In a startling reversal, Britain’s Labour government has put on the table a feed-in tariff proposal for “microgeneration.” The proposed feed-in tariffs will pay homeowners, farmers, and community groups for the electricity they generate with renewable energy.

The move represents an ideological breakthrough. Long an ardent supporter of Renewable Obligation Certificate trading systems and plain old-fashioned subsidies as the sole means of developing renewable energy, Britain’s Labour government has abruptly changed course.

Britain, along with its English-speaking allies in the United States, Australia, Canada, and New Zealand, has been a staunch proponent of the “Washington Consensus” of neoliberal economic orthodoxy. In this world view, the only mechanisms that can be used to develop renewable energy and hew to ideological purity are quota systems coupled with Tradable Green Certificates. In Britain this policy is called the Renewable Obligation; in North America, it is known as Renewable Portfolio Standards.

However, outside the schools of economics aligned along the Chicago-London axis, others have argued that feed-in tariffs are a more effective and less costly market mechanism for rapidly developing renewable energy. These include prominent British economist Sir Nicholas Stern, as well as continental European economists who are less well-known in North America.

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The specific proposal by the new Minister of Climate Change, Ed Miliband, is less significant than the fact the government felt compelled to act. Prime Minister Gordon Brown narrowly escaped a backbench revolt in the House of Commons earlier this year over exclusion of a feed-in tariff in Britain’s long-awaited energy bill. Meanwhile, in the House of Lords, debate on the inclusion of feed-in tariff provisions continued despite the government’s attempts to quash the subject.

Nevertheless, Miliband’s proposal is timid and vague.

For example, the proposal limits individual projects to no more than 3 MW. That’s enough for rooftop solar systems, but not big enough for most community wind projects. It’s clear that the government doesn’t want a program of feed-in tariffs to threaten its quota system, despite the fact that there’s widespread acknowledgement that Britain will miss its renewable energy targets and now pays more for renewables than its European neighbors that use feed-in tariffs.

The existing Renewable Obligation has mostly benefited commercial wind development in Britain’s highlands. What the British call microgeneration — rooftop solar, for example — has been dependent upon the waxing and waning of traditional up-front subsidies. As a consequence, Britain lags well behind Germany, Spain, Italy, and France — all countries using feed-in tariffs — in the development of rooftop solar photovoltaics.

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Even in wind energy, Britain is falling increasingly behind continental nations. By the end of 2008, France, Britain’s long-time cross-channel rival, will operate nearly 1,000 MW more wind-generating capacity than Britain, despite being a relative newcomer to wind energy development. (See “French Wind Growth Continuing.”) France uses an innovative feed-in tariff policy.

British renewable energy campaigners, notably Friends of the Earth, have called for more specifics in the proposal and for increasing the maximum project size to at least 10 MW — equivalent to about five modern wind turbines. Friends of the Earth is also calling for prices (the feed-in tariffs) to be differentiated by technology — solar is paid one price, wind another, and so on — a feature found in all countries successfully developing renewable energy.

Elsewhere, a number of Australian and American states, as well as Canadian provinces, are considering feed-in tariffs: