REN21 - Instruments of Renewable Energy Policies

The relatively short history of renewable energy policy has already produced a vast variety of political measures intended to promote renewables. The International Energy Agency (IEA), with support from the European Commission, offers a Link to an external resource

Global Renewable Energy Policies and Measures Database. This database currently covers more than 100 countries and categorises the measures according to 14 different technologies and 24 policy types.

Various categories of instruments can be distinguished:

Most forceful are mandated market policies, which set mandatory quantities in the form of quotas (renewable portfolio standards (RPS), blending,...) or mandatory prices such as feed-in tariffs. They are applied in order to give renewable energy a considerable role in the electricity generation and transport fuel markets, and create a critical mass for the development of the industry. In segregated partial-markets, competitive bidding for renewable energy concessions and renewable energy or green energy tradable certificates also constitute mandated market policies. In some cases (e.g. off-grid areas where previously no market exist) policy must actually organise markets and the necessary institutional development.
Financial incentives constitute another category of policies, which is focussed more on cost reductions and improving the relative competitiveness of renewable energy technologies (RET) in given markets: capital grants, third-party finance, investment tax credits, property tax exemptions, production tax credits, sales tax rebates, excise tax exemptions, etc. Some of these measures can be well applied to RET invested by the users themselves. Taxes on fossil fuels also improve the competitive position of renewable energy and are particularly appropriate to internalise negative external effects on environmental or energy security.
Public investments giving RET preference in government procurement, infrastructure projects and use of public benefits funds etc. are another way of increasing the market share of renewables. This is also an area where renewable energy growth stimulation can be combined with development programmes.
RET can only occupy the markets if respective industry standards, permits, and building codes exist, as well as the respective environmental guidelines. This must therefore be an area of utmost concern for a meaningful renewable energy policy, especially as RET typically are new technologies that are constantly evolving.
Policy should also contribute and assure basic functions with regard to information, awareness building, education and capacity building.
As RETs are typically new technologies, research and development should also be an important element of renewable energy policy.