*Different green energy incentives are being tried and tested around the world. Mark Rowe and Keith Nuthall compare and contrast.*

In April, the UK will introduce a feed-in tariff for renewable microgeneration, which the government hopes will encourage the general public and businesses generally to install green generation. Along with the other 26 members of the European Union, the UK is working towards the target enshrined in the Renewable Energy Directive that renewables meet 20 per cent of Europe's energy demand by 2020. Detailed plans are due to be discussed in Brussels this year, and the directive is due to be implemented in all EU countries by December.

The directive does not specify what kind of incentives should be used to promote green energy. As they consider their respective approaches, national governments can look around the world to learn from the experience of others.

According to international renewable energy consortium REN21, in 2008 subsidies were introduced for solar photovoltaics in Australia, China, Japan, Luxembourg, the Netherlands and the US. New laws and policies backing renewable energy also appeared in Brazil, Chile, Egypt, Mexico, the Philippines, South Africa, Syria and Uganda. Mandates promoting solar hot water and other renewable heating appeared in South Africa, Germany, Hawaii, Norway and Poland. And new rules allowing or promoting biofuels appeared in at least 11 countries, including a new 20 per cent consumption target in India.

*Power to the People*

Across Europe and beyond - even in Russia - governments are legislating to reward people for installing renewables or to compel power companies to buy renewable energy.

"National governments now take this seriously," says Samantha Olz, a renewables analyst with the International Energy Agency (IEA). "Northern European countries have generally made more headway than southern European countries, but the latter are catching up. You also find resistance among some local councils across Europe, or certain banks that are unwilling to provide low-interest loans for renewable schemes."

In Sweden, a network of district heating systems has played a key role in encouraging people to reduce their fossil fuel use and source their energy from renewables. Around 70 per cent of the feedstock is biomass, municipal waste and some peat, with only minor supplies from fossil fuels. District heating plants are included in the EU's Emissions Trading Scheme but district heating and electricity plants will no longer be eligible for free allocations from 2013, by which time emissions rights will have to be purchased on the market.

*District Heating*

Another policy measure that has had a substantial impact on district heating and combined heat and power is the introduction of electricity certificate systems - green certificates and quota-based systems, as opposed to feed-in tariffs.

Feed-in tariffs are the preferred subsidy in many countries. By 2009, according to REN21, 63 countries, states or municipalities had enacted feed-in tariff legislation. Germany, which introduced the measure in 1991, is generally regarded as the standard bearer for the policy. The key to feed-in tariffs is that they impose a legal obligation on utilities and energy companies to purchase electricity from renewable energy producers at a favourable price, usually guaranteed over time.

In Germany, several laws have been passed to incorporate feed-in tariffs, usually reducing the rates. In 2006, for example, the rate per kilowatt-hour for photovoltaics was reduced by 6.5 per cent. Germany, along with most countries with feed-in tariffs, has financed the system through a cost-sharing mechanism that shares the costs among electricity consumers. It has also introduced them over a long time scale, making them less vulnerable to changing political moods.

*Feed-in Tariffs*

France has also centred its renewable energy efforts on feed-in tariffs (introduced in 2001 and 2002, and modified in 2005) for photovoltaics, hydro, biomass, sewage and landfill gas, municipal solid waste, geothermal, offshore wind, onshore wind, and combined heat and power. The cash is made available in three ways: tax credits of 50 per cent are available, a 5.5 per cent reduction in VAT has been introduced for residential green energy and subsidies of up to 40 per cent are granted for biomass heating plants.

"Feed-in tariffs are a very popular way to guarantee the generator a generous price, but it may not always be the most efficient approach," says Olz. "Price incentives are the most important driver, and countries also look to low-interest loans and tax rebates."

According to the IEA, tax rebates have helped spur the take-up of photovoltaics in Japan, by offering people a small cut on their tax bills. "In the short and medium term, conventional incentives will predominate," Olz says.

*Success is not Guaranteed*

It is difficult to come to general conclusions about any specific measure or incentive. Even where legislation is in place, it does not necessarily follow that it will be successful in encouraging either generators or the general public to install renewables plant. Italy has put in place several measures, including: giving priority access to the grid for renewable energy and combined heat and power plants; introducing a feed-in tariff for photovoltaics guaranteed for 20 years; offering subsidies for bioethanol production and tax exemptions for biodiesel production; and putting a legal obligation on generators to feed a given proportion of renewables into the power system (around 3 per cent). However, according to a spokesman for the EU's energy directorate-general, "enforcement in practice is considered difficult because of ambiguities in the legislation".

Hungary's national energy efficiency action plan was ratified in 2008 and aims to reduce energy consumption by 1 per cent, year on year. The key to Hungary's policy is energy conservation subsidies. These were introduced in legislation in 2008, which also sought to encourage the development of renewable energy by establishing purchasing obligations and introducing the possibility of feed-in tariffs.

Russia plans to increase the share of renewable energy generation from less than 1 per cent today to 4.5 per cent by 2020. When it comes to microgeneration, the Russians are understood to favour a feed-in tariff, and legislation is expected mandated this by spring. However, the appetite for renewables appears to be as low among the public as it is among the country's generators.

It seems that the message that switching to green energy is simply the right thing to do is not enough for most of Europe's residential customers, according to Olz. The key to the success of deploying renewables is education.

"It's not just about price incentives," she says. "You need to have guidance in place to raise awareness. It probably depends on the political culture of each country, and to what extent the population has been educated and sensitised to the importance of climate change, green energy and energy security. You also need regulations in place that are coherent and enabling - planning and building regulations for renewables and making sure that access to the grid is easy."

Mark Rowe and Keith Nuthall are freelance journalists.