Gainesville’s feed-in tariff program is limited to 4 megawatts of solar PV each year. The program is already fully subscribed through 2015 — a 24-megawatt commitment.Photo courtesy U.S. NRELClean energy advocates in Europe have long considered the feed-in tariff as an antidote to the industrial world's fossil fuel dependency. Now, the United States and Canada are starting to catch on as well.

Feed-in tariffs (FITs) guarantee that anyone who generates electricity from a renewable energy source -- whether they are a homeowner, small business, or large electric utility -- is able to sell that electricity into the grid and receive long-term payments for each kilowatt-hour produced. Payments are set at pre-established rates, often higher than what the market would ordinarily pay, to ensure that developers earn profitable returns.

The FIT is credited for the rapid deployment of wind and solar power among world renewable energy leaders Denmark, Germany, and Spain this past decade. Similar policies have since been adopted by many other countries, leading the FIT to become the most prevalent tool for promoting renewables.

In North America, its adoption has been relatively slow. As public support for renewable energy increases, however, more governments are adopting FIT policies -- often as a complement to the widely used Renewable Portfolio Standards (RPS) that require utilities to purchase minimum amounts of renewable electricity.

Several U.S. states and Canadian provinces began serious consideration of the FIT last year. More than a dozen states, one province, and numerous municipalities have since implemented some form of FIT.

"We've reached a tipping point where a feed-in tariff is no longer such an odd idea for America," said Paul Gipe, the author of several books on wind energy and a FIT advocate. "In fact, it's the best idea for rapid development of the massive amount of renewable energy that's needed now."

Renewable energy projects have often struggled to gain the confidence of investors, a problem the FIT policy addresses by ensuring that anyone with a sun-drenched roof or windy backyard may receive funding for a set period of time, normally 15-20 years.

"A lot of the charm of the feed-in tariff is solid, take-it-to-the-bank security and confidence for the investing community," said U.S. Representative Jay Inslee, a sponsor of legislation that would establish a nationwide FIT, at a Washington, D.C. briefing earlier this month. "You get access to what is very difficult to get right now: financing."

Not all FIT policies are created equal. The North American programs enacted to date often limit the level of economic incentive, the project size, and the renewable energy source, compared to large-scale programs enacted in Europe. Small-scale renewable energy advocates are praising FIT programs approved this year in Gainesville, Florida; Vermont; and Ontario as examples that North America should follow.

Gainesville, Florida

Florida, the Sunshine State, is blessed with bountiful solar resources to support renewable electricity. In the northern city of Gainesville, the municipal utility has helped ratepayers purchase their own solar panels since 1997. The program has partially financed some 40,000 watts of solar photovoltaic (PV) panels, but until recently there was no incentive for homeowners to install the panels properly.

"We weren't getting energy bang for the buck," said John Crider, an engineer with Gainesville Regional Utilities' strategic planning department. "People could get the rebate check and put their solar panel in the shade."

Last year, Assistant General Manager Ed Regan visited Germany, the world's leader in grid-connected solar PV, on a trip coordinated with the Solar Electric Power Association. Impressed by Germany's FIT policy, Regan convinced the Gainesville City Commission to approve the first FIT for solar PV in the United States. The utility promised that solar providers who signed up for the program before 2011 would earn $0.32 per kilowatt hour for 20 years, an estimated 4-6 percent return on investment.

"We assume, as time goes on, it will be cheaper to buy and install solar equipment," Crider said. "The rate we pay goes down as well, to keep the return ideally constant."

The utility, which is otherwise reliant on coal and natural gas for its power generation, wanted to be sure that electricity costs would not increase more than 1 percent due to the FIT, Crider said. The decision led the utility to limit the program to 4 megawatts total of solar PV each year. The program is already fully subscribed through 2015 -- a 24-megawatt commitment. Before the Gainesville program, the entire state of Florida had installed 2.5 megawatts of solar electricity capacity.

