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Legal Frameworks for Renewable Energy

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Legal Frameworks for Renewable Energy Legal Frameworks for Renewable Energy Policy Analysis for 15 Developing and Emerging Countries Published by: Preface ii 3 Country Profiles: Spreadsheet Data, Summaries, Analysis 27 Abstract iii 3.1 Spreadsheet Analysis 28 3.1.1 Spreadsheet Data 30 Introduction 08 3.2 Textual Analysis 44 1 How to use the data structure for policy analysis 11 3.2.1 Brazil 44 1.1 Understanding the methodological approach 12 3.2.2 Chile 50 1.2 The Policy Design Cycle 12 3.2.3 China 53 1.3 Giving Policy Advice Based on the Methodology 15 3.2.4 Egypt 57 3.2.5 Ethiopia 63 2 Theoretical Overview: Existing RE Support Instruments 17 3.2.6 Ghana 66 2.1 Feed-in Tariffs 18 3.2.7 India 71 2.2 Renewable Portfolio Standards or Quotas 19 3.2.8 Indonesia 78 2.3 Tradable Renewable Energy Certificates 19 3.2.9 Kenya 83 2.4 Net Metering 20 3.2.10 Mongolia 88 2.5 Public Investment, Loan or Financing 20 3.2.11 Morocco 91 2.6 Public Competitive Bidding 21 3.2.12 Philippines 96 2.7 Capital Subsidies, Grants, Rebates 21 3.2.13 South Africa 101 2.8 Investment or Other Tax Credits 21 3.2.14 Thailand 105 2.9 Sales, Energy or Excise Tax or VAT Reduction 22 3.2.15 Tunisia 108 2.10 Energy Production Payments or Tax Credits 22 4 Conclusions 115 2.11 The Role of Barriers on RE Support Instruments 25 Appendix 119 Glossary 120 References 122 Abstract Preface Abstract Renewable energies (RE) hold the key to a through technical cooperation we can only Need for Good Practice in RE support schemes in different national contexts, allowing climate friendly energy future and an energy give advice according to the requirements of Policies policy makers to derive concrete action out of a supply that is sustainable and secure in the long our partners. Decisions on electricity tariffs, complex set of influencing factors. term. Since the Bonn Renewable Energy Confe- for example, are often very political and for- Due to the growing importance of renewable rence in 2004, numerous developed and develo- eign advice can only exert a certain amount of energy on global scale, a need for effective sup- The methodology is valid for any policy type. ping countries have increasingly set targets for influence. Nevertheless, we must endeavour to port policies arises in many countries. Often, The Policy Design Cycle defines five levels of the utilisation of renewable energies in meeting continually improve our advisory services, and policy instruments showing good results are general design criteria to be considered for their power supply needs. In order to reach this report should contribute to this process. highlighted as ‘good practice’, and thus recom- consistent and thus effective renewable energy their targets, many countries have designed and mended for adoption in other countries. How- sources support policies: implemented a variety of policies, strategies and The study is part of the work of the GIZ pro- ever, such a transfer of ‘good practice policies’ instruments. Our initial assessment was that ject on ‘Technology cooperation in the energy often stays behind expectations or leads to 1. definition of renewable energy sources only a few countries had implemented these sector’ commissioned by BMZ. In addition to failure. Therefore, independent from the type targets; comprehensively enough to reach their self-set the report, we have also produced a spreadsheet of instrument, it is most important for policy 2. definition of a strategy for reaching the targets. providing comprehensive information on the makers to understand: targets; countries analysed. This is available separately. 3. definition of concrete measures for imple- • Why do policies work (or do not)? To verify our assessment, we compiled a com- menting the strategy; prehensive overview of the progress made in We would like to thank Ecofys Germany GmbH • Which factors of influence are relevant for 4. enforcement and monitoring; establishing legal frameworks for renewable for all their hard work on the study, as well as success or failure? 5. evaluation of compliance. energies in 15 partner countries of German our colleagues in the various partner countries • How can these factors be isolated and their development cooperation. This overview is for their invaluable input. effect be understood in detail? presented here. In some of the countries, GIZ The Policy Design Cycle is not assessing policies is – on behalf of the Federal Ministry for Eco- For improving RE policy design on an inter- in a sense of a ranking between good and less nomic Cooperation and Development (BMZ) Holger Liptow Stephan Remler national level, an indicator based approach is good practice, but it helps to determine and – advising partners on creating an enabling required, analysing the functioning principles evaluate their general functioning principles, Technology Cooperation in the Energy Sector environment for renewable energies. Of course, behind policies immaterial of their respective which, if complying with the criteria given, fa- Department of Water, Energy and