See appended article from today's CBS MarketWatch. The referenced report is
a pdf at http://www.energyfuturecoalition.org/pubs/RAND.pdf.
Dr. Stephen R. Humphrey, Director of Academic Programs,
School of Natural Resources and Environment,
Box 116455, 103 Black Hall, University of Florida
Gainesville, FL 32611-6455 USA
Tel. 352-392-9230, Fax 352-392-9748
More green energy use could cut costs, study finds
By Stephanie I. Cohen
Last Update: 10:15 AM ET Nov 14, 2006
WASHINGTON (MarketWatch) -- Switching the U.S. 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,
a think tank said Monday.
The Energy Future Coalition, a Washington-based group that champions
increased reliance on renewable energy sources, commissioned the study,
which was completed by the Rand Corp.
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.
Rand ran the data through their 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.
<http://www.energyfuturecoalition.org/pubs/RAND.pdf> Read the report
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 - assuming 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
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.
Rand tried to improve on past government models that typically consider just
a handful of scenarios by using more than 1,500 possible future scenarios to
gauge how much it would cost to use more renewable energy and determine
whether renewable energy sources, long favored for social reasons and
environmental reasons, would become cost competitive over time.