The FIT gained the city's support mostly to boost the local economy. More than 220 companies in Florida produce, sell, or install solar PV products, according to the Apollo Alliance, a San Francisco-based organization that champions "green jobs" nationwide.

"Our primary motive is not to get the cheapest energy and keep profits high for investors, because we don't have investors," Crider said. "For the municipality, we have a larger vision.... Create a local, thriving marketplace for local solar providers."

Vermont

With two-thirds of Vermont's electricity contracts set to expire in 2012, the state was in a position this year to change its energy portfolio. Meanwhile, Vermont was far from its 2025 goal of 25-percent renewable energy -- renewables were supplying less than 10 percent.

The state offered a "net-metering" program that allowed residents to feed renewably generated electricity into the grid, offsetting some or all of their electric bills. Hundreds of small-scale systems resulted, but these combined to meet a mere 0.02 percent of the state's electricity load.

"We were trying to alter the entire energy paradigm, but we were on a very slow trajectory," said Andrew Perchlik, executive director of Renewable Energy Vermont.

The net-metering program did not allow participants to turn a profit, a problem given that small-scale power generation projects required the same costly permits as commercial power plants. Too few Vermonters had reason to participate.

Legislators had considered adopting a FIT, but the policy lacked grassroots support until a new coalition of business leaders, environmentalists, and utility executives formed a renewable energy consensus. The group met before the state's politicians convened in January and settled on the framework of what would become Vermont's first FIT, which they call a "standard offer."

"Increasingly, utilities are realizing that customers are asking for renewable energy. In the long run, it will be less expensive than the alternative," said Robert Dostis, a former state House of Representatives energy chairman who now directs external affairs for Green Mountain Power. "By being at the table, we were able to contain the enthusiasm of some of the renewable energy advocates and have them understand the rate impact of some of their ideas."

The legislature settled on a 50-megawatt program that limited individual projects to 2.2 megawatts each. Starting in January 2010, 20-year contracts will be available for developers of large- and small-scale wind, solar, and biogas power projects.

Opponents said the public would reject the idea of paying more for renewable energy projects -- the highest rate, $0.30 per kilowatt-hour of solar energy, far exceeded the $0.04 many ratepayers were being charged at the time. "That was not the case at all," Perchlik said. "Some 80 percent wanted renewable energy, and they were willing to pay 5 percent more."

The energy bill cleared the Democrat-controlled legislature easily. In May, Republican governor Jim Douglas allowed the bill to become law despite his concerns about it. He said the FIT "fails to recognize the current viability of renewable energy in a competitive setting and will needlessly increase costs to Vermont consumers so as to subsidize this one favored business sector."

Although program specifics have yet to be finalized, Vermonters are expressing growing interest. Dostis predicts that the program will fulfill its 50-megawatt limit by 2012. "I think this is really going to propel development," he said.

Ontario

During the 2007 provincial campaign, Ontario's Liberal party promised it would close every coal-fired power plant across the province by 2014. Premier Dalton McGuinty said the plant closures would benefit human health and meet half of the party's commitment to reduce greenhouse gases 15 percent below 1990 levels by 2020.

Following the election, the Liberal party secured 71 of the Legislative Assembly's 107 seats. Despite clear political support, shuttering 18 percent of the province's power source is no easy feat. The Liberals had already pledged to close the coal plants during their previous term, only to push back their own deadline.

Since 2006, the Ontario Power Authority (OPA) began offering a FIT system that provided 20-year payments of 11 Canadian cents (US$0.09) per kilowatt-hour for small-scale hydro, wind, and biomass power projects, and 42 Canadian cents (US$0.34) for solar projects. More than 1,000 megawatts of projects were installed during the first year, but renewable energy advocates criticized the payments, particularly for solar energy, as too small.

In March, the province announced that its proposed Green Energy and Green Economy Act would establish a revised FIT modeled after Germany's. The bill set payments for on-shore, off-shore, and community-based wind power; rooftop PV and ground-mounted PV power; small hydropower; and various biomass power options. Payments would depend on the project size for each technology.

