Energy Future Coalition Study, Green Energy Cuts Costs

Switching the US economy to run more on renewable energy sources rather than traditional fossil fuels could save money and reduce pollution and the benefits could be seen within a decade, according to a study commissioned by The Energy Future Coalition, a Washington-based group that champions increased reliance on renewable energy sources.

The study found that if policymakers set and reached a goal of having 25% of electricity production and automobile fuel produced from renewable energy by 2025, the impact on energy costs would be relatively modest. 

Data was run through a computer model more than 1,500 times to assess the probability of different outcomes based on different assumptions on the pace of technological change and prices.  Today about 6% of the energy consumed in the United States comes from renewable sources.  If hydropower is excluded, the figure drops to 3%. Renewable energy sources include solar, wind, geothermal and biomass.

Switching to renewables would also give added benefits in the form of reduced pollution and less reliance on oil from politically unstable regions of the world.  If the U.S. reached a target of 25% of its energy from renewables, it would eliminate 2.8 million barrels of petroleum fuels per day, the study said.  

If the cost of renewable technologies continues to decline as it has in the past, then total energy expenditures in the United States could drop despite a surge in renewable energy use.  National energy costs could fall by 3%, or $40 billion, under a best-case scenario, according to the report.

"It is interesting to note that in our computer runs of the renewables goal, more scenarios have lower energy expenditures in 2015," the report said. "Those findings suggest that, while cost savings from renewable energy will not materialize overnight, they also will not take decades to achieve."  But much will depend on whether the cost of alternative energy technology and the price of fossil fuels fall over the same period.

Under a worst-case scenario which assumes a 30% rise in the costs of renewable energy technology during the next 20 years and a 50% dip in the price of natural gas, oil, and coal from current projections, there could be up to a 6% rise in energy costs, or about $75 billion in 2025, the report found. This increase would amount to roughly 0.25% of U.S. gross domestic product.

Cost has been the biggest obstacle to widespread use of renewables. But the skyrocketing price for oil and natural gas over the past five years and increased attention to global warming has bolstered the case for renewable energy sources recently.  In its 2006 projection, the Energy Department's statistical arm predicted $54 a barrel for oil in 2025, priced in 2006 dollars.

Relying more on renewable energy would likely reduce carbon-dioxide emissions from the electricity and fuel sectors by 1 billion tons, roughly equivalent to eliminating one-seventh of the total U.S. carbon-dioxide emissions projected for that year.