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 expanded renewable energy in the United States. Renewable-energy sources are those that are inherently nondepletable or that can be naturally replenished in a relatively short period of time, such as wood, waste, wind, hydroelectric, photovoltaic (PV), and solar-thermal energy. Geothermal energy is also usually lumped together with these resources.
One of the most visible signs of the increased interest in renewables was the proposal by President George W. Bush in his 2007 State of the Union address to reduce U.S. petroleum consumption in motor fuels by 20 percent in the next 10 years, with particular emphasis on renewable fuels. In addition, many states have set or are setting requirements for using renewable energy in the electrical-power sector (see EERE, 2008).
Substituting renewable energy for fossil fuels would reduce emissions of carbon dioxide (CO2), the most prevalent “greenhouse gas” (GHG) associated with global warming.1 By their very nature, wind and solar energy do not generate CO2 emissions. The CO2 generated by burning biomass energy derived from plant sources can be mitigated by the reabsorption of CO2 in the growth of new biomass feedstocks, although the net savings will depend on how the biomass is grown and on resulting land-use changes. Increasing renewable-energy use can also lower demand for oil. Many advocates of increasing the use of renewables point to this as contributing to national energy security. Finally, there is the potential for increased renewableenergy supply from rural areas to enhance rural incomes in the United States.
The penetration of renewable energy into the marketplace has been small. In 2006, renewable energy supplied about 9.5 percent of total U.S. electricity use, most of that through largedam hydroelectric facilities. The usage of renewable energy in motor fuels—primarily alcohol derived from corn and blended into gasoline to meet certain clean-air requirements—is an even smaller fraction of total energy use in that sector, amounting to only around 1.6 percent (EIA, 2006a).
One major factor limiting the market penetration of renewables has been their higher cost relative to fossil energy. Costs for renewables in the power sector, especially wind, have declined considerably over the past 20 years. However, even with tax credits and other forms of subsidization, the costs of renewables have not yet declined far enough to make significant inroads in
1 For a comprehensive review of global warming, see IPCC (2007).