About Us

U.S. think tank extols benefits of renewables

Nov 22, 2006 Refocus Weekly

Switching the U.S. economy to run on renewable energies could save money and reduce pollution, with visible benefits within a decade, says a national think tank.

If prices for fossil fuels remain high and the cost of producing renewables continues to drop in line with historical trends, the U.S. could source 25% of its electricity from green power and 25% of its transportation fuels from green fuels by 2025 at little or no additional cost, concludes the Rand Corporation in 'Impacts on U.S. Energy Expenditures of Increasing Renewable Energy Use.' The report was commissioned by the Energy Future Coalition of Washington.

Currently, 6% of energy in the U.S. comes from renewables; if hydropower is excluded, the share drops to 3%. The study evaluates the '25x25' goal, which refers to sourcing 25% of green power and green fuels by 2025, and the data was modelled 1,500 times to assess the probability of different outcomes based on different assumptions on the pace of technological change and prices. It does not consider the impact of green heat technologies for space conditioning.

"The debate on use of renewable energy has largely centered on the tensions between some seeing renewables as socially desirable and others seeing them as economic losers," it explains. "Even advocates for renewable energy based on environmental benefits have had to acknowledge that solar power, wind power, geothermal energy, and biomass fuels have been too expensive to compete economically with non-renewable fossil fuels on a broad scale."

The scepticism about the cost of renewables is "anchored both in a long history of government energy programs that sought and failed to make alternative energy sources commercially competitive and in the negative views of the cost and reliability of renewables left over from poor experiences with renewables in the late 1970s and early 1980s," it continues. Market adoption has proved elusive in the U.S. and "surprisingly little systematic analysis" has been done of the possible long-term impact on total energy expenditures of expanding renewables consumption or the key drivers of expenditure impacts.

"Higher oil and and natural gas prices, if sustained, make renewable energy more competitive today than it was during much of the last quarter-century, when energy prices were lower than their peaks in the 1970s," the report notes. "The simulation analysis helps to identify the circumstances under which the specified renewable energy target raises or lowers total energy expenditures."

Renewables lower total energy expenditures in "virtually all cases in which current energy price and technology cost trends continue," and expanded use of renewables "could be achieved at acceptable costs," it concludes. "Shifting to renewables had adverse impacts on total energy expenditures in cases when fossil fuel prices are lower than current forecasted projections; costs of renewable energy technologies increase or decline less than historical trends as renewables use scales up, and non-renewable technology costs drop relative to the cost of renewables, the reverse of what has tended to occur as renewable technologies improve."

If renewable energy technologies continue to improve at historic rates, and are 20% less expensive to install by 2025, energy expenditures might be 0.5% higher or lower than the non-renewables case, "essentially breaking even." The most extreme of the 1,500 scenarios produced by Rand show a 6% change in energy expenditures (US$75 billion in 2025) if the costs of renewables rise 30% over the next 20 years while natural gas, oil, and coal prices fell 50% from current projections.