Asian feed-in tarrifs could be global tipping point for renewables

Source: The Climate Group

Japan is set to follow China’s lead with legislation to subsidize low carbon energy, which will up investment in the renewables industry and could provide a global tipping-point for the deployment of renewable energy worldwide. 

The bill, which proposes feed-in tariffs (FIT) for renewable energy, is set to be passed by Japan’s lower house of parliament in the coming days, and supports the country’s aim to grow the renewables market to 10 trillion yen (US$130 billion) by 2020. 

Renewable energy already makes up 9% of Japan’s electricity generation. The FIT bill will increase this total, as it requires utilities to purchase renewable energy such as wind, solar, hydro, geothermal and biomass at above market rates. 

Tetsunari Iida, Executive Director of the Institute for Sustainable Energy Policies in Tokyo said: “The scheme will create a large market in a short time. It will prompt immediate growth of related industries.” 

While the bill does not specify how much and how long the FIT will be for, Trade Minister Banri Kaieda told parliament last month that rates for renewable energy (except solar) will be up to 20 yen per kilowatt hour for about 15 years, and the rate for solar energy could be higher, possibly double that. 

As well as intending to develop the renewable energy markets, the bill was triggered by the need to lessen dependence on nuclear power and will mark the last of three goals that Prime Minister Naoto Kan pledged to action before resigning. 

It is expected that the legislation will be law as soon as August 26, 2011, becoming effective on July 1, 2012.
The bill follows China’s recent announcement from the National Development and Reform Commission in China (NDRC) of a clear pricing policy on solar photovoltaic (PV) power generation. 

Damian Ryan, Policy Manager, The Climate Group says: “The likelihood that Japan will follow China in rolling out major policy incentives to scale up renewable energy production is an exciting prospect. The demand created by these two Asian giants could well provide the global tipping point that accelerates the emergence of renewables as cost-competitive or indeed cost-beating alternatives to fossil fuel power generation.”

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