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Policy Options:
Renewable Portfolio Standards (RPS)

Renewable Portfolio Standards (RPS) mandate a minimum percentage of electricity be generated from renewable sources. RPS allows flexibility to choose whichever resources are most appropriate for their markets. (CREST)

Renewable Energy Credits are the mechanism by which industry buys, sells and trades electricity generated from renewables. Credits are "tradable certificates of proof that one kWh of electricity has been generated by a renewable-fueled source. The RPS requires all electricity generators or retailers to demonstrate, through ownership of Credits, that they have supported an amount of renewable energy generation equivalent to some percentage of their total annual kWh sales." (AWEA)

The US's RPS is outlined below, but several other nations also have renewable portfolio standards; Japan is targeting 3% renewable energy by 2010 and the European Union's goal is 20% of their electricity in renewables by 2010 (Clean Edge). According to the UNDP, a RPS can be particularly applicable for developing nations that have a public monopoly, but intend to reform and create a competitive market. The RPS can be transferred to the market participants after the reform. (China's tenth Five-Year Plan is an example.)

To include in design of an RPS:

1. Accurate definition of renewables

2. The level of the standard must begin at, or very near current levels of renewables and rise from that point

3. Sunset clause: price of credit should fall to zero when renewables are fully competitive


Benefits of RPS:

1. Ensures a minimum amount of renewable energy for a state or country

2. Flexible- allowing industry to decide what type of renewables to develop, where is the most cost-effective place for the development

3. Market driven policy



United States' RPS

In the United States, most renewable energy policy originates from state and local governments. Over a dozen states have renewable portfolio standards (RPS), mandating that a percentage of total electricity purchases are derived from renewable resources.

This creates a demand for renewable electricity. Also, it gives the suppliers the power to make decisions regarding R&D and investment.









For specific states' policies:

Renewable Energy Policy Project & CREST
Union of Concerned Scientists: Background of RPS and Analysis of State's RPS

Resources:

:American Wind Energy Association
Clean Energy Trends 2003, Clean Edge