Policies to Promote Non-Hydro Renewable Energy in the United States and Selected Countries
March 1, 2005
Introduction
Since the energy crises of the 1970s, many countries have become interested in developing renewable energy technologies for
electricity generation. At first, many countries pursued this strategy as a way to reduce dependence on imports of fossil fuels.
However, with an increased awareness of environmental issues in the 1980s and 1990s, many countries have continued their
renewables strategies as a means of protecting the environment. This article examines policies designed to encourage the
development of non-hydro renewable energy in four countries—Germany, Denmark, the Netherlands, and Japan—and
compares the policies enacted in each of these countries to policies that were used in the United States between 1970 and 2003.
For each country, policy development is analyzed in the context of historical non-hydro renewable generation data to try to
determine which types of policies most effectively increase non-hydro renewable generation. Since this paper uses data to
examine the effectiveness of policies, more recent policies (e.g., renewable portfolio standards) will not be analyzed closely, as
there is not yet enough data to determine their ultimate effect on non-hydro renewable generation.
Clearly, many conditions differ among these countries—even in regions within countries—such as natural resource endowments, political and economic systems, and cultural traditions. All of these factors can lead to differences in energy costs and prices. Natural resource endowments are important because they can impact the energy choices countries make. For example, Denmark has virtually no hydro potential, Japan has little fossil energy, and Germany has a relative abundance of coal resources. Additionally, the countries examined in this report tend to have higher electricity prices than the United States, potentially reducing the relative cost of policies to promote non-hydro renewables.
Another point worth noting is that the differences among countries mentioned above affect policy choices and may make some policies not applicable in certain countries. Finally, a major policy that will directly affect the energy choices of all the countries analyzed here except the United States is the Kyoto Protocol. With Russia’s ratification in November 2004, this international agreement to reduce emissions of greenhouse gases of its industrialized country signatories, compared to 1990 levels, entered into force in February 2005.
In this report, generating capacity values from various sources are used in the country discussions to provide specialized information on specific issues. For comparability Table 1 below shows country generating capacities according to the International Energy Agency as of yearend 2002.