ENERGY AS FIC
FIC stands for Feed-In-Compensation. Feed-In is a legislation method that delivers energy transition away from fossil to a renewable energy model. By the fact that Feed-In a only legislation based model is, it has as huge benefit that it has no impact on the governmental budgets (i.e. it's governmental budget neutral). This governmental budget neutral facet that could be a very important facet in times that almost all governments must cut spending severely, but still wants to change the direction of the national energy system by a budget neutral model. The reason why nations would like to change the direction of their energy model is obvious: a) the fossil model that has powered economies for a century is ending and nations that will stick to it will face severe economic damage as fossil energy prices will rise and economies based on cheap fossil energy prices will slowed down by it, b) importing fossil energy is exporting wealth and c) much of the geopolitical and georegional friction and/or tension is caused by fossil energy demand and its attached capital flows. It's not strange that nations with no fossil resources are the first ones that considered FIC legislation. They have no double agenda as the fossil states have (as the fossil states have a huge fossil energy based income): energy is for the fossil deficit nations just a huge daily export of wealth and a huge future risk. How does it work basic? It forces the fossil fuelled power manufacturers that deliver to the grid to add a little to their price (say -for example- 1 dollar cent per kWh -but this is a variable that each nation could judge different) and to transfer this carbon fee the national energy transition fund managed by the national grid authority. This energy transition fund subsidizes with this carbon originated income the renewable power generation that is feed to the grid with a certain fee per kWh: the difference of an average fossil fuel generated kWh and an average renewable generated kWh. The operational costs are very low (as the grid administrations (national, regional or local) is already in place and functioning fully automatic and the costs of it are already for account of the parties involved. So fund nett income = fund nett expenses. The last thing nations need is a new governmental layer with ditto costs that will burden their economy. As the current energy power is almost fully fossil fuelled, this 1 dollar cent per kWh feed fund will have more carbon fee income than renewable fee expenses. This capital is parked by the National Renewable Energy Transition Fund, a body that supports maximum -for example- 25% - but this is a variable- of the loans for renewable energy investments by regular banks under certain conditions (see Energy as Rating) and as long these are liquid to handle (as they can be needed on short term to pay renewable fees if the renewable production starts to get traction. How does it work actual? The fund pays the difference between renewable and fossil power energy generation to the supplier of renewable energy to the grid (as additional price component on top of of the already everywhere installed open grid IT based administration). So the payment administration doesn't cost a dime extra to any party involved. The whole measuring, accounting and payment infrastructure is already in place (servicing the open grid architecture). The FIC model is also much, much, much more better that than the carbon tax proposed in Copenhagen, as that would lead to new global governance structures, with ditto costs and ditto poor transparency. The FIC model is by design much better than the Copenhagen Proposal. The FIC model does for the full 100% what it supposes to do, with no costs, no global treaties or any other not proposed side effects. The Copenhagen Proposal was just about installing a global tax to be able to install a global governance structure. It wouldn't solve the problem, nor bring solutions and delivers only less democracy and less transparency. As written before: democracy/transparency and distance are contrary items. The more far government is from the persons and companies it governances: the lower the quality of governance. Their should be installed a National Renewable Energy Transition Auditors (with maybe regional or local branches), that give the auditing guidelines to the market auditors and audit the market auditors in following these guidelines. Market auditors can be energy auditors if they get a permit (based on an energy knowledge educational course) for it and by mal-auditing or even audit fraud there are sanctions that leads in three strikes (with auto recover of strikes due to good behaviour -as in: no recorded mistakes) to withdrawal of the auditing permit. The FIC legislation stays in place to fossil fuel generated and renewable harvested power prices are equal, after that point, fossil will become only more expensive and renewable only will become cheaper, so the legislation is no longer needed. This price compensation model delivers the owners/financiers of renewable energy harvesting/generating facilities the coverage they need to initiate/finance these facilities. So this FIC model is not about 20 or 30 year guarantees. It just a market driven guarantee model that will be in place as long renewable is more expensive than fossil. This would not be a long period. The FIC model is just a way to kick start a national/regional/local renewable energy production, that will keep the energy costs for now in to the domestic economy, will guaranteed the economy steady energy supply, give the banks (instead of foreign states) a new line of income and prevent economic slowdown due to to high energy prices as fossil energy exploration starts to become too expensive and increased market demand of the emerging nations will drive prices even higher. What if the renewable fee demand is higher than carbon fee supply? That's just a sign that or the renewable fee must be lowered or the carbon fee must be higher. Just to the judgement of the national/regional/local government as writing in the FIC legislation. What's the method to get no head wind on the FIC model by large industrial power users? Limit the FIC model to grid deliveries and leave own power production by the industrial mega users out. They are powerful in lobbying and can retard the installation of FIC legislation for years. Furthermore: they really understand that mega energy using processes are not good any more from economic/competive perspectives: they will change by themselves for the sake of maintaining/realizing profits and markets. They are certainly interested in energy transition. They understand the energy status better than we all do, as they must pay huge energy bills and due to the current economic turmoil the biggest share of profit realizations is in cutting costs. More on the current concept (not the above described new concept) of FIC can be found on Wikipedia (http://en.wikipedia.org/wiki/Feed-in_tariff). Energy as FIC is certainly an very easy to implement concept that is capable of generating a massive energy transition investment wave.
Author: Gijs Graafland
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