The proposal was instantly applauded by renewable energy supporters. "The Green Energy Act is the most progressive renewable energy policy in North America in three decades," said Gipe, who advised the Ontario Sustainable Energy Association. "There was a decision to pay what it costs to develop renewable energy. It's clear to the public, transparent to everyone."

An OPA-conducted survey found 150 developers who were interested in the new FIT and were willing to construct 15,000 megawatts of electric capacity -- enough to produce the equivalent of 20 percent of Ontario's electricity consumption.

Gipe also solicited support from Ontario's farmers, whom he advised would be eligible to receive payments for wind turbines on their property.

"I went to every farm group I could," Gipe said. "This is an opportunity to revitalize the Ontario economy ... not just to revitalize the rural economy, but the entire industrial economy of Ontario."

The proposal was approved in May. It now stands as the most generous FIT policy in North America.

This article is a product of Eye on Earth, Worldwatch Institute's online news service. For permission to reprint Eye on Earth content, please contact Juli Diamond at jdiamond@worldwatch.org.

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The United States today spends some $400 billion a year importing oil from countries like Saudi Arabia, Nigeria, Mexico, Russia, and Venezuela. Think for a moment what an incredible impact that same $400 billion a year could have on our country if that money were invested here and not abroad, in such areas as weatherization, energy efficiency, sustainable energies like wind, solar, geothermal, biomass, public transportation and automobiles that are energy efficient or don't use fossil fuels at all.

What we are talking about is an energy revolution that leads us toward energy independence, the cessation of support for foreign dictatorships and the ability to avoid Mideast wars fought over oil. What we are talking about is an energy revolution that will substantially reduce greenhouse gas emissions and enable us to address the global warming crisis that threatens our planet with increases in floods, drought, extreme weather conditions, disease and wars fought over limited natural resources. What we are talking about is an energy revolution that will result in cleaner air, water and food and make us a healthier nation.

And, as our nation struggles to recover from the worst economic times since the Great Depression, what we also are talking about is an energy revolution that has the capability of creating millions of good-paying green jobs.

These are jobs that will occur at every level of education and for every skill set. These are jobs for scientists, engineers, machinists, and electricians. These are jobs for workers who weatherize older homes and buildings and save consumers substantial sums on their fuel bills. These are jobs for factory workers who produce advanced insulation material, energy-efficient windows, improved roofing materials and LED light bulbs. These are jobs that build, distribute, install and maintain wind turbines, photovoltaic panels, solar hot water systems, geothermal heating and cooling systems, and biomass heating systems. These are jobs on our farms and in our forests producing biofuels and converting farm waste to electricity.

I see a future where by 2025, we are producing a quarter or more of our electricity from clean, sustainable energy sources. I see a revitalized American manufacturing base where instead of importing 90 percent of the batteries used in hybrid vehicles, 46 percent of solar photovoltaic cells and modules, and half of all wind turbines used in the U.S., those product are made right here at home. I see a future where American companies lead the world in the production of hybrid-plug in cars and electric vehicles.

I see a future where instead of creating 330 jobs to build yet another fossil-fuel power plant, we create 4,000 jobs building a solar thermal plant that has no carbon dioxide emissions and does not pollute our air because the only fuel is endlessly renewed, no-cost sunlight. These plants, according to the Interior Department secretary, could provide up to 29 percent of the electrical needs of our country.

I see a future where by 2020 our nation follows the example of a state like Vermont, which, in the last two years, has seen electricity demand lowered because of energy efficiency efforts. Investing in energy efficiency is cost-effective; it saves 3 cents per kilowatt hour compared to the 14 cents it costs to generate the same amount of power.

I see a future where states compete with one another to see which can be the most efficient, and where businesses seek out efficient states in which to locate so they can reap the economic and environmental benefits for their businesses and employees.

I see a future where getting to work, or to school, or to the store does not have to cause pollution. I see a future where plug-in hybrid cars and electric vehicles are commonplace, producing a fraction of the emissions of conventional vehicles while providing the same mobility for drivers.

