Ken Silverstein EnergyBiz Insider Editor-in-Chief

Fossil fuels are volatile and responsible for most of the carbon dioxide emissions thought to cause global warming. A wider diversity of fuel sources is therefore essential to add to market certainty as well as to sustain the environment. To motivate developers, the two think tanks advocate fewer subsidies for coal and natural gas production while promoting market-based incentives to cut carbon dioxide emissions tied to global warming. They also advocate federal renewable portfolio standards that would compel utilities to add wind and solar to their mix of fuels.

"We're now at a moment of transition," says Christopher Flavin, president of Worldwatch Institute, at a press conference in Washington. "Stronger federal leadership is absolutely required. If there's one thing that's going to make a difference, it's political will." The report, "American Energy: The Renewable Path to Energy Security," says that one-fourth of the U.S. land area has winds powerful enough to generate electricity as cheaply as natural gas and coal, and that the solar resources of just seven southwest states could provide 10 times the current electric generating capacity.

For at least the next half century, coal and natural gas will make up the preponderance of fuels that produce electricity -- a portfolio that will most likely grow to include more renewable and nuclear sources. The U.S. Energy Information Administration says that about 72 percent of the energy consumed in the United States in 2005 was generated from coal, oil and natural gas, another 20 percent from nuclear, while about 8 percent of the fuels used to create electricity came from all renewable energy forms including hydropower.

Incentives are already in place to induce more investment in the renewable sector. And, by all accounts, they are having an effect. Clean Edge and Nth Power say that the markets for solar, wind and fuel cells are now poised to grow from $16 billion in global revenues in 2004 to $100 billion by 2014. And some impressive participants such as Goldman Sachs and institutional investor Calpers are getting involved. The momentum has helped lead Nasdaq to begin operating the "Clean Edge U.S. Index" in May 2006.

Cost Competitive

While just about all policymakers recognize that the nation's energy appetite is expanding and therefore welcome the entrance of clean energy supplies, there is sharp disagreement over how to encourage new development. Republicans, generally, think that market forces should make such determinations and to require arbitrary portfolio standards would not only end up costing consumers more but would also be less reliable.

On the other hand, many Democrats say that without incentives and mandates, the overall dependence on fossils fuels will never diminish. Key lawmakers have vowed to steer through the halls of Congress meaningful renewable energy requirements, new carbon emissions standards and mandatory efficiency requirements.

Hundreds of early-stage companies could offer "breakthrough technologies" but are unable to introduce their ideas on a massive scale, says Clean Edge. That necessitates support from not just industry and investors but also federal regulators and lawmakers -- all so these technologies can reach their full potential, it says. The result would pump billions into the national economy and produce new jobs linked with clean technologies.

The key to greater growth is to become more cost competitive to gain wider acceptance in the marketplace and to replace fossil fuels at a faster rate. Toward that end, the Bush administration says that nations must invest in ideas and technologies that lower costs and address barriers hindering the deployment of renewable energy. Still, it says that the U.S. must adhere to an energy policy that is dependable and affordable and as such it supports the need for all countries to diversify their energy supplies.

Many states are not waiting for national standards and are setting progressive renewable energy policies. About 22 states and the District of Columbia have renewable portfolio standards that force utilities to generate some of their power from sustainable sources. California, for example, gets 12 percent of its energy from non-hydro sources such as wind and geothermal energy. New York State, meantime, is paving the way for its clean energy portfolio standards to increase from 19 percent today to 25 percent by 2013.

Other jurisdictions are promoting renewable energy by granting tax breaks for installing such green energy equipment as solar panels and fuel cells. They are also giving customers the choice of being assessed a small monthly fee to go into a research fund to explore for new sources. The idea behind the push is to create economies of scale that will help bring down the cost of renewable energy and to therefore increase the use of it.

Many developed nations have embraced change. Denmark, Germany, Japan, New Zealand and Spain are among those actively encouraging the development of renewable resources. Indeed, capital investment in the sector on a global basis reached $38 billion in 2005 and could go as high as $70 billion by 2010, says Worldwatch Institute. Specifically, global wind generation has more than tripled while solar cell production has risen six-fold, all since 2000, it adds.

Compelling reasons exist to look a lot more closely at sustainable energy sources. But, it will take a concerted and ongoing effort to bring new technologies to market and to make a dent in fossil fuel's share of the generation mix. While renewable energy may see impressive growth in the coming years, overall energy consumption is expected to rise and increase the demands on coal and natural gas as well. The smart policy is then to encourage fuel diversity with stringent clean air standards.

More information on this topic is available from Energy Central:

Embracing the Wind EnergyBiz, January/February 2006

Catching Wind EnergyBiz, May/June 2005

Clean Power for the Future EnergyBiz, July/August 2005

The Promise of Wave Power EnergyBiz, March/April 2005

California Goes Solar EnergyBiz,, March/April 2006

Nevada's Huge Solar Plant EnergyBiz, May/June 2006

For far more extensive news on the energy/power visit:  http://www.energycentral.com .

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