Saturday, June 4, 2011

Renewable Energy: A Marginal International Comparison - by Leontiy Korolev

Given Jin's last blog about The Stockholm Memorandum, this seems like an appropriate time to share what I learned when I attended the ABA International Section Meeting in Washington D.C. a few months ago. The meeting covered a wide range of topics but one of the mini themes was the environment.

One environmental panel was comprised of attorneys from firms in Canada, Chile, Finland, New York and Spain. Each panelist gave a brief overview of the developments of green energy in their respective geographical area. A brief overview of the European system and the Canadian approach provides two arguably successful attempts at increasing the use of renewable energy.

The European Union has issue a binding directive requiring the bloc to obtain 20% of its energy from renewable resources. A considerable feat considering in 1995 the share was almost zero. The 20% target is then apportioned to the individual countries. While some countries will struggle to meet the deadlines, others have increased their goals. There are many reasons for the growth of renewable energy throughout the European Union. Two of the more notable reasons are the widespread use of feed in tariffs and the lack of huge lobbying efforts from the oil industry.

Feed in tariffs are one incentive provided by the EU as well as individual states to companies and individuals that wish to contribute to the energy grid through renewable resources. So for example, a family in Italy can acquire money through grants and loans from the EU and the Italian government to set up home solar panels. This loan is paid back over the course of 7-8 years; however the payments are only made from profits earned by the access electricity created by the panels and fed into the general electrical grid. Thus the feed in tariff. With respect to the oil lobby, it is just a non issue in many countries. Most European countries don’t have any large oil businesses, so although they may import oil for their use, they do not have much of a domestic industrial sector that relies on the oil as a significant source of profit. Here, Italy is another example.

Ok, so we have these socialist Europeans making a strong push towards renewable energy. But there are many differences between the European political system and culture that makes this system difficult to use in the US. For example, a mandate from the federal government to the states to increase their use of renewable energy by 20% would hardly stand a chance, especially given the current political climate. Of course, this is just my interpretation of the political climate, and I really hope I am wrong.

Nonetheless, we are a country that seems to push back against federal mandates, so are there other successful approaches to renewable energy that arise from a more individualistic philosophy?

Canada, eh. Canada’s renewable energy movement has had almost no assistance from the federal government, yet Nova Scotia plans on deriving 25% of its energy from renewable sources by 2015 and 40% by 2025—currently it is at 12%. Quebec gets 85% of its energy from hydro sources, and has been developing wind energy. (Side note, Quebec has filed complaints against the U.S. for restricting the import of hydro energy from Quebec in violation of NAFTA.) Ontario plans on closing all of its coal burning plants by 2014.

Obviously there are many differences, good and bad, between Europe, Canada and the US. Some of these differences are manifested in the barriers that exist in the US with regards to the renewable energy sector. There are cultural and political barriers, such as the idea and debate over the role of the federal government, the idea of the free market as well as certain protectionist policies.

Personally I do not have a problem in an increased role of the government with respect to the promotion of the growth of renewable energy. As they say, desperate times call for desperate measures, however I will concede that limiting the power of the federal government does leave room for states to develop their own approaches, in line with the “states as laboratories philosophy,” allowing us to try a variety of approaches.

There are also some legal barriers as well, such as the dormant commerce clause and international trade agreements. However, every country has its issues in passing legislation, especially legislation with respect to energy policy, we have our problems in the US but that does not mean that other countries did not have problems in passing energy legislation.

The theme of the discussion was that we are in a dire situation and drastic changes need to made, furthermore, there is evidence that these changes can be made and that there are some good examples being set by different countries and regions of the world. That said, what I took out of it was that I wish I had a few hundred thousand to invest in alternative energy in Europe. Especially in Germany which has just pledged to shut down its nuclear sector.

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