Comparing Market-Based Renewable Energy Regimes: The Cases of the UK and Japan

A comparison is made of the operation and outcome of “market based” renewable energy support mechanisms operating in Japan and the United Kingdom. Although the results of this comparison suggest that both designs have deficiencies compared to “feed-in” tariff support mechanisms, there are clear differences between the two market-based regimes. The British design, which is based on automatic penalties for non-compliance by electricity suppliers and on reasonably ambitious targets for expansion of new renewable energy, is producing some significant volume growth in renewables. Projections suggest that this will continue. However, the same cannot be said of the Japanese scheme, where penalties for non-compliance have not been applied and where the targets for expansion are low.