JUNE 2008 HOT TOPICS

Assessing the Impact of Increasing Renewable Energy Use

Increased use of renewable energy has been held back because of its higher cost of production relative to fossil energy. But sharply higher prices for oil over the past several years, concerns about energy security, and growing worries about global warming have greatly increased interest in expanding renewable-energy use in the United States.

RAND Corporation researchers assessed what the potential impacts would be on U.S. consumer energy expenditures and national carbon dioxide (CO₂) emissions if the nation produced 25 percent of its electric power and motor-vehicle transportation fuels from renewable resources by the year 2025. The baseline for the comparisons was expenditures and CO₂ emissions in 2025 as drawn from the reference-case tables of the Energy Information Administration's 2006 Annual Energy Outlook (AEO). Because oil prices have increased significantly since the release of the 2006 AEO, the researchers also considered the implications of higher baseline energy costs for expenditure on renewables.

The researchers used basic supply-and-demand–type models to describe possible “snapshots” of 2025 energy markets in terms of energy prices, quantities used, expenditures, and CO₂ emissions. Assessing impacts on consumer expenditures and CO₂ emissions requires considering many influences on future energy costs and demands that remain highly uncertain. These factors include the rate of advance in renewable energy technologies, costs of fossil energy (in particular, the future price of oil), and the availability of renewable resources (in particular, biomass). The goal was not to identify any single “most likely” scenario for future energy costs or patterns of energy use. Instead, the study considered a large number of scenarios based on ranges of values for key parameters to illustrate the range of possible impacts with the renewable-energy requirements.

The study shows that increasing renewables use can reduce CO₂ emissions and enhance energy security by lowering the cost of imported petroleum. However, for the renewables requirements to have a relatively low impact on consumer energy expenditures, significant technical advances must occur in several aspects of renewable energy supply. Particularly important are a large, inexpensive future biomass supply; rapid progress in the technologies converting biomass feedstock into transportation fuels; and increased affordability of wind power at marginal sites. Without progress in all these areas, the renewable-energy requirement could substantially increase consumer energy expenditures. Thus, rapid technical advances in providing biomass energy and wind power generation should be top priorities for increasing affordable supplies of renewable energy.

Read the Document: Impacts on U.S. Energy Expenditures and Greenhouse-Gas Emissions of Increasing Renewable-Energy Use

Read the News Release: Major Progress in Technology Needed for 25 Percent Renewable Energy Use to Be Affordable

Looking Across Climate Change, Transportation, and Energy Policies: A Series of RAND Workshops

As the nation forges new policies on climate change, transportation, and energy, it is critical to look at them in an integrated way. To help foster such discussion, the RAND Corporation hosted workshops on the three areas on June 4, 5, and 19 that brought together representatives of government, industry, advocacy groups, and the research community to share different perspectives and to identify common points of view that could lead to new policy solutions, particularly for climate change mitigation.

Climate Change

Given today's emphasis on cap-and-trade approaches, the workshop focused on answering a series of questions about such approaches: What are the key obstacles to getting such a system up and running and what are the prospects for overcoming these obstacles? How effective can we expect a real world cap-and-trade approach to be, and where will be some key weaknesses? What do we do about them? What other policy mechanisms also need to be considered? How do we achieve a policy framework that can be adapted over time?

Transportation

Given the overlap with climate change, this workshop sought to answer a number of questions: How do greenhouse gas mitigation and congestion mitigation interact? What about greenhouse gas mitigation and transportation finance? What are the priorities for federal level transportation policy, and what mistakes should be avoided? What about state and local priorities? How much progress are we making on lower-carbon transportation modes, and what are the barriers to more such progress? What role can changing travel behavior play in reducing greenhouse gases from the transportation sector?

Energy

Drawing on the links to climate change, the final workshop addressed some broad-level questions: What kind of progress are we making on low-carbon energy systems, and what are the barriers to more progress? What about further progress in energy efficiency? How do energy security and greenhouse concerns interact? What are the U.S. implications of significant continued growth in global energy demand, especially in the developing world? What are the priorities for U.S. energy policy, and what mistakes should be avoided?

A document summarizing the results of the workshops is being prepared and will be disseminated through RAND's Web site (www.rand.org) when completed.

The RAND Environment, Energy, and Economic Development Program conducts research and analysis on environmental quality and regulation, energy resources and systems, water resources and systems, climate, agriculture, oceans, natural hazards and disasters, and economic development. To access our research, please visit our Web site at http://www.rand.org/ise/environ/.

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