A cost-effective renewables policy can advance the transition to competition
- Environmental Defense Fund, Oakland, CA (United States)
- Barkovich and Yap, San Rafael, CA (United States)
A surcharge-funded production incentive is the best way to support the renewable energy industry. It`s consistent with a competitive industry framework, has the virtue of capping costs, and uses market mechanisms to maximize cost effectiveness. What policy should there be for renewable energy under new, competitive frameworks? Discussion has focused on a `renewables portfolio standard` (RPS) that would require every generator or retail seller of electricity to have a minimum percentage of renewable energy in its mix, represented by actual generating assets or by sufficient `renewable energy credits` indicating the generation of renewable energy. Discussions among a number of environmental, utility, and customer interests in California led, however, to an alternative proposed mechanism for renewable energy policy. Of course, market-based tradable permit schemes such as the RPS are all the rage today. Why do the authors - including the Environmental Defense Fund, the leading environmental advocate of such market mechanisms - promote an alternative approach? In brief, they crafted their mechanism with several key goals in mind: compatibility with retail competitive markets; efficient use of limited funds; and administrative efficiency. Their proposal also maximizes renewables development within strict costs limits, and encourages a transition to a self-sustaining renewables industry. They hope that comparison of alternative mechanisms for implementing a policy for renewable energy will help inform the debate and lead to wise policy choices, both in California and in other states seeking to move expeditiously through the transition to competition. The authors first describe the policy mechanism - a `surcharge-funded production incentive` - as well as alternatives, beginning with a brief description of the RPS. They then compare these mechanisms in terms of a number of attributes.
- OSTI ID:
- 443480
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 1 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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