To achieve emissions reduction goals, a South American government considers policies other than carbon pricing to target carbon-intensive industries more effectively. The government intends to promote renewable power generation by implementing subsidies.
Which action should the government take to support this subsidy policy?
To support a subsidy policy for promoting renewable power generation, the government should establish feed-in tariffs. Feed-in tariffs provide long-term contracts to renewable energy producers, offering a guaranteed price per unit of electricity generated. This mechanism directly subsidizes the renewable energy sector and incentivizes investment in renewable power generation.
D. Feed in tariffs are subsidies. RPS are not.
RPSs require commercial power producers to source a specific portion of their supply from renewable energy sources, while feed-in tariffs offer a guaranteed price per unit of electricity generated.
I think the correct answer is D.