The US depends on large, centralized power plants that run on
fossil fuels and nuclear power. As a result, it has an electricity system that
is increasingly vulnerable to volatile fuel prices, supply disruptions, and
dependency on foreign imports. Fossil fuels also pose serious risks to health,
air quality, water supplies, and the earth’s climate.

Fortunately, this growing reliance on fossil fuels and nuclear power can be
reduced with clean renewable energy sources such as solar, wind, geothermal,
and bio-energy. These safe, homegrown energy sources are readily available,
increasingly cost effective, and highly popular with consumers. Recent studies
have shown that increasing America’s use of renewable resources would
create a more diverse
and secure energy system that pollutes less, creates jobs, benefits consumers,
and stimulates rural economies.

Despite the benefits, there exists an enormous “renewable energy gap” in
the United States. Significant market and commercialization barriers force
renewable energy to compete
on an uneven playing field with fossil fuels. As a result, renewable energy
sources (not including hydropower) generate about 2 percent of our electricity
today. Worse, there is no significant national
policy to help renewable energy overcome these barriers. Without new policy
support, the US Energy Information Administration
(EIA) forecasts renewable energy generation will increase to just
3 percent of the nation’s electricity by 2025.

The good news is that a few states are taking the clean energy lead by setting
an example for other states and the nation to follow. These states have adopted
policies like renewable electricity standards and funds, which are designed
to remove barriers and establish long-term markets for renewable energy. But
do they go
far enough to put us on the path toward energy sustainability and independence?

Boundless Potential

Of all the barriers that face renewable energy, an adequate resource base
is not one of them. The United States is blessed with a wealth of diverse renewable
resources. Combined, the major non-hydroelectric renewable technologies (wind,
solar, geothermal, and bioenergy) have the technical potential to provide more
than five times the amount of electricity this country currently uses.1

Renewable resources are well-dispersed throughout the country. Every state
has enough renewable energy technical potential to generate at least one-quarter
of its electricity needs. Thirty states have the technical potential to generate
all of their electricity from renewable energy.

Of course, not all of the technical renewable energy potential will
be tapped, due to economic, physical, and other limitations. But these resources
are certainly sufficient to support a gradual increase in renewable energy
use of 1 percent per year, to at least 20 percent by 2020 or 2025. This level
has been advocated by a growing number of environmental and consumer groups,
and energy companies as an achievable and appropriate mid-term goal in the
transition to a more sustainable energy system.

Despite the boundless potential and strong interest from consumers, only a
few states are currently generating electricity from renewable energy at meaningful
levels. In 2001, renewable energy provided more than 5 percent of total electricity
use in just seven states – Alabama, California, Hawaii, Maine, Nevada,
New Hampshire, and Vermont – and less than 1 percent in 23 of the states.
Sadly, most of the states with low penetrations of renewable energy also have
significant renewable energy potential.

State Leadership

A growing number of states have recently implemented policies to increase the
use of these clean, homegrown resources. Renewable electricity standards (RES),
for example, have emerged in the past several years as an effective and popular
tool for reducing existing market barriers and creating new markets for renewable

The RES (sometimes called a renewable portfolio standard or RPS) is a simple
market-based policy that increases power supply diversity
by establishing a minimum commitment to generate electricity from renewable
resources. RES requirements and design varies from state to state, but the
policy essentially requires electricity providers to gradually increase the
share of renewable energy in their electricity mix. To date, 13 states have
established minimum renewable electricity standards.

Renewable electricity funds, often referred to as public benefits funds,
also emerged as a popular policy tool for supporting renewable power during
of the electric industry. Funds are collected through a small fee on consumers’ monthly
electricity bills. Funding is then distributed to support programs promoting
renewable energy development, with the focus varying from state to state based
on local priorities and interests. To date, 15 states have implemented renewable
electricity funds that, cumulatively, are projected to collect more than
$4 billion to promote clean, sustainable energy by 2017. Eight states – Arizona,
California, Connecticut, Massachusetts, Minnesota, New Jersey, Pennsylvania,
and Wisconsin – have implemented both funds and renewable electricity

Together, state standards and funds have created significant new markets
for renewable energy that will provide important economic
and environmental benefits well into the future. We estimate that these state
policies will lead to the development of 17,310 MW of new renewable energy
capacity by 2017 – enough to meet the electricity needs of 11.7 million
typical homes (see Figure 1). An additional 7,325 MW of existing renewable
energy capacity receives ongoing support from these policies, for a total of
24,635 MW. Though there are 20 states with standards and/or funds contributing
to this total, it is important to note that more than 80 percent of the development
is supported by policies in just five states.

By 2017, the new development resulting from states with standards and funds
could reduce annual carbon emissions from fossil fuel plants by an estimated
14.3 million metric tons (MMT). This is equivalent to taking 7.8 million cars
off the road.

Renewable electricity standards and funds are not the only policies that states
have adopted to stimulate the growth of the renewable energy industry. States
policies such as net metering, generation disclosure, financial incentives,
and state government purchase requirements have been effective at removing
some market barriers
and promoting some renewable energy development. In addition,
energy consumers in every state now have the opportunity to support renewable
energy directly through voluntary green power purchases. However, the development
from these policies and voluntary approaches has been relatively small and,
in many cases, difficult to attribute to specific policies. For example, a
recent National Renewable Energy Laboratory Study found that voluntary programs
may add only enough renewable generation to equal 0.1 percent of US electricity
sales by 2010, while we project that existing state standards and funds will
add 11.6 times as much by that date.

