Governments around the world implement a wide variety of policies to promote the development and adoption of renewable energy technologies. The goals of these policies are to reduce reliance on fossil fuels, cut carbon emissions that cause climate change, improve energy security by diversifying energy sources, and stimulate economic growth in the renewable energy industry. Some of the key policy mechanisms governments use include regulatory standards, financial incentives, public investments, and international cooperation.
Regulatory standards are a major policy tool used by many governments. Renewable portfolio standards require electricity providers to obtain a minimum percentage of power from renewable sources each year. Feed-in tariffs guarantee renewable energy producers a set purchase price for the electricity they generate, providing long-term revenue certainty to support project development. Net metering policies allow customers who generate their own renewable energy to receive credit for excess power sent back to the grid. Biofuel blending mandates require gasoline and diesel to contain a minimum amount of biofuels. These standards create guaranteed demand for renewable technologies and help them to scale up and gain cost competitiveness.
Financial incentives are another vital policy approach to make renewable energy investments more attractive. Tax credits lower the cost of developing, constructing, and operating renewable projects. For example, the US federal tax credit for utility-scale solar and wind projects lowers costs by around 30%. Government grants provide upfront capital to demonstrate and prove emerging technologies. Low-interest loans help fund renewable projects. Rebates on the purchase of renewable energy systems like solar panels or heat pumps for homes and businesses also stimulate demand. Property Assessed Clean Energy programs allow customers to finance renewable upgrades through property taxes with no upfront costs. Together, these various incentives make projects financially worthwhile sooner.
Public investments in research, development, and demonstration projects are important for advancing renewable technologies down the cost curve. National governments and international bodies like the EU fund research at universities and national labs into new materials, production methods, energy storage solutions, and more to optimize technologies. Pilot and demonstration projects are deployed to prove technical performance at larger scales. Direct government investment accelerates technology learning and commercialization that the private sector may be reluctant to undertake due to high risks. This early stage R&D support is complemented by private sector investments as technologies mature.
Many governments promote renewable energy trade and cooperation to share innovation. International groups like Mission Innovation and the International Renewable Energy Agency organize collaborative projects among nations. Bilateral partnerships support joint research on issues like connected power grids and offshore wind. Government initiatives accelerate the development and diffusion of the most promising low-carbon technologies worldwide. International trade agreements also facilitate commerce in renewable technology goods to expand global markets and economies of scale.
If implemented comprehensively and sustained over the long run, these policies successfully drive renewable energy development according to independent analyses. Regulatory standards provide guaranteed demand to support scaled-up investments. Financial incentives overcome higher initial costs that impede market adoption. Public R&D accelerates technological progress. And international collaboration maximizes these efforts. As a result, renewable energy use has grown rapidly around the world in recent decades according to official forecasts and outlooks from groups like IEA and IRENA. With continued strong policy and market support, the share of power from renewable sources is projected to continue rising substantially in the decades ahead as these technologies progress down the learning curve. Effective policy action is vital to transition energy systems towards a sustainable low-carbon future.