The world has started experiencing the adverse climatic changes

The world has started experiencing the adverse climatic changes

The world has started experiencing the adverse climatic changes that were only predicted in the previous century. The aspect of a probable future in a damaged environment is manifesting daily. Different parts of the world are experiencing high tides which threaten human settlement, extensive droughts, increased hurricanes and high temperatures are melting snow in the Antarctica. The United States, as one of the largest emitters of greenhouse gases in the 19th and 20th centuries, have developed immense policies to aid in reduction of the wastes dumped n the environment. As part of several international agreements, the United States has adopted some of the international policies in changing the climatic issues, especially in the adoption of renewable energy. The industrial boom in the nation led to increased production of electricity from fossil fuels; thus, the national grid was supported by the form of energy production. In the modern era, several policies have been put in place to encourage the increased production of renewable energy both on the federal and state level. The main energy policies in the US are based on the economic incentives for manufacturers of renewable energy. The main policies on renewable energy for the nation are renewable portfolio standards, tax credit, MARCS, investment tax credit, RFS, grants, subsidies and overall goals based on each government.

The advancement of renewable energy policies in the US are focused on the advancement of the renewable portfolio standards. According to the Energy Information Administration (2019), “Renewable portfolio standards (RPS), also referred to as renewable electricity standards (RES), are policies designed to increase the use of renewable energy sources for electricity generation. These policies require or encourage electricity suppliers to provide their customers with a stated minimum share of electricity from eligible renewable resources.” The policy enacted in 1997 calls on all suppliers to offer a designated percentage of energy to the customers from renewable sources. The amount and source of the renewable energy varies among the states. However, the average amount of the renewable energy offered to customers is from 10 to 30 per cent in the states abiding by the policy. The policy has been effective in adding a notable percentage of renewable energy into the state grids in each region and expected to rise in the current centuries. The policy offers a federal guideline on the amount required by each state supplier hence allowing each electricity supplier to adhere to support of the renewable energy plants. The policy is effective as it reduces the carbon print of each family as well as encouraging suppliers to aid in the growth of renewable energy. Moreover, the progressive addition of the renewable energy source is viewed as a positive step towards increased production by the firms over the fossil fuel suppliers. By offering a monetary incentive to the producers of renewable energy, the government hopes to improve the overall percentage of renewable energy in the national and state grids.

The second policy on renewable energy in the United States is the production tax credit. The policy is based on offering a tax relief to the producers of renewable energy in the US at a given percentage for a defined period. According to the office of energy efficiency and renewable energy, “The Production Tax Credit (PTC) provides a tax credit of 1¢–2¢ per kilowatt-hour for the first 10 years of electricity generation for utility-scale wind” (windexchange, 2019). The policy offers a monetary benefit to the private investors looking into establishing in the renewable energy sector in the US. The policy was enacted in 1994 by the governor of Iowa and has since led to a rush in the advancement of renewable energy production, especially in the wind production. The policy looks into offers a relief to the new companies and offers them a ten-year period to establish the energy production. The form of policy has been debated severally in congress as it was set to expire in 2012. However, it was extended to 2019. In a debate tabled to congress last year, the PTC was extended to the end of 2020 based on the rush of companies to complete the renewable energy projects. The policy in the renewable energy sector has been successful in the nation as it encourages private investors to look into the form of energy production. Similarly, the policy has allowed increased renewable energy investment as the companies have a grace period in which the companies can be able to grow in the energy production sector. The monetary incentive has been able to work in getting more private investors to be drawn into the sector.

Apart from the PTC, the United States policies on renewable energy also offer the Investment Tax Credit. The previous form of incentive is focused on the production as the ITC is focused on the advancement of investment into the sector. As expressed in the Office of energy efficiency and renewable energy, “Investment Tax Credit (ITC) provides a credit for 12%–30% of investment costs at the start of the project and is especially significant for the offshore and distributed wind sectors because such projects are more capital-intensive and benefit from the up-front tax benefits” (windexchange, 2019). The credit allows the investment burden at the beginning of the project to be given by the federal government. The policy works in the same way as the PTC to encourage investment into the renewable energy sector. The acquiring of the equipment such as windmills and powerful steamers for hydropower, among other essential equipment, is expensive. The initial cost of setting up a renewable energy production station is higher while the income is progressive and takes time to offers a full compensation for the investment. Therefore, investment credit to private firms across the nation looking to establish renewable energy forms offers a business model that is attractive to investors. Over the years, the ITC has seen a notable increase in the investors interested in the renewable energy production.

