The United Kingdom will have two years to craft an incentive program that pays a premium for renewable energy to promote an emerging industry while cutting greenhouse gas emissions.

The government will come up with policies to carry out a recently passed energy bill that will create the renewable energy incentives program, which is often called feed-in tariff. The program is scheduled to begin in 2010.

Feed-in tariffs have played a key role insolarenergy boom worldwide. Solar equipment makers and power plant developers look for such incentives that sometimes draw criticism for supporting an industry at the expense of consumers.

The Queen gave her approval to an energy bill last week, making official a series of government initiatives that aim to cut greenhouse gas emissions to 80 percent below the 1990 levels by 2050. The government previously had sought to reduce the emissions by 60 percent.

In a typical feed-in tariff program, utilities are required to buy all the electricity generated from renewable sources, such as solar and wind, and pay rates that are higher than the prices for conventional power. The government sets the rates, though utilities can pass on the costs to customers.

Unlike similar programs elsewhere, the U.K.'s feed-in tariff will apply to projects that are 5 megawatts or smaller.

Countries such as Germany and Spain have similar programs in place that have turned them into a lucrative markets for solar equipment makers not only from Europe, but also North American and Asia (see Spain Approves 500MW for Solar and Solar Prices Set in Germany).

France, which is big on nuclear power generation, recently expanded its feed-in tariff program. The French government said it will allow solar power projects on commercial rooftops to get 45 euro cents per kilowatt hour, higher than the rates set for 2009 in Germany, reported the Renewable Energy World.  

France doubled the baseline feed-in tariff from 15 euro cents per kilowatt hour to 30 euro cents per kilowatt hour starting in 2006. It also passed a tax credits for installing residential solar energy systems.

Meanwhile, Japan is looking at reintroducing one (see Japan Wants to Resurrect Solar Incentives).

The United States doesn't have a national feed-in tariff program. The likelihood of having one under the new administration appears unlikely because it's not included in Barack Obama's energy plan, though California has one (see Policy Roundup: British Columbia Curbs Carbon, California Expands Feed-In Tariff).