One energy analyst is challenging the commonly held belief that European nations’ renewable energy policies are more progressive than those in place in the U.S.
“Whisper it quietly,” says Jonathan Lane, head of consulting for power utilities at research firm GlobalData. “The U.S. has a more progressive renewable support policy than Europe. In the U.S., the major federal support scheme for renewables – the production tax credit – provides a tax break for renewable generators of $0.022/kWh for 10 years.”
In many European countries, renewable energy subsidies are loaded onto customers’ electricity bills – usually through a tax, or sometimes via an electricity retailer obligation – a policy Lane calls “perverse.”
“Whilst this approach confers the advantage of keeping tax subsidies out of the electricity sector, with the competitive market setting the price for consumers, the reality is that it is government intervention pushing prices upwards,” he explains.
In fact, Lane says Europe should actually look to the U.S. as an example for successful energy policy.
“As energy prices become more politically charged across the world, Europe should take a look at the U.S,” he says. “The problem with Europe’s policy is growing fuel poverty. Electricity and gas prices increase rapidly against a recessionary backdrop, with little or no wage growth and high food and road fuel inflation.
“This can’t be considered fair, and the complaints are getting louder,” Lane says. “The reason that governments subsidize renewable generation is a social good – aimed at reducing carbon emissions and reducing fossil-fuel import dependency – and it makes far more sense for these goals to be delivered via general taxation. Under the U.S. system, those most able to pay for renewables do so. Under the European system, those least able to afford it pay.”
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