Transport Deutsche Gesellschaft für Internationale Zu- type (i.e. feed-in tariff, quota etc.), allowing to cilitate good results under any policy approach sammenarbeit (GIZ) GmbH answer these questions individually for each and country context. policy context and set priorities in policy advice accordingly. Theory and Practice Methodology To further illustrate current approaches and re- lated difficulties in RE policy making, the study The theoretical fundament for this analysis gives a brief overview on the ten most common is a simplified concept of the “Policy Design types of policy instruments, highlighting diffe- Cycle”1, originating from the scientific approach rences in theory and practice and the general of “Theory Based Policy Analysis”2 . The Policy role of barriers. Design Cycle defines pragmatic categories for consistency and effectiveness of RE support 1 a scientific approach developed under the European Union project AID-EE. 2 developed by Blumstein et al. (1998). ii iii Abstract Analysis of RE policies in 15 countries prioritizing electrification as such) or the origin massive) implementation problems and, where Stakeholder commitment across several policy of deadlocks for RE legislation (e.g. unresolved ambitious targets are in place, they will not lead areas is required to establish a modus operandi According to the Policy Design Cycle, country conflicts between RE tariffs and possible price to their compliance. on how to deal with structural changes due to analysis is based on an indicator-based, compa- effects in various countries). RE deployment. Although often evident, these rison-focused approach, assembling all availab- As a consequence, international policy support gaps are not sufficiently in the focus of further le data in standardised form. Key questions (maturity of the policy frame- activities, currently often focusing on design political action. Therefore, international action Core part of the study is a complex, spreadsheet work, degree of successful implementation, and implementation of concrete instruments, should develop a broader focus to address such based data structure. The country specific text successful financing, condition of the electricity might be more effective where analyzing in the strategy gaps. chapters must be read as accompanying frame- network, as well as potential barriers) allow first place and at broader level if the instrument work, on the one hand explaining the methodo- isolate information serving as indicators for chosen for a country fits to its target/level of Financing of policy approaches is a general logical approach, on the other hand summari- market development. An overview matrix with ambition and other influencing factors. problem throughout many countries. Even if zing key information of the current situation in filter options, both on a country and indicator a government’s commitment to RE goes far the respective countries. level, provides a synthesis of all information, Commonly, failure of instruments does not enough to accept certain related price increa- which allows a detailed comparison of most only result from insufficient design of a single ses, the overall amount of cost due to paradigm Based on the data structure, the current sta- relevant aspects. Nevertheless, the user has to be policy instrument, but goes in fact beyond: ma- shifts in the energy system (e.g. grid infrastruc- tus of renewable energy support in fifteen aware that despite the standardized approach jor gaps concerning a consistent political strate- ture investments) may exceed available funding. countries (Brazil, Chile, China, Egypt, Ethiopia, most data must be read in a qualitative sense, gy to reach the respective target can be detected Further advice should be provided especially Ghana, India, Indonesia, Kenya, Mongolia, Mo- i.e. not being comparable 1:1, and thus requi- in most of the countries examined. This applies on the option of financing RE support policies rocco, Philippines, South Africa, Thailand, and ring additional interpretation according to the especially if interference with other policy areas through the mechanism of NAMAs (National Tunisia) is examined. In addition, for ten of the context of their use. occurs, e. g. cost for RE conflicting with social Appropriate Mitigation Actions). fifteen countries (Brazil, Egypt, Ghana, India, welfare policies focusing on low energy prices. Indonesia, Kenya, Morocco, Philippines, South Main conclusions Africa, and Tunisia) the study performs policy analyses and identifies potential future fields of The main result of the study consists of a action to help improve local renewable energy structured mapping of individual strengths and support. weaknesses of RE policies against the respec- tive background of a country, i.e. their success Purpose of the data structure and the accom- in comparison to each country’s individual panying text is to provide an insight into each ambition. This is supportive to strategic con- country’s individual stage of RE policy making, siderations on setting focus in international structured along a homogeneous set of criteria.
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