Progress in Technology Needed for 25% Renewable Energy To Be Affordable

Dramatic progress in renewable energy technology is needed if the United States wants to produce 25 percent of its electricity and motor vehicle fuel from renewable sources by 2025 without significantly increasing consumer costs, according to a study recently released by the RAND Corporation.

Produced by the RAND Environment, Energy and Economic Development program, the study provides a look at the nation's potential energy expenditures if a requirement was imposed that 25 percent of electricity and motor vehicle fuels used in the United States by 2025 (25 x '25) would have to come from renewable resources. The study finds that biomass resources and wind power have the greatest potential to contribute toward reaching the 25 x '25 goal. Currently, renewable energy provides 9.5 percent of total U.S. electricity supply, most of this comes from hydroelectric power, and 1.6 percent of motor vehicle fuel.

"Expanding the use of renewable fuels will lower the long-term price of crude oil and reduce carbon dioxide emissions that are contributing to global warming," said Michael Toman, lead author of the report and director of the RAND Environment, Energy and Economic Development program. "However, to reap these benefits will require a major investment in improving and increasing the use of renewable energy technology."

The study's key findings include:

Renewable energy technology will have to improve at the very significant pace envisioned by some renewable energy supporters in order to enjoy low-cost impacts.
Significant increases in the use of wind power are possible, but only with substantial technical advances to facilitate greater use of less-productive locations.
More moderate renewable energy targets – such as 15 or 20 percent – reduce expenditure impacts more than proportionately, though carbon dioxide reductions also are less significant.
The federal government's policy approach to pricing of renewable motor fuels will significantly affect fuel demand and society's total energy expenditures.

"In particular, passing the cost of more-expensive renewable fuels to gas pump prices will result in improved energy efficiency, though it will cost consumers more," Toman said. "Subsidizing more-expensive fuels will save people money at the pump, but only because the expense is shifted to the federal budget."

For more information about the report from the RAND Corporation, click here.