What does a Feed-in Tariff (FiT) encourage?

A Feed-in Tariff (FiT) is a policy mechanism designed to promote the development and adoption of renewable energy sources by providing a guaranteed payment to energy producers for the electricity they generate and feed into the grid. This approach gives investors and developers a stable and predictable revenue stream, which is essential for financing renewable energy projects, such as solar, wind, and biomass.

The primary goal of a FiT is to stimulate investment in renewable energy production. By offering set prices for renewable energy that are often higher than the market rate, FiTs make renewable projects more economically viable. This investment not only helps to diversify the energy mix but also contributes to reducing greenhouse gas emissions, enhancing energy security, and promoting sustainable resource use.

While options related to fossil fuels, reduced energy consumption, and decentralization may have some relevance in broader energy policy discussions, they do not encapsulate the primary intention of a Feed-in Tariff, which is geared specifically towards increasing the uptake of renewable energy technologies. Therefore, the focus of a FiT is clearly on encouraging investment in renewable energy production, making it the correct answer.