Renewable Energy in the U.S. Economy

How Renewable Energy Can Save Us from Climate Change

Renewable energy is power generated from sources that are adequately replenished. It includes solar energy, wind energy, hydroelectric, tides, biomass, and geothermal heat. Some sources also consider hydrogen and fuel cells as a form of renewable energy.

Difference Between Renewable and Alternative Energy

Renewable energy should not be confused with alternative energy. The difference is that alternative energy specifically avoids fossil fuels such as oil, natural gas, and coal. It doesn’t harm the environment or add greenhouse gases that add to global warming. For example, wood burning is not alternative energy because it leads to deforestation and adds greenhouse gases. But it is a source of biomass renewable energy in that new trees can be grown.

Hydroelectric power is both renewable and alternative. But many in the environment movement frown on reliance on this source. It can disturb salmon runs, endangering not only the salmon but also the orcas and bears that feed on