National Policy

Significant renewable energy commitments
by a handful of states
are a laudable start, but it is not nearly enough
to ensure a national
shift toward a cleaner, more sustainable
energy system. Poor performances and the lack of commitment by most states
to date speak to the need for a comprehensive national renewable energy policy.

While important to the renewable energy industry, national tax incentives
alone are not a comprehensive enough policy. The federal PTC helps level the
field for new renewable energy facilities that otherwise would have to pay
higher taxes than competing fossil fuel
and nuclear plants. It does not, however, create new long-term market demand,
which is critical for an industry with high up-front capital costs. The PTC
has contributed to significant wind power development in
the past few years. But this growth has mostly occurred in states with standards
and/or funds, effectively demonstrating how well these policies can work together.

A national standard would address the fact that the majority of states have
yet to make any specific commitments to renewable energy either through funds
or standards. It would also provide an opportunity to create a more level playing
field among states that have already enacted standards, by enforcing a minimum
standard that states could still choose to exceed.

In the past two years, the Senate has twice passed a comprehensive energy
bill that included a national renewable electricity standard. This standard
require major electric companies to increase sales of renewable electricity
by an average of 0.6 percent a year starting in 2005, reaching 10 percent by
2019. A recent study by the Union of Concerned Scientists (UCS) found that
by adopting the Senate standard – along with extending the PTC through
2006 – the US can meet a significant portion of its electricity needs
with renewable energy while generating substantial economic and environmental
benefits. 2

Under a 10 percent standard, the US would increase its total homegrown renewable
power to nearly 80,000 MW by 2020 – which would provide enough generation
to meet the needs of 57 million typical homes. While wind power would provide
most of the new development, bio-energy and geothermal would also make important
contributions. The new power generated by this development would be 3.4 times
as much as the new generation supported by state standards and funds (see Figure

A national RES of 10 percent would stimulate significant economic benefits
through 2020, including:

  • $18 billion in new capital investment;3
  • $1.2 billion in new property tax revenues for local communities; and
  • $430 million in wind-power-related lease payments to farmers and rural

UCS also found that the Senate RES and tax credits would reduce long-run energy
costs to consumers. Increased competition from renewable energy would reduce
natural gas use for generating electricity, which in turn would lead to slightly
lower natural gas and electricity prices. As a result, total annual consumer
energy bills would be $8.3 billion or 1.5 percent lower in 2020. The present
value of total consumer savings would be $17.6 billion between 2002 and 2020.

In addition, increasing renewable energy use in the United States would help
reduce air pollution. Power plant carbon emissions would be reduced by approximately
38 MMT nationwide by 2020 with a national RES of 10 percent. Other pollutants
that harm human health would also be reduced, as would the damage to water
and land resulting from extraction, transport, and use of fossil fuels.

Congress has also introduced several bills over the past few years proposing
a national renewable electricity standard of 20 percent by 2020 or 2025. While
neither the Senate nor the House has yet supported a 20 percent RES, a UCS
study found that doubling the RES requirement is achievable and affordable,
and would substantially increase economic and environmental benefits.

For example, under a 20 percent standard, total renewable capacity would increase
to more than 170,000 MW by 2020. The new renewable generation supported by
this standard would be 3.3 times as much as the Senate-passed 10 percent RES
and tax credits, and 11.3 times as much as existing state standards and funds.

Between 2002 and 2020, a 20 percent national renewable standard would produce:

  • $80 billion in new capital investment;4
  • $5 billion in new property tax revenues for local communities;
  • $1.2 million in wind-power-related lease payments to farmers and rural
  • $4.5 billion in consumer energy bill savings; and
  • 150 MMT of annual carbon emission reductions by 2020.

Recent RES analyses by EIA have reached similar results, despite using pessimistic
renewable energy assumptions and low natural
gas prices. A 2002 EIA study showed that an RES of 10 percent by 2020 would
result in slightly lower electricity and natural gas prices, generating savings
for energy consumers of $13.2 billion through 2020.5 EIA also found that increasing
the standard to 20 percent
by 2020 would reduce natural gas prices enough to offset nearly all of a modest
4 percent increase in electricity prices, resulting in virtually no net cost
increase to consumers.6

A robust commitment to renewable energy in the US
can provide many economic, environmental, health, and security benefits. A
few states recognize this and have become clean energy leaders. But the bigger
picture is one of inaction and wasted opportunities. A strong national policy
with specific targets for making renewable energy a key element of the US electricity
is needed.


1 Deyette, J., S. Clemmer, and D. Donovan. 2003. “Plugging In Renewable
Energy: Grading the States.” Cambridge, Mass: Union of Concerned Scientists.
May. Online at renewable_energy/page.cfm?pageID=1180.
2 Union of Concerned Scientists. 2002. “Renewing Where We Live:
A National Renewable Energy Standard Will Benefit America’s Economy.” Cambridge,
Mass: Union of Concerned Scientists. September.
Online at September_Update.pdf.
3 Results presented are in 2000 dollars. Cumulative results are in net present
value using an 8 percent real discount rate.
4 Results presented are in 1999 dollars. Cumulative results are in net present
value using a 5 percent real discount rate.
5 Energy Information Administration. 2002. “Impacts of a 10 Percent Renewable
Portfolio Standard.” SR/OIAF/2002-03. February. Online at
6 Energy Information Administration. 2001. “Analysis of Strategies for
Reducing Multiple Emissions from Electric Power Plants: Sulfur Dioxide, Nitrogen
Oxides, Carbon Dioxide, and Mercury and a Renewable Portfolio Standard.” SR/OIAF/2001-03.
June. Online at oiaf/servicerpt/epp/pdf/sroiaf(2001)03.pdf.