It was in Germany that Ed Regan realized Gainesville, Florida, was going about things all wrong. The assistant manager at Gainesville Regional Utility (GRU) was out looking for ways to boost his city’s renewable energy capacity. "Germany was a game-changer," Regan says. Wind turbines and solar panels seemed to be everywhere. He soon learned the secret.
Before Regan’s June 2008 trip, the GRU was trying to promote small-scale renewable energy generation by offering hefty cash rebates to customers who installed solar photovoltaic panels. And it had a "net metering program" that allowed customers who generate their own power to run their electricity meters backward, thereby cutting their electric bills potentially to zero.
But the programs weren’t attracting a great deal of interest. The utility’s rebate program had yielded only 300 kilowatts of solar power capacity–roughly the amount of electricity used by 160 hair dryers–and it cost a lot of money.
The difference between Gainesville and Germany was that Germany had a national feed-in tariff. Under this system, energy consumers can become renewable energy producers by installing solar panels on their roof or a wind turbine in their backyard and selling their energy to the local utility. These customers-turned-producers receive above-market prices for their energy, often for up to twenty years. With the feed-in tariff, Germany boosted its renewable energy production from 1 percent of its total output in 1995 to 12 percent in 2005. By 2007 renewables supplied 14 percent of Germany’s electricity. Denmark and Spain also have successful feed-in tariff programs.
So this past March, Gainesville rolled out its own feed-in tariff. GRU now pays twice the retail cost for every kilowatt of solar power-generated electricity. The extra cost means a small increase in electrical bills for all utility consumers, less than a dollar per month per household.
But in order to keep consumer prices down, the feed-in tariff is limited to expand by only 4 megawatts of solar photovoltaic capacity per year, for six years. And the first year’s quota was snapped up in just two weeks. The program now has a waiting list through 2016. Rather than a bunch of homeowners each installing a few panels, the Gainesville quotas were mostly taken by commercial investors.
Among them is Dave Davis, a north Florida native who after sixty-five years in wholesale and retail gasoline distribution is getting into solar. "I have six acres out back where I am going to put the solar," says Davis, whose Southern drawl makes the word sound exotic, almost foreign: soh-laar. "I been on both ends of the oil companies," he says, "and I’d like to see a lot more solar here in Florida. A lot less dependency."
For Davis, the small solar farm represents income security for his heirs. But the larger wisdom of feed-in tariffs is also clear. Studies show that such laws boost green energy production. And feed-in tariffs transform the economic function of the electrical grid: no longer is it a centralized technological embodiment of corporate power and hierarchy. With feed-in tariff legislation, electricity starts running both ways along the wires. And by extension, so does money and political power.
Perhaps that’s what’s keeping feed-in tariff legislation from spreading in the United States: it begins ever so slightly to break the near-monopoly of the private utilities. It creates new economic constituencies (small, clean-power producers), and it is a reassertion of the state’s right to control its infrastructure.
Gainesville’s solar program is one of many attempts to boost green energy production across the country. From California to Vermont, an increasing number of states and municipalities are moving to adopt feed-in tariffs and other innovative strategies for boosting clean energy production and reducing energy consumption.
Unfortunately, these efforts are Lilliputian in the face of climate change. The United States and other developed countries must cut carbon emissions by 80 to 95 percent over the next few decades to avoid very serious climate change. That goal is not impossible to meet. Numerous studies indicate that the United States could dramatically improve its renewable energy capacity if it had the right policies and financing. But in conversations with public officials, utility operators, small-scale energy producers and green energy advocates, one issue emerged again and again: the United States lacks long-term national clean energy planning. Basically, the government has done little to end the monopolistic hold that private utilities and fossil fuel industries have on energy policy.
First, though, some good news: more than thirty states have implemented renewable- or alternative-energy portfolio standards. These are policies that require electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. California Governor Arnold Schwarzenegger recently increased his state’s standard from 20 percent by 2010 to 33 percent by 2020. Several other states are shooting for 25 percent by 2025, with Hawaii aiming for 70 percent by 2030. And California, Hawaii, Wisconsin and Vermont all have feed-in tariff legislation.
"You can’t really look at renewables in a vacuum, though," says Terry Tamminen, a climate change expert at the New America Foundation. "The other side of the fight to reduce carbon emissions is energy efficiency. Progress on these two fronts makes me much more optimistic about what can be accomplished in meeting greenhouse-gas reduction targets."
Here, too, states are taking the lead. Passed in 1978, California’s aggressive energy efficiency standards have reduced emissions by 30 million metric tons annually. That is equivalent to taking 6 million passenger cars off of the streets each year. Seven other states have set similar standards. Fifteen years ago, a two-kilowatt rooftop solar panel could meet 40 percent of a typical consumer’s energy needs. Today, through technological improvements to most household heating and cooling systems and appliances, that same solar panel could meet 65 percent of that need. Not only are customers’ bills declining; so are their carbon footprints.
