Study: Renewable Energy Could Play Expanded Role In U.S. Energy Future Under Right Conditions

• Nov 01, 2006

Renewable resources currently provide about 6 percent of all the energy used in the United States. However, renewable resources could produce 25 percent of the electricity and motor vehicle fuels used in the United States by 2025 at little or no additional cost if fossil fuel prices remain high enough and the cost of producing renewable energy continues falling in accord with historical trends, according to a RAND Corp. study issued on Nov. 13.

RAND found that meeting a 25-percent renewable energy target for electricity and motor fuels together would not increase total national energy spending if renewable energy production costs decline by at least 20 percent between now and 2025 (which is consistent with recent experience), unless long-term oil prices fall significantly below the range currently projected by the U.S. Energy Information Administration.

Wind power, solar power and the burning of agricultural waste are all examples of renewable energy sources that can be used to produce electricity. Biomass resources like stalks from food crops, wood material and grasses also can be turned into ethanol that can be used to power motor vehicles.

The study evaluates the goal known as 25x'25 (or 25 percent by 2025). This refers to having 25 percent of the energy used for electricity and motor vehicle fuel in the United States supplied by renewable energy sources by the year 2025. The Energy Future Coalition, a nonprofit organization, asked RAND to assess the economic and other impacts of meeting the 25x'25 goal. The RAND study considered technological and economic factors that would affect the costs of renewable energy as well as non-renewable fossil fuels.

"When talking about the impact of increasing use of renewable energy sources in our energy future, it's important to be clear about the assumptions being made about future energy prices and technological developments, not just for renewables but also for competing fossil energy sources," said Michael Toman, director of RAND's Environment, Energy and Economic Development program.

Significant reductions in carbon dioxide emissions from fossil fuel combustion also can be achieved by meeting the 25x'25 goal, the study found -- amounting to 1 billion tons of carbon dioxide in 2025, or 15 percent of projected U.S. emissions. In addition, an estimated 2.5 million barrels of oil consumption would be displaced, according to the study.

Previous studies have relied on a handful of scenarios to capture uncertainties in the U.S. Department of Energy's projections of future energy prices and changes in the costs of various technologies.

The RAND study examined 1,500 cases of varying energy price and technology cost conditions for renewable and nonrenewable resources. The RAND team developed a model based on the National Energy Modeling System created by the U.S. Energy Information Administration.

RAND researchers did not assess the impact of renewable energy used directly by industry in buildings currently using natural gas, in off-road vehicles used for construction and recreation, or in railroad and jet fuel.

RAND researchers assumed that implementation of increased renewable energy use would be carried out at a national level in the least costly manner, versus a more piecemeal approach. Among the important uncertainties considered is the cost to ramp up use of new renewable energy technologies.

For additional information on the study, go to http://www.rand.org/pubs/technical_reports/TR384.

For more information about 25x'25, go to http://www.25x25.org.

On Dec. 5, The RAND Corporation announced it is revising a study on renewable energy expenditures issued Nov. 13 after learning there were some inadvertent errors in the computer model and numerical assumptions on which the study findings were based.

RAND Vice President Debra Knopman, who is director of the RAND Infrastructure, Safety and Environment division, said the errors ?may have an effect on the results of the study, but exactly what that effect will be is uncertain at present. In this instance, the RAND quality assurance process that we use to carefully review our studies failed to detect inadvertent errors in the treatment of existing subsidies for biofuels and the availability of existing hydropower capacity in the computer code, as well as some other details relating to how the renewable requirement is met and at what cost.?

Knopman said that RAND will issue a corrected version of the report in early 2007.

This article originally appeared in the 11/01/2006 issue of Environmental Protection.