternate approach is a carbon tax.  This method would skew the market away from fossil fuels and would provide incentives for entrepreneurs to develop new and innovative sources of energy.  This technologically neutral approach enables technologies to be selected by their technical merits instead of for political considerations.

The corn ethanol industry illustrates the dangers of subsidizing a particular technology.  Biofuels, and ethanol in particular, are not necessarily inappropriate solutions if the proper feedstock is utilized but a ethanol-specific tax credit in addition a corn subsidy encouraged a solution that has had a questionable effect on the environment and cost billions of dollars. This wasted capital could have been redirected at other renewable technologies.

Germany's feed-in tariff has caused an enormous boom for rooftop photovoltaic cells in county with a modest solar resource.  The tax dollars spent on PV in Germany could have been spent on a more appropriate solution such as conservation and geothermal.

Making carbon expensive will allow the market to select the most appropriate technology for any particular application and allow for more money to be spent on R&D.

Answer 2

yes they work, energy companies hate them, thats why u.s. and u.k. dont have them yet. germany does not have a socialist government at the moment, it is the christian democrats. they do have a strong chancellor (Merkel) who takes no messing and has rather better foresight than most world leaders.

Answer 3

Germany is socialist so feed in works.  In america were are a democracy and capitalist so feed in is a forced economic system that will double the cost of energy.

Here's why.  The utility companies that will be forced to buy alternative energy have two laws that will kick in. 1) The utility company must back up all solar and wind energy with standby generation at 85% of capacity. IE, if they buy 100 MW of wind power, they must buy 85MW of gas fired turbines or Diesel generators at the same time.

2)  Utilities are guaranteed a 8% profit, the more they speed, the more they can charge the customers, so they won't care how much the wind farm or solar farm charges them.  This whole process take capitalism out and the customer has no control.  THIS IS NOT A DEMOCRATIC way to run energy.