The federal government continues to lag behind reform-minded states and municipalities. Both versions of climate change legislation under debate in Washington do little to boost clean energy production; the emission reduction targets are soft, and neither bill includes a feed-in tariff provision.
"The House bill and the drafts in the Senate are weak and wouldn’t add anything to what states have already done," says Steve Clemmer, research director of the Union of Concerned Scientists’ Clean Energy Program. Without long-term, stable planning at the national level, many investors will be too afraid to sink the huge sums of capital required to build out the massive clean energy infrastructure needed.
The one piece of federal support for clean energy that has existed for more than a decade is a set of production and investment tax credits for renewable energy projects. But Congress frequently allows these credits to lapse before reinstating them, thus creating market uncertainty that scares off investors who might otherwise be willing to build wind farms, solar plants or tidal power facilities.
"If the federal government only offers production tax credits for one or two or three years at a time, it doesn’t give investors enough time to deploy capital and ensure it’s there when projects come on line," explains Clemmer. Many projects depend on such credits to make money, so the threat of losing the credits drives investors elsewhere.
Opponents of green energy argue that it needs public subsidies because it cannot compete in a free market. Greens disagree: "The idea that we have a level playing field for alternative fuels production in the US is patently absurd," says Steve Kretzmann, executive director of Oil Change International. He and others point out that the government has given tax breaks, cheap recourse leases and direct investments to fossil fuel industries for more than a generation.
In just the past few years, from 2002 to 2008, coal, oil and natural gas companies received $72.5 billion in subsidies, while the alternative energy sector benefited from $29 billion–more than half of which went to biofuel industries, which are essentially the agribusiness lobby.
A robust federal clean energy policy would have positive spinoff effects throughout the economy. Infinia Corporation, which builds concentrated solar power systems, illustrates this point: upward of 90 percent of its components come from–of all places–the automobile parts industry.
"When we speak to our suppliers," says an Infinia vice president, Peter Brehm, "they are very excited by the growth possibilities in clean energy, which contrast sharply with the lack of growth, or even contraction, in the automotive industry." Infinia employs just 150 people globally, but its example points to the potential for a green rehabilitation of the nation’s battered manufacturing sector.
The Apollo Alliance, a national coalition of labor, business, environmental and community groups, estimates that a ten-year, $500 billion investment would create more than 5 million green-collar jobs, many in the highly paid skilled-crafts sectors. A $100 billion stimulus package spent over two years, according to the Center for American Progress, could net 2 million jobs in clean energy industries. Although projections of a clean energy-driven economic recovery vary, a strong consensus has emerged since last year’s economic meltdown that a strong stimulus package promoting green energy could spur job recovery.
The Treasury Department recently allocated $500 million in grants and tax breaks to renewable energy producers, bringing the Obama administration’s total funding for green power industries to $1 billion. The administration has committed to extending that amount to $3 billion, which could bring about a doubling of renewable energy production. Even so, this amount remains a fraction of what fossil fuel industries receive.
Another problem is that the clean energy industry, such as it is, is hardly distinct from the old fossil fuel-dependent energy sector. Most utilities that invest in and sell green power also burn coal and gas. And their boards interlock with the fossil fuel industry.
Clean industry trade groups, like the American Wind Energy Association, have boards that include representatives from utility groups such as General Electric and T. Boone Pickens’s Mesa Power. Is it any wonder that the alternative energy sector lacks a robust lobbying effort? After all, these are not environmental organizations; they are trade groups seeking profits for their members. And within their ranks lurk members that stand to lose millions through greater energy efficiencies or through requirements to shift toward renewables.
Meanwhile, the old fossil fuel sector lobbies hard. Through the first nine months of 2009 the oil and natural gas industries spent a staggering $120.7 million on lobbying. Coal companies spent an additional $10.4 million; electric utilities, $108.2 million. Conversely, alternative energy industries–including biofuel companies–have spent $23 million, with the American Wind Energy Association alone accounting for a fifth of that amount. Most other renewables trade groups spend tens of thousands rather than millions of dollars.
The alternative energy sector’s deficiencies aside, the problem remains one of federal action–or rather inaction. Damon Moglen, global warming director at Greenpeace, says, "We have the answers. We are not talking about developing new technologies in order to shift from fossil fuels to renewables. We are talking about using available, off-the-shelf renewable energy systems to radically change the way we produce energy. Ultimately, it’s a question of political will."
In Germany, land of the feed-in tariff, local and state governments led the way for years, but eventually the federal government got on board. The question for Congress and the Obama administration is, When will they follow our states and municipalities, and fully embrace clean energy?