The Renewable Energy Picture
Most Renewable Energy Goes to Producing Electricity
Electrical utilities, independent power producers, and combined heat and power plants consumed 53% of total U.S. renewable energy in 2009 for producing electricity. About 26% of renewable energy used was biomass consumed by industry for industrial applications (principally paper-making) by facilities producing only heat and steam. Biomass is also used for transportation fuels (ethanol and biodiesel) and to provide residential and commercial space heating. The largest share of the renewable-generated electricity in 2009 came from hydroelectric energy (66%), followed by wind (17%), wood (9%), biomass waste (4%), geothermal (4%), and solar (0.2%). Wind-generated electricity increased by 28% in 2009 over 2008, more than any other energy source.
The United States Is Second in Renewable Electricity Production
China leads the world in total renewable energy consumption for electricity production due to its recent massive additions to hydroelectric production, followed closely by the United States, Brazil, and Canada. However, the United States consumes the most non-hydro renewable energy for the production of electricity. The United States consumes twice as much non-hydro renewable energy for electricity production as Germany and more than three times as much as Spain.5
The Share of Renewable-Generated Electricity in the United States Is Expected to Grow
The U.S. Energy Information Administration (EIA) projects that renewable-generated electricity will account for 17% of total U.S. electricity generation in 2035, up from 9% in 2008.6 This growth is driven mainly by the extension of Federal tax credits and the new loan guarantee program in the February 2009 American Recovery and Reinvestment Act (ARRA).
From a global perspective, EIA projects that renewable energy will be the fastest-growing source of electricity generation through the forecast period to 2035.7 Much of the increase is expected to be from hydroelectric power and wind power.
Why We Don't Use More Renewable Energy
In general, most renewable energy power plants have less environmental impact than fossil and nuclear power plants, but there are two main reasons why we don't use more renewable energy.
- Renewable Energy Technologies Are Capital-Intensive: Renewable energy power plants are generally more expensive to build and to operate than coal and natural gas plants. Recently, however, some wind-generating plants have proven to be economically feasible in areas with good wind resources, compared with other conventional technologies, when coupled with the Renewable Electricity Production Tax Credit (described below).
- Renewable Resources Are Often Geographically Remote: The best renewable resources are often available only in remote areas, so building transmission lines to deliver power to large metropolitan areas is expensive.
Policies Aim to Increase the Use of Renewable Energy
Three kinds of policies to increase the use of renewable energy are:
- Tax credits: The Renewable Electricity Production Tax Credit, a Federal incentive, has encouraged a eight-fold increase of wind energy capacity since 2001. EIA projections assume that the tax credits expire as specified in current law. EIA analyses indicate that extending the tax credits would result in additional generation from these resources.
- Targets: Many States have Renewable Portfolio Standards (RPS), which require electricity providers to generate or acquire a percentage of generation from renewable sources. However, many RPS programs have "escape clauses" if renewable generation exceeds a cost threshold. Some States have delayed compliance and others lack enforcement procedures. As a result, some States may not meet their RPS goals. EIA projects that most States should ultimately be able to meet their RPS requirements.
- Markets: A number of States have built Renewable Energy Certificates/Credits (RECs) into their Renewable Portfolio Standards. This allows electricity providers to sell renewable energy certificates/credits and use their proceeds for renewable projects. Some States have made REC markets mandatory, requiring electricity providers to produce or acquire renewable generation to reduce reliance on fossil fuels to generate electricity.