Similarly, the United States policies on renewable energy is based on the cost recovery system. The policy commonly referred to as MACRS offers a relief to the investors in the renewable energy sector by offering a reduction in the cost on investment. According to the US PREF (2014, p.2), “Since its inception, the Tax Code has authorized depreciation deductions.3 The Tax Reform Act of 19864 streamlined the system for claiming these deductions by creating MACRS.” The form of policy looks into the declaration of several entities of the renewable energy sector as depreciating. In the artificial depreciating provision, the companies investing in the renewable energy sector are able to have a tax relief. The tax relief for the firms has seen a tremendous reduction in the amount of consumer charges across the states. The reduction of the tax burden allows the suppliers to produce and supply electricity at a subsidized rate. Moreover, the renewable energy percentage in the national grid has increased as the cost of capital is reduced in the tax burden removal. In the social aspect, the advancement of the renewable energy sector has also allowed the advancement of jobs to the common citizens in the various regions where the plants have been formed.

Additionally, a notable policy in the renewable energy sector in the US is the renewable fuel standards. The advancement of the energy regulations in 2005 looked into the pricing of biofuels. According to energy specialists, “congress first established a Renewable Fuel Standard (RFS) a mandatory minimum volume of biofuels to be used in the national transportation fuel supply. The initial RFS mandated that a minimum of 4 billion gallons of renewable fuel be used in the nation’s gasoline supply in 2006” (Schnepf, 2011, p.1). The amount provided in 2006 was set to increase progressively in 2012 and the subsequent years. The policy is based on advancing the use of biofuels in the transportation industry, especially on the federal level. The advancement of the policy was expected to reduce the overall carbon print of the government. The policy differs from the other policies as it does not focus on the advancement of monetary value for the people investing in the renewable energy sector. On the contrary, the policy looks into changing the level of greenhouse gases emitted by the automobiles. The different forms of biofuels used in the transportation also creates the brand of fuel that can be adopted by other members of the society to avoid the overconsumption of fossil fuels in automobiles and the emission levels in the means of transportation. The policy enacted in 2005 was seen as a new way of ensuring the society changed the approach on the use of fossil fuels in the day to day. Even so, more gallons need to be used in the transportation by federal cars to ensure the government plays a role in the reduction of carbon emissions per year.

Apart from the acknowledged policies, renewable goals adopted by different administrations have impacted on the renewable energy production and use. Different presidents have different plans in ensuring the adoption of more renewable energy into the national grid. One of the most popular policy was initiated by President Obama in 2009. The president called on the increase to 25% of the renewable energy in the grid by 2025. According to a report published by the NPR, “President Obama and his counterparts from Canada and Mexico are preparing to unveil an ambitious new goal for generating carbon-free power when they meet this week in Ottawa. The three leaders are expected to set a target for North America to get 50 per cent of its electricity from nonpolluting sources by 2025. That’s up from about 37 per cent last year” (Horsely, 2016). The 50 per cent mark in 2016 comes up from the 25 per cent goal created in 2009 by the administration. The goal was rapidly adopted in various states, especially those of the democratic representatives. The overall approach of the Obama administration was focused on getting more people to invest in the renewable energy sector. Moreover, the style of the administration was focused on getting more people to reduce their carbon print rapidly. In the same way, the Trump administration changed and introduced different administrative policies and approach to renewable energy. Different presidents have increased funding and reduced it accordingly.

Furthermore, the state leaderships have extended different forms of grants, subsidies and credit to aid in the development of state-level increased renewable energy. As an author illustrates, “Every US state except Arkansas provides some form of financial assistance to renewable energy. Although the nature and the extent of this assistance considerably, tax exemptions are a common theme” (Chinese Academy of Engineering, et al. 2011, p.121). Different states have established different ways in which the production of renewable energy can be achieved in the given state. The approach has allowed the mini-grids to have an increase in the renewable energy based on the needs of the given state. The state-level subsidies also encourage the production of renewable energy on the local level, which is effective in getting more energy production sources to be changed into renewable sources. The different state policies act based on the federal and international policies on renewable energy. As a result, the form of energy source prioritized is different as well as the amount of funding offered to the private investors also changes to facilitate the state needs. However, unlike the federal policies, which are bulky and difficult to implement, state-level economic incentives are likely to improve the renewable energy in the mini-grids.

Conclusively, the united states policies on renewable energy are focused on offering monetary incentives through the RFS, RPS, PCT, ICT, and MACRS. The policies look into offering a tax relief and credit to the investors and private firms looking into expanding into the renewable energy sector. Given the nature of the American financial ideologies of capitalism, the policies are effective as they allow the capitalists to have motivation towards adding into the system. Moreover, the policies have been effective in ensuring that investors are helped with the intensive capital and given a tax relief of several years to be well-established. The policies offered by the government is tailored towards the ideologies and way of doing business in the nation. Similarly, the monetary incentive allows more people to be willing to get into renewable energy as it is lucrative, especially for RPS, which requires each state to increase the renewable energy percentage in the supply. An essential part of US policies on renewable energy also relies on the role of the different administrations. The incoming of a new president comes with increased and change in the renewable energy policies. The policies of the government and the leaders in each state play an essential role in increasing the renewable energy in the national grid in America. Nonetheless, the country has shown an increase in the percentage of renewable energy in the national grid and advancements in renewable energy policies can aid in advancing the percentage more.