Why not rely just on incentive-based approaches, such as tax credits?
Setting minimum standards has been an effective and essential policy for achieving many critical societal goals, such as increasing vehicle and appliance efficiency, company environmental performance, and building and product safety. Renewable energy production tax credits are vital for leveling the tax playing field with fuel-intensive technologies that pay lower property taxes and can deduct fuel expenses, but do not necessarily overcome other critical market barriers. In order to ensure the tax credits are effective, there needs to be a policy that creates a market for the technologies. For example, the production tax credit for wind has produced most new wind capacity in states that also have a state RES. The RES creates a market for renewable technologies that are commercially viable or close to viable and helps reduce their costs (see below). Complementary policies, including net metering and other financial incentives, are also needed to encourage the development of higher cost
