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RAND: Renewable Resources Could Produce 25% of Total US Electricity and Fuels by 2025

Renewable resources could produce 25% of the combined demand for electricity and motor vehicle fuels in the United States by 2025 at little or no additional cost if fossil fuel prices remain high enough and the cost of producing renewable energy continues falling in accord with historical trends, according to a RAND Corporation study issued today.

Renewable sources currently provide about 6% of all the energy used in the United States.

RAND found that meeting the 25% renewable energy target for electricity and motor fuels together would not increase total national energy spending if renewable energy production costs decline by at least 20% between now and 2025 (which is consistent with recent experience), unless long-term oil prices fall significantly below the range currently projected by the Energy Information Administration.

The study evaluates the goal known as 25x’25 (earlier post). This refers to having 25 percent of the energy used for electricity and motor vehicle fuel in the United States supplied by renewable energy sources by the year 2025.

The Energy Future Coalition, a nonprofit organization, asked RAND to assess the economic and other impacts of meeting the 25x’25 goal. The RAND study considered technological and economic factors that would affect the costs of renewable energy as well as non-renewable fossil fuels.

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.

—Michael Toman, Director of RAND’s Environment, Energy, and Economic Development Program

The study—Impacts on US Energy Expenditures of Increasing Renewable Energy Use—also found that meeting the 25x’25 goal results in significant greenhouse gas emissions reductions amounting to 1 billion tons of carbon dioxide in 2025, or 15% of projected US emissions. In addition, an estimated 2.5 million barrels of oil consumption (10% of projected consumption) would be displaced, according to the study.

A 25% renewable future could, according to the study, reduce oil prices by 4%, natural gas prices by 6%, and coal prices by 16%. If renewable technology improves by 50% relative to nonrenewables, the maximum degree of improvement simulated by RAND, then net energy costs are nearly $30 billion lower in a 25x’25 future.

Previous studies have relied on a handful of scenarios to capture uncertainties in the US Department of Energy’s projections of future energy prices and changes in the costs of various technologies.

The RAND study examined 1,500 cases of varying energy price and technology cost conditions for renewable and nonrenewable resources. The RAND team developed a model based on the National Energy Modeling System created by the US Energy Information Administration.

RAND researchers did not assess the impact of renewable energy used directly by industry in buildings currently using natural gas, in off-road vehicles used for construction and recreation, or in railroad and jet fuel.

RAND researchers assumed that implementation of increased renewable energy use would be carried out at a national level in the least costly manner, versus a more piecemeal approach. Among the important uncertainties considered is the cost to ramp up use of new renewable energy technologies.

(A hat-tip to Allen!)



Paul Dietz

Comparing nuclear fuel to itself according to economic cost doesn't seem kosher when other industries aren't playing by the same rules but influence the same economic system, so to speak. How would reprocessed fissile fuel compare to fossil fuels if their waste stream was accounted for in the cost?

Irrelevant. Nuclear power without reprocessing is cheaper than nuclear power with reprocessing, and this is independent of whether fossil fuels are subsidized or penalized.

Could the additional space/cost required for storage and retrieval be why Europe reprocesses?

The reason reprocessing was being pursued was the expectation that uranium would become expensive and breeder reactors would be needed. You start fast breeders on plutonium extracted from spent thermal reactor fuel (after that, they can fuel themselves.)

Germany is going with dry cask storage now, btw.

Cheryl Ho

There are developments in DME in China today:

DME is an LPG-like synthetic fuel can be produced through gasification of Biomass. The synthetic gas is then catalyzed to produce DME. A gas under normal pressure and temperature, DME can be compressed into a liquid and used as an alternative to diesel. Its low emissions make it relatively environmentally friendly. In fact, Shandong University completed Pilot plant in Jinan and will be sharing their experience at upcoming North Asia DME / Methanol conference in Beijing, 27-28 June 2007, St Regis Hotel. The conference covers key areas which include:

DME productivity can be much higher especially if
country energy policies makes an effort comparable to
that invested in increasing supply.
National Development Reform Commission NDRC
Ministry of Energy for Mongolia

Production of DME/ Methanol through biomass
gasification could potentially be commercialized
Shandong University completed Pilot plant in Jinan and
will be sharing their experience.

Advances in conversion technologies are readily
available and offer exciting potential of DME as a
chemical feedstock
By: Kogas, Lurgi and Haldor Topsoe

Available project finance supports the investments
that DME/ Methanol can play a large energy supply role
By: International Finance Corporation

For more information:

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