I see a future where we rebuild our mass transportation and rail systems. For every $1 billion we invest in public transportation, we create 30,000 jobs, save thousands of dollars a year for each commuter, and dramatically cut greenhouse gas emissions.

The bad news is that if we do not act boldly to address the global warming crisis, the consequences for our planet and future generations will be dire. The good news is that we have the knowledge and technology today, which will only improve in the future, to address that crisis. Yes, we can dramatically cut greenhouse gas emission. Yes, we can create an energy independent nation. Yes, we can create millions of good paying green jobs in the process. Let's do it!

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Vermont's feed-in tariff legislation became law at the end of business on May 27, 2009.

H. 446 is the first legislation calling for a full system of advanced renewable tariffs in the US to pass the legislature and become law. The bill includes changes to Vermont's Sustainably Priced Energy Enterprise Development Program (SPEED) that would implement a pilot feed-in tariff policy.

Vermont's action follows closely on that of the Ontario provincial legislature's groundbreaking Green Energy Act and with several states considering similar legislation, the Green Mountain state could be the tipping point for a rapid succession of feed-in tariff policies across the continent.

It may be small states, such as Vermont, and municipalities, such as Gainesville, Florida, that could drive new renewable energy policy in the US and not the big states of California or Florida that are hopelessly embroiled in partisan stalemates.

Unlike the policy in Washington State and in the crude feed-in tariff in California, Vermont's legislation bases the tariffs on the cost of generation plus a reasonable profit. Costs of the program in Vermont are borne by ratepayers, not taxpayers as in the Washington State system.

One unique feature in the Vermont program not found in Ontario is a specific tariff for small wind turbines, those less than 15 kW. Though several bills have contained proposed tariffs for small wind turbines, Vermont's legislation is the first to become law with long term contracts. The tariff of $0.20/kWh is the highest in North America.

Though it has a low program cap of only 50 MW, Vermont's feed-in tariff policy is a serious commitment by a state of its size. Vermont has a population of little more than 600,000.

Vermont's feed-in tariff program contains the key elements of the successful policies found in Europe:

As the technology progresses, Vermont renewable energy advocates expect the tariffs will decrease. The bill directs the Vermont Public Service Board to review and reset the tariffs every two years. The first review begins September 15, 2009 when the PSC will open a case on the tariffs contained in the legislation.

Renewable Energy Vermont (REV) led the successful grassroots' campaign, the first of its kind in New England to focus on feed-in tariffs. REVs Executive Director, Andrew Perchlik, notes that "This law puts Vermont in a leadership role on renewable energy policy and will help to bring vibrant growth and development to our local renewable energy industry."

Here are several key elements of H. 446:

Under Vermont law the Governor had the choice to sign the legislation into law, veto the bill, or to let it become law without his signature. He chose the latter course to the joy of long-suffering renewable energy advocates in Vermont.

In a statement, Republican Governor James Douglas said, "Even though this bill does set statutory standard offer rates, which I believe is inappropriate, because the Public Service Board must revisit those rates within the next four months and periodically thereafter, I will allow this bill to become law without my signature."

The effort now shifts to the Public Service Board to ensure that the hard won progress on tariff setting is not lost in the regulatory fog.

H.446 Bill As Passed by House

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In the tricky legal world of "preemption" -- the principle that federal law "preempts," or trumps, state law -- two recent Supreme Court decisions bode well for ongoing, seemingly unrelated global warming litigation.

The first of these decisions, Altria Group, Inc et al. v. Good et al., concerned a class-action lawsuit brought by smokers in Maine, who claimed the manufacturers of "light" cigarettes used deceptive practices by promoting their product as having fewer health risks than normal cigarettes. The cigarette makers, by contrast, argued that they were immune from state fraud claims if they have met federal cigarette labeling law. In a 5-4 ruling handed down in December, the Supreme Court agreed with the smokers, holding that federal cigarette labeling law does not preempt state fraud claims. Then, in a similar and much higher-profile decision handed down earlier this month, Wyeth v. Levine, the Court held that federal drug labeling law also does not preempt state "failure to warn" lawsuits against drug makers.

