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Afterword: A Sustainable Economic and Finance Proposal Chapter j 30 577

ECONOMIC APPROACHES: OVERVIEW IN BRIEF
Feed-in Tariffs

Feed-in Tariffs (FiT), also known as standard offer contract or advanced
renewable tariff, are policy mechanisms that are designed to accelerate invest-
ment in renewable energy systems and technologies. They achieve this by
offering long-term contracts to renewable energy producers, typically based on
the cost of generation of each different technology. Technologies like wind
power, for instance, are awarded a lower per-kWh price, whereas technologies
like solar, photovoltaic, and tidal or wave power are currently offered a higher
price, reflecting their higher costs.
In addition, FiT often include “tariff degression,” a mechanism according
to which the price (or tariff) ratchets down over time. This is done to track and
encourage technological cost reductions. The goal of FiT is ultimately to offer
cost-based compensation to renewable energy producers, providing the price
certainty and long-term contracts that help finance renewable energy
investments (Gipe, 2011). The FiT has been tested and perfected since 1991 in
Germany. Although suspended temporarily a few years ago in Germany, the
FiT has been reinstituted as the results have been demonstrated and well
documented in a Deutsche book report The German Feed-in Tariff for PV
(Fulton and Mellquist, 2011) with an important economic subtitle, Managing
Volume Success With Price Response (Fulton and Mellquist, 2011).
Carbon Incentive (Tax)

As in most countries, there needs to be a high tax on fossil fuels in the United
States. When many people oppose the use of the word “tax,” they then call it
an “incentive,” which is what was done in California when it took the national
and then international lead on taxing cigarettes. The tax was explained as an
incentive to stop people from smoking, and prevention of second-hand smoke
was seen to prevent lung and other related diseases. The money collected was
used to promote antismoking advertisements and materials as well as support
health research in this problem. Now other nations are doing the same.

Master Contracts
The basic issue is always money. How do you pay for something that is needed
but new. The costs are usually high. Some programs have been tried and have
successfully addressed the economic issues. To start with, governments need
new “green” buildingsdcompany, campus, groups, etc. Some companies, for
example, are now providing their employees solar panels and related systems
at the same price that they bought them for their offices, facilities, and plants.
Other companies are even supplying and encouraging subcontractors to pur-
chase renewable energy systems, recycled products, and related environmen-
tally sustainable products for their own use.