Conclusion - Energy Policy Analysis: A Conceptual Framework - page 236

The EEG provides guaranteed feed-in tariffs and mandatory connection to the electric grid for
producers of electricity using renewable fuel technologies. Every kilowatt-hour generated from
renewable energy facilities receives a fixed feed-in tariff. If the transmission grid is overloaded,
network operators must feed this electricity into the grid preferentially to electricity generated
by conventional sources (nuclear power, coal, and gas). Renewable energy generators receive a
twenty-year, technology-specific, guaranteed payment for their electricity. Small and medium-sized
independent power producers now have access to the interconnected electricity market, along with
private land owners. Anyone who produces renewable energy can sell it for a twenty-year fixed
price (Lauber and Mez 2004).
EEG remuneration rates reveal what electricity from wind, hydro, solar, bio, and geothermal
energy actually costs to produce in Germany. Remuneration rates are paid by consumers through
their electricity bills, not by taxpayer subsidies. The “polluter pays principle” distributes increased
costs directly to the consumer: whoever consumes more energy pays more. Rates of remuneration
for new sources are reduced 1 percent per year, exerting pressure on producers to become more
efficient and less costly. Because the feed-in tariff provides financial certainty, the EEG has been
found to be more cost-effective and less bureaucratic than other support schemes such as investment
or production tax credits, quota-based renewable portfolio standards, and auction mechanisms.
The net benefit of the EEG exceeded costs of initial investment by about US$4.97 billion in 2005.
The feed-in tariff generates more competition, more jobs, and more rapid deployment of renew-
able energy technologies for manufacturing, and it does not pick technological winners, such as
more mature technology versus solar photovoltaics technology (Butler and Neuhoff 2008; Morris
2007; EC 2005). Public policy favoring renewable energy fuel technologies while deemphasizing
fossil fuels and nuclear energy has produced dramatic results in Germany, a modern industrialized
country, and might do so in the United States as well.
The U.S. electric utility industry marketplace has for many years moved away from nuclear
electric generating stations and oil-fired power plants and, in the absence of some ill-advised
massive federal government initiative at the expense of the taxpayer, seems poised to continue to
do so. Future national energy policy should place heavy reliance on decentralized development
of solar photovoltaic technology for our electric needs, supplemented by continued reliance on
hydroelectric, geothermal, beneficial biomass, and wind resources for small, increasingly local
portions of our electricity needs during a transition period.
NATURAL GAS
Transportation needs in the United States will continue to be met for some years with petroleum
products, which must be viewed increasingly as transition fuels and conserved for use as feedstocks
for manufactured goods while we develop greater reliance on beneficial biomass and hydrogen fuel
cell technologies for liquid fuels. Greater use of natural gas should be encouraged during a transition
away from reliance on petroleum, especially for fleets of large buses and trucks delivering people and
goods over long distances. As long as natural gas is plentiful in the United States, it is less expensive,
contributes less greenhouse gases, and is less environmentally disruptive and has lower national
security costs than petroleum. Use of petroleum products should be reduced due to their higher en-
vironmental, dollar, and national security costs as compared to natural gas, beneficial biomass, and
hydrogen, but the latter two fuels should be used instead of natural gas whenever possible.
COAL
Implementation of new air quality rules for toxic air pollutants in January 2012 has had and will
continue to have significant effects on the use of coal in the United States, stimulating overdue