Renewable Energy Through Feed On Tariffs And Taxes

Introduction In recent years, more has been debated on whether or not nonrenewable energy such as fossil fuel has caused global warming. Sakamoto and Managi (2016) believe fossil fuel is the likely reason that temperatures have been rising from greenhouse gases, increasing the CO2 emissions (p. 1). With depleting resources, it may be a good idea to look more seriously at renewable energy (Sakamoto Managi, 2016, p. 16). More governments have been trying to create policies to encourage usage of renewable energy. However, it has been debated what is the best way to enforce renewable energy. In this paper, I will discuss two ways countries have been encouraging renewable energy through feed-in tariffs and taxes. Body Sakamoto and†¦show more content†¦14). An increase in marginal cost of nonrenewable resources will drive more consumers to renewable resources. On the other hand, a tax on nonrenewable energy does not have the same effect. Sakamoto and Managi (2016) discovered: â€Å"The introduction of the tax on the nonrenewable energy sector leads to the reduction of nonrenewable energy use and an acceleration of renewable energy use, but the acceleration is not enough to keep the pre-tax level of production†¦ because the marginal cost of renewable energy is high as renewable energy use increases† (p. 15). A tax on nonrenewable energy leads to an increase in marginal cost of renewable energy. Less consumers were interested in buying when prices on renewable energy rose. Another way governments have been trying to implement renewable energy is through feed-in tariffs. Feed-in tariffs usually consist of some type of purchase obligation and also a tariff payment on renewable energy that is fixed for every unit of electricity (Jacobs, 2012, p. 43). The grid operator involved in the purchase obligation must buy the renewable electricity no matter what (Jacobs, 2012, p. 43). The producer has the right to a certain amount of money for every unit of electricity that they produce (Jacobs, 2012, p. 43). Jacobs (2012) conducted studies in Europe in the countries of Germany, Spain, and France that use feed-in