Feed-In Frenzy

It has also crossed the pond, after a fashion, inspiring Ontario’s pacesetting Standard Offer Program. The Ontario government’s version, however, is watered down, freighted with artificial growth caps, implementation deadlines, and other caveats — a bold leap reconfigured as a series of furtive hops. Nonetheless, it is Canada’s most ambitious renewable energy program. It even looks, from a certain angle, like a fine start.

If, however, the goal is to formulate a new and truly transformative energy policy — if, in other words, the goal is to succeed — then Canada’s most ambitious program needs to be reassessed against the model that inspired it. Which foundation is better suited to supporting a twenty-first-century economy? The one propped up by aging hydro plants, flirting impotently with renewables while dumping money into unproven clean coal tech-nology and environmentally problematic, chronically cost-overrunning nukes? Or the one already on track to generate 30 percent of its power from green sources within a quarter century, buoyed by a massive industrial and infrastructure boom? Wouldn’t the latter be the definition of well positioned? A case study in strategic advantage? The very model of a national paradigm shift? An example, finally, of real green ambition?

Germany’s leading-edge, fit-driven green economic model arose out of its climate policy, which is among the world’s most ambitious. In 2007, the German government said it was willing to seek a 40 percent decrease in carbon dioxide emissions by 2020 if other EU countries made similar commitments — a reduction in absolute volume (not intensity) below 1990 levels that is fully double the European Union’s current target. The country is already nearly halfway there. As of 2006, it had already shrunk its carbon footprint by 18.5 percent. The lion’s share of this reduction was accomplished by shuttering obsolete East German factories in the wake of reunification, but after a few years of stagnation the feed-in tariff has helped renew the downward trajectory.

The first fit was enacted in California in 1978, with Portugal, Denmark, and Japan adopting similar legislation by the early 1990s. Germany, though, is widely regarded as the contemporary fit’s birthplace and best-practices model. It was the product of the so-called Red-Green Coalition, the partnership between the old-left Social Democrats and the newly ascendant Green Party that governed the country from 1998 to 2005. The coalition passed the Renewable Energy Sources Act in 2000, and, although this was already far and away the most aggressive renewable energy law the world had seen, substantially intensified it in 2004. Solar power was given a particularly big boost, with the going rate for solar energy generated from German household rooftops amped up to seven or eight times the market rate. (It was nudged back slightly after a mandatory reassessment this June.)

These deliriously high rates were designed not just to cover the extra cost of bringing new installations online, but to allow a small profit for producers — much as traditional North American energy markets operated prior to the deregulation wave of the 1980s. The fit thereby guaranteed a market for companies willing to make sizable up-front capital investments, sparking the construction of not just renewable en-ergy installations, but a renewable energy industry. The chief architect of the German law, the veteran Social Democrat parliamentarian Hermann Scheer, summed it up thusly: “It is the most successful new job creation program we ever had, and the most cost-effective job creation program.” Best of all, it does the job without direct taxation: the cost of the fit is embedded in the price of energy and distributed equally to all power consumers. The more you use, the more you pay.

The highest estimates for the German fit have it adding about one eurocent to the cost of a kilowatt hour of power. That equates to about thirty-six euros per year for the average German consumer — fifty bucks a year, give or take, for 250,000 new jobs and a rapidly rising share of renewable energy on the national grid. The amount of green energy consumed in Germany leaped from roughly 6 percent in 2000 to 14.2 percent in 2007, and it is on target to reach at least 25 percent by 2020. What’s more, that fifty-buck average masks the money-saving contributions of some 400,000 German homeowners who have installed rooftop solar panels, becoming power plant operators in their own right and, in some cases, paying a near-zero net cost for their electricity over the course of a year. Those 400,000 have embarked on a fundamental inversion of the industrial age’s energy economy, transforming themselves from rate-paying power con-sumers into profit-making power producers. If that’s not a paradigm shift, nothing is.

Until very recently, some North American experts viewed the German fit as a lurch toward disaster. In 2006, I mentioned the tariff to John Anderson of the Rocky Mountain Institute, one of the world’s most influential energy efficiency think tanks, and he responded with a melodramatic, stage-whispered “Oh, God!” Then he quoted the going rate for German solar power, saying, “I could put monkeys in cages to make power for that and make money. Good Lord!” Then he settled down and told me, “A certain amount of that kind of thing your economy can stand. But it can’t become a very big part of it, or your economy goes down the toilet.” And then, in the next breath, he wondered if he was overlooking something.

“Okay, look,” he said. “If in 1980 you’d come into my office, I’d have said I was pretty happy with telecom: had a box on the desk in the office, had a box on the wall at home. Telecom’s great. Love it. If you’d told me that for thirty bucks I could buy one of these things” — he held up his mobile phone — “and call anywhere in the world from anywhere, I would’ve laughed at you. Then if you’d told me the highest, best economic use of that was for my thirteen-year-old daughter to stand in one end of the mall and talk to her friend at the other end of the mall while they were shopping? I’d have had you committed. That’s clearly insane, right? That’s the kind of paradigm shift electric utilities are facing.”

Let’s repeat that, mantralike: That’s the kind of paradigm shift electric utilities are facing.

Certain North American jurisdictions are finally acknowledging the scope of this shift and the enormous business opportunity it represents. Witness, for example, the headline-making power play by oilman T. Boone Pickens, who has begun building what will eventually be the world’s largest wind farm, 2,700 turbines strong, on a patch of breezy west Texas land. His goal is to have 20 percent of US electricity generated by wind. In California, meanwhile, Governor Arnold Schwarzenegger’s $3.3-billion (US) California Solar Initiative has spurred the rapid expansion of the state’s solar industry. Private homes and big-box rooftops all over California are now being tiled in solar panels in unprecedented numbers, while several Silicon Valley headquarters (most famously Google’s) have parking lots shaded by banks of them, and the state’s old-school energy titans are ushering in an era of utility-scale solar farms. pg&e, for example, recently announced plans to partner with two solar companies to bring installations of 250 and 550 megawatts online — a combined capacity similar to that of a medium-sized nuclear reactor.