Renewable Energy Incentives and the Role of the State and Federal - PowerPoint PPT Presentation

Renewable Energy Incentives and the Role of the State and Federal Governments www.bakersfieldvision2020.com www.kis.uni-freiburg.de April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Renewable Energy • Need for renewable energy policies • Role of the states • State based success • Need for federal policy • International lessons • Conclusions April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Need for Renewable Energy Policies • Energy shortages • Growing energy demand • Fossil fuel pollution • Dependence on foreign suppliers • Renewable energy does not currently compete well www.cnn.com April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Role of the States • Diverse regions – Geographical – Geological – Ecological www.infomotions.com • Federal regulations would be unproductive • States are more knowledgeable twins.free.fr April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Role of the States • Sunlight abundance – Texas – Arizona – New Mexico http://www.eere.energy.gov/consumer/pdfs/130.pdf April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Role of the States • Wind abundance – Wyoming – New York – Iowa – Massachusetts http://www.nrel.gov/wind/images/wherewind800.jpg April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

State Based Success • Combination of multiple programs • Strengths and Weakness • Market-push incentives – Reduce costs – Increase revenue • Market-pull incentives – Create market for alternatives April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 2005 – 65% increase in solar installations April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Renewable Energy Standards State Renewable Time Period Energy % California 20 % By 2017 Texas 3 % By 2009 Iowa 2 % Current April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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. April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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. April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

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 April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

Any Questions? April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue

US DOE Energy Efficiency and Renewable Energy Website http://www.eere.energy.gov/ April 24, 2006 Brett Mckeon, Dylan Minert, Rebecca Alternative Energy Rockwell, Morghan Transue