Thursday, June 25, 2009

Failure Policies

"But from a longer point of view, the country's [Germany's] ambitious green project is failing."

Michael Scott Moore, "Germany's Fine Failure," Miller-McCune, July-August, 2009.

Policies spur green markets -- but policies can be turned around -- that's the potential (likely) failure in Germany. A combination of mandatory nuclear phase out and "feed in tariffs" for renewable energy creation has driven green innovation, jobs, etc. Now there's a failure of nerve (and maybe analysis) that renewables can do the job alone.

"[U.S.] policies look anemic -- as if the idea of harnessing market forces to drive innovation has yet to dawn on Washington lawmakers."

At another level, individual households won't adopt solar because of prohibitively long payback periods and high short-run costs of installation.

"At its root, there is a financing market failure for renewables and energy efficiency in people's homes. Everybody's talking about all the technology, but we have to solve the financing problem."

Francisco DeVries, quoted in Matt Jenkins, "Solar System," Miller-McCune, July-August, 2009.

It's so simple. Treat solar, energy efficiency improvements like the sidewalk out front, putting utilities underground, or special assessments for extra services. Set up a special district if needed, figure out the pay back mechanism through utilities or taxes, subtract incentives, sell bonds, provide upfront cash to homeowners. Pilot and scale. Yes, I know it's not that simple. But it's virtue is that it uses tried and true municipal financing techniques and puts energy efficiency in the realm of the normal.

Again, policies and incentives spur markets -- and then comes job and business creation.

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