As an Australian who relocated to California to take advantage of the sunny outlook for the solar power business over here, I watch for movement in the Australian climate debate with an eye to coming home when it finally makes sense to do so.

Sadly, the superficial rhetoric coming from both major parties makes me fear that the kinds of policies that could trigger my return, along with that of other ‘ecopreneurs', are a long way off. Howard and Rudd are both toying with climate protection policies but failing to really sink their teeth in. Instead of working out how to stop the pollution causing climate change, they are both busy working out how to trade it. A price on carbon would help but it is no silver bullet, and it will take a suite of solutions to address a problem of this scale.

With the community consistently clamouring for solar in poll after poll, any party that delivers a policy for building the renewable energy industry to supplant fossil fuel-based electricity sources should win widespread support. This policy would need to go far beyond the pathetic mandatory renewable energy target that the Howard government has overseen. Clearly it must not be an excuse for further corporate welfare to the so-called ‘clean coal' industry (a dream nearly as fantastic as nuclear power being ‘too cheap to meter') or the nuclear industry, which has hopefully suffered its final credibility blow with recent near misses in Australia and Japan. Renewable energy policy is 07's election litmus test.

What should they do?

The best market-based policy to put Australia back in the race to develop a clean energy industry, especially for key technologies like wind and solar, would be a ‘Feed In Tariff', also known as a ‘renewables premium' or ‘standard offer contract'.

Where a feed in tariff is in place, electricity produced from solar, wind, minihydro or any other renewable energy technology, receives a premium price. In Germany, for example, solar PV gets four times the market rate for 20 years, guaranteed. Germany has spearheaded the uptake of solar and wind technologies with this scheme. The feed in tariff is becoming the preferred policy for increasing solar uptake, with 30+ countries using programs similar to the German model.

A premium price is obviously a huge incentive to install renewable energy technologies, but it is not a subsidy. The cost is spread around electricity users by mandating that generating companies charge all of them a little extra. In Germany it has added about 1 cent per kilowatt hour or an extra $1 - $2 per user per month. It reduces the payback on the technologies to less than 10 years and offers a Return on Investment of 8 - 9%. Moreover it creates the scale required for industries to learn how to become more efficient and less expensive, and therefore more accessible across the board. This policy has made Germany the centre of excellence in solar businesses.

The results are incredible: Germany - a geographically small, northern European nation - has more than half the world's installed solar electric systems. It gets 2.5 gigawatts of electricity from photovoltaics (PV) - a fact that contradicts Prime Minister Howard's oft-repeated lie that solar won't contribute significantly to our needs in the future. In actual fact, the 12% of Germany's electricity already coming from a variety of clean energy sources would power much of Australia. Germany has created a quarter of a million new jobs in clean tech this decade (and a capital base financing people like myself) largely through the use of a feed in tariff.

I asked an experienced economist at a solar consulting company in Sydney to explain how a feed in tariff might work in the Australian national energy market:

The regulatory agencies would establish a central renewable generator fund. The generators would charge a tariff of less than 1% of the average bill (less than in Germany), which would be collected in the fund before being dispensed to solar and other renewable energy generators at 50 cents per kilowatt-hour that they produce. This would save ratepayers and taxpayers money because it would reduce the cost of upgrading grid infrastructure (since renewables are more decentralized), and builds new generation capacity to meet peak demand (since PV produces best when demand is highest, when the suburbs switch aircon to high).

To ensure that the tariff helps build a self-sufficient industry rather than one under permanent protection, the premium paid to solar producers would be reduced over time, as in Germany. A 5% reduction per annum, for example, would track the learning curve and really make investors want to get in sooner rather than later.

Here are the sorts of benefits we could garner by 2020 with a properly run policy:

• A feed in tariff for solar alone (a broad-scale, multi-technology policy would deliver far more) would deliver over 3,000 megawatts of clean peaking electrical generating capacity.
• This would provide electricity to over 750,000 Australian homes and reduce CO2 emissions by 4 million tons per annum.
• It would create 9,000 jobs across Australia in a high tech industry with enormous export potential, whereas right now we are a losing the last of our clean technology experts.
• It would immediately attract private investment - provided that there was enough faith that the policy would survive the slings and arrows of Australia's outrageous politicians.

But therein lies the rub. The coal-loving leadership of both Labor and the Coalition continue to play out scripts from the 19th century steam engine economies. The one simple policy outlined above could have a very positive net economic impact on the Australian economy. It would reduce reliance on outmoded and brittle electricity grids. It would have economic benefits including jobs and technology investment nationwide. It would green our growing electricity system and diversify our supply in a low-cost way, as a hedge against the growing scarcity and cost of fossil fuels. It would give us an ‘in' to an expanding global market - the solar industry grew 70% in 2005 and is expected to be a $40 billion business by 2010. Last but not least it would significantly reduce our CO2 emissions.

A feed in tariff would cost Australians only about the price of a cup of coffee each year that it remains in place. It would ensure a new globally competitive industry in little more than a decade, after which it will no longer need the support of such a scheme. Yet it need not affect energy intensive industries if the powers-that-be want to continue to protect their pet aluminium and other producers (as in Germany, key sectors of the Australian economy can be exempted from the tariff). And it would engender energy security and price stability and lead the way into a low-carbon, climate-safe economy.

So for the market faithful on both sides of the Parliament it should be the perfect solution. But I note on Hansard that when Greens Senator Christine Milne asked a series of questions about such a policy in the Senate, it was clear the Government had no idea and the Opposition was little better informed. It seems that the world's preferred policy for supporting renewable energy has barely registered for Australia's major parties. Nonetheless I am still hoping someone introduces it before the election. I'd vote for it!