In both these cases, the Court determined that states had the right to protect their citizens when Congress had not explicitly stated an intention, through federal legislation, to preempt state authority.

These decisions should help states that are currently defending their auto emissions standards against auto industry challenges. In four ongoing federal lawsuits, automakers and dealers are challenging state emissions standards aimed at reducing greenhouse gases from new vehicles, claiming that those standards are preempted by the federal Energy Policy and Conservation Act (EPCA), which empowers the Department of Transportation to establish national "fuel economy" standards (which may sound similar to, but are technically different from, "auto emissions" standards).

In 2004, California adopted auto emission standards calling for a 30% reduction in greenhouse gas emissions from new vehicles by 2016, which it has the right to do under the Clean Air Act provided it obtains a waiver of preemption from the EPA. Since then, 14 other states have also adopted the California standards, prompting federal lawsuits from the auto industry in California, Vermont, Rhode Island, and New Mexico. The district courts that have considered the auto industries' claims on the merits have found that state emissions standards would not be preempted by EPCA if the EPA grants a Clean Air Act waiver because, once these state emissions standards receive the waiver, EPCA treats these state standards as federal standards. The industry nonetheless claims that EPCA both expressly and impliedly preempts state auto emissions standards (thereby employing two distinct legal arguments for the courts to decide) because auto emissions standards have an impact on fuel economy standards.

The Bush Administration attempted to boost these claims by inserting pro-preemption language into the preamble of fuel economy regulations it proposed last spring under EPCA. It did the same thing with the preamble of federal drug labeling regulations, prompting the Supreme Court in its Wyeth decision to note that attempts by a federal agency to introduce "preemption by preamble" without undertaking public notice and comment were "inherently suspect." By sharply criticizing the Bush Administration's "preambulatory" approach to preemption, the Court assisted state efforts to defend their auto emissions standards. The Obama Administration, announced last week that it is removing all mention of preemption from Bush-era fuel economy regulations, which should only further assist the states' legal defense.

In addition, the Supreme Court's rulings in Altria and Wyeth reinforce the Court's doctrine of "presumption against preemption," which holds that when Congress has not stated its intent with respect to preemption, the Court generally "presumes" that states should be allowed to adopt regulations they deem necessary. The Court's deference to this principle will hopefully make it easier for states to defend their auto emissions standards against industry preemption claims.

Fortunately, automakers have so far been unsuccessful in convincing federal judges that state auto emissions standards are preempted by EPCA, having lost at trial in both California and Vermont. However, both these cases are currently being appealed in the U.S. Court of Appeals for the Ninth and Second Circuits, respectively, with oral arguments heard in the Vermont appeal just last week. Meanwhile, auto dealers are pressing ahead with their lawsuits in Rhode Island and New Mexico.

It is important that the industry not succeed in convincing the appeals courts that states cannot introduce better-than-federal auto emissions standards. Such rulings would flagrantly conflict with Congress's expressed intent to allow more stringent state auto emissions standards, just as they would conflict with the Framers' vision of federalism. In this vision -- which was upheld in Altria and Wyeth -- states reserve the right, when Congress has not expressly taken it away, to go above and beyond federal law to protect their citizens' safety and environment, thereby serving as the appropriate "laboratories" of our democracy.

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A Penny Saved Is…

States should be allowed to restrict greenhouse-gas emissions from cars, and Big Auto should just deal, a federal judge ruled today. Right now, the only real way to curb the emissions is to improve gas mileage; when Vermont decided to adopt California's strict emissions rules, automakers sued, claiming that the state was illegally regulating fuel economy -- and that making cleaner cars was unattainable and unsafe, to boot. U.S. District Judge William Sessions didn't see it that way: "The court does not find convincing the claims that consumers will be deprived of their choice of vehicles, or that manufacturers will be forced to restrict or abandon their product lines," he wrote. "History suggests that the ingenuity of the industry, once put in gear, responds admirably to most technological challenges." The ruling, while significant, doesn't mean the fight is over: Automakers have a similar suit awaiting verdict in California, and the U.S. EPA also has yet to rule on whether California can implement its stricter standards.

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This week, the U.S. state with the fewest registered cars will take the driver's seat in the race to regulate carbon-dioxide emissions. A Vermont court will hear a landmark case on whether the state's adoption of a stringent California emissions law is legal. Under the Clean Air Act, states can choose between federal legislation and California's, which is notoriously progressive. But miffed automakers argue that -- buckle your seatbelt -- because cutting emissions means burning less fuel, which means improving gas mileage, the law is attempting to govern fuel economy, something only the feds can do. Whew. In a decision last week confirming EPA's authority to regulate carbon dioxide, however, the U.S. Supreme Court said emissions regulations and efficiency improvements "may overlap." Covering their gases, carmakers also say the rule is too expensive to implement, will raise costs for consumers, and singles out their industry. In other news, this year's models all come equipped with tiny violins.

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Vermont's maple-syrup industry braces for climate change

Will warmer winters stop the flow of Vermont maple syrup? That's the question of the day in the Green Mountain State, where folks worry that climate change will make the $200 million industry -- which provides 32 percent of U.S. syrup output -- dry up. "I've always been, 'Oh, global warming, I don't know about that,'" said syrup-maker Doug Rose. "But now I do think we need to start thinking about it, because ... we're seeing production go down, we really are." Some tree-tappers report that the season now starts in January instead of March, and a recent study by the University of Vermont's Proctor Maple Research Center (sweet!) showed that the month-long season has shrunk by about three days over the last 40 years. And since the best syrup comes from warm days followed by below-freezing nights, temperatures play a key role. A hit to the tradition would hurt not only pocketbooks, but pride. "It's like a religion, maple syrup," said one worried observer. "It's the heart and soul of Vermont."

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Vermont, which has long tussled with Maine to avoid the tag of "whitest state in the nation," is going in search of some color -- green, that is. Lending depth to its nickname, the Green Mountain State is luring eco-engineers to its verdant flanks and helping established green companies expand. Noting that the state boasts "clean air, no billboards," Gov. Jim Douglas (R) says he hopes green-tech will be to Vermont what high-tech is to Silicon Valley: "We wanted to find a niche, an economic sector in which Vermont can excel. Environmental engineering and sustainable technology is that niche." But bizfolk in the state say it's not easy: "The tax burden is high, and the costs of health insurance have just risen and risen," said David Bowles, president of an oil-spill cleanup equipment maker. "And there's a sort of philosophical disconnect between people who love this view of Vermont as an unspoiled place where business doesn't mix." Other than that, Mrs. Lincoln, how do you like your state?

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California wilderness bill passes Congress, Vermont wilderness bill doesn't

Just before adjourning for election season on Friday, Congress OK'd a bill to designate 273,000 acres in Northern California as wilderness, including a long stretch of stunning coastal land, and President Bush is expected to sign it into law. Conservationists and their congressional allies had been aiming to protect far more land, but the size of the proposed wilderness area was whittled down over five years of negotiations, and as part of the deal, 51,000 nearby acres were designated for use by off-road vehicles. Still, many enviros were happy to see the bill pushed through. "This is a bipartisan victory in partisan times," said wilderness campaigner Jon Owens. Not feeling so victorious were backers of legislation to designate new wilderness in Vermont's Green Mountain National Forest. The bill, compromised down from 48,000 to 42,000 acres just last week after Vermont Gov. Jim Douglas (R) expressed concerns, didn't make it to a floor vote in the House's closing session. Also not put to a final vote were an Oregon wilderness bill opposed by the Bush administration, an Idaho wilderness bill, and legislation to designate a national monument in New Mexico.

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