Big boost to US renewable energy could cost nothing

Switching a large fraction of US energy to renewable sources by 2025 could involve no increase in cost, says an independent US think tank, as long as current price trends hold firm.
Renewable sources currently provide about 6% of the energy used in the US. The new RAND report concludes this could be boosted to a total of 18% by 2025, equivalent to 25% of electricity and motoring fuel, at no extra cost. The provisos are that the price of renewable energy continues its downward trend and that predictions of future oil prices are roughly accurate.
The report was commissioned by the Energy Future Coalition in Washington DC, US. In July 2006, this bipartisan group of Senators and Representatives introduced a congressional resolution calling for a new national renewable energy goal: 25% of the nation's energy supply from renewable sources by 2025.
To assess the financial implications of this target, RAND ran a computer model involving 1500 different scenarios in which fossil fuel and renewable energy prices varied. Their model took into account the fact that as renewable energy prices drop and become better able to compete with fossil fuel prices, the latter are likely to be pushed down.
"When talking about the impact of increasing use of renewable energy sources in our energy future, it's important to be clear about the assumptions being made about future energy prices and technological developments, not just for renewables but also for competing fossil energy sources," says Michael Toman, environmental economist for RAND and director of its Environment, Energy, and Economic Development program.
Starting assumptions
The most extreme scenarios produced only a 6% rise in national energy expenditures - about $75 billion annually by 2025 - or a 3% drop. The scenario leading to the 6% cost rise assumed the price of renewable energy technology will rise by 30% by 2025, while natural gas, oil, and coal prices will fall by 50%.
The research “does not speak to whether it will happen”, cautions Toman, who says his organisation was not asked to estimate the probability of increasing the amount of electricity and motor fuel generated from renewable sources. His team started with the assumption that the 25 by 2005 target was met.
In addition, the model did not take into account some emerging technologies such as renewable forms of hydrogen, nor does it look at the impact of renewable energy used in off-road construction vehicles, trains or jet engines.
Finally, the think tank assumed that biofuel made from wood would be available to run cars. However, this technology is not yet available commercially as the price of producing wood ethanol is still very high.
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