FITs Gaining Support from Neoliberal Business Leaders

By Paul Gipe

In a surprising admission, businesses leaders gathered by Bloomberg’s New Energy Finance acknowledge that feed-in tariffs are a superior policy tool for developing renewable energy. The admission is unusual because many senior business leaders in the English-speaking world support a neoliberal world view that finds the regulated rate-setting necessary in feed-in tariff policy anathema.

Bloomberg recently released a summary of the meeting, the 2012 European Power Leadership Forum, that took place 13-14 November in Königswinter, Germany.

While the business leaders believe that a carbon tax is the best overall policy, it is closely followed by feed-in tariffs. However, carbon taxes are consistent with neoliberal philosophy.

Remarkably, the business leaders found feed-in tariffs are a far more optimal policy than Renewable Portfolio Standards, described in Europe as quota policies or by Bloomberg at the meeting as the Green certificates scheme.

Even more telling for Americans, less than 5% of participants found Reverse Auctions an optimal policy. In contrast, more than 30% found feed-in tariffs the optimal policy.

In describing feed-in tariffs, Bloomberg’s selected presenter said they “offer better efficiency for society and a better deal for the consumer, while also providing stable and predictable support for the generators.” Futher, FITs

Give clarity and certainty to developers and so have proven the best mechanism for incentivising rapid deployment, are

  • Better at capping excess profits than green certificates,
  • Despite being a price certainty mechanism, they can be
  • modified with caps, or declining returns, to reduce the risk of
  • excess build and manage total costs, and
  • Can support auto-production through net metering and partial
  • tariffs.

“Participants voted on the policy suggestions advocated by the panel (Figure 6). Interestingly there was wide disagreement over the optimal policy, with participants roughly equally split between carbon prices, feed-in tariffs and green certificate schemes. However, a clear majority argued that feed-in tariffs would remain the mechanism of choice through 2020.”