Controversies There has been a lively debate over advantages of FiTs, especially in comparison to quota-systems, in the EU from the late 1990s. Attempts by the European Commission to impose a Europe-wide harmonized system of green certificates, however, failed. 13 The controversies regarding the policy approach arise over different issues, including the cost-effectiveness of FiTs. 14 There are strong indications, however, that the FiT might in practice be more cost-effective than a quota system due to the higher investment certainty which drives down financing cost. In a quota system, the investor has to bear the risk of both the market price and the certificate price, leading to higher rents. Examples analyzed by Resch et al. show that“… certificate systems lead to higher producer revenues than FITs, which compensate for high investment risk.[…] The fact that expected profitability from the investor’s perspective is significantly lower for FITs is directly linked with a higher efficiency of this strategy because additional costs for consumers are lower.” 15 Furthermore, quota systems in practice have often not achieved the RE expansion goal. 16 This has been claimed e.g. on the fact that penalty payments were too low to incentivize compliance. It shows, however, that while a FiT system is challenged by finding the right equilibrium to achieve the politically set expansion goals, an improperly designed quota system can also fail to achieve RE targets. Case study: The German Feed-In Tariff System Germany as a Member State of the EU The last two decades have seen a considerable expansion of RE in Europe. In the EU, not only national but also European policies triggered national action. One of the early elements for this development was the introduction of Directive 2001/77/EC on renewable energies in the electricity sector. The directive required“national indicative targets” and respective“appropriate steps”(Article 3 of the 2001 RE Directive). This incentivized legislative action at the national level in each Member 13 For more information see Mehling et al.(2013), pp. 29 sq. 14 See Zhang(2013), p. 2; Diekmann et al.(2012), pp. 18 sqq.; Resch et al.(2007), pp. 27 sqq.; Bardt et al.(2012), p. 31. 15 Resch et al.(2007), p. 29. 16 Bardt et al.(2012), pp. 7, 8, 10; Diekmann et al.(2012), p. 18. 9