An effective energy solution that could also boost the economy

It is clear that we need to transition from dirty coal power to clean, renewable energy sources in order to curb GHG emissions and make our nation more secure.  Although a movement away from the focus on profit and development would be best, the beginnings of our energy revolution will have to form in the private sector, with a certain amount of trust in the invisible hand of the market.

In order to cut emissions, different leaders have proposed carbon caps, carbon taxes, and carbon offsets.  But these are difficult to pass, and states such as California are struggling to meet their goals for renewable energy.

One approach that is not discussed as often is the feed-in tariff.  The March-April 2009 issue of Audubon has a good explanation of how this system works:

climateChange-tariffs-1

(Click here to download the PDF)

So anyone — a corporation or an individual — can produce clean energy, and they are guaranteed a profit when they sell the energy to the grid, because the utilities are required to pay a fair price.  Banks can make safe loans to producers, which would help them through these tough economic times.

So, does it work?  Well, Germany has been using the feed-in tariff since 1991, and total installed power cas quadrupled since 2004.  Germany now has a booming energy sector, producing 55% of the world’s solar capacity.  The cost of electricity to German families has increased just $4 per month — much cheaper than other options.

The feed-in tariff could be very successful in the U.S.  Minnesota alone gets more sunlight than all of germany.

Six states (Minnesota, Illinois, Rhode Island, and California) have introduced feed-in tariff bills, and similar laws are being considered in eight other states.  This legislation could potentially take effect sooner than a national plan, such as Waxman-Markey, since it would not have to be passed by Congress.

So far, feed-in tariffs are one of the only policies that could work swiftly enough to reduce GHG emissions as drastically as scientists say we must.  And it could boost the economy at the same time.  I’m neither a scientist nor an economist, but it sounds like a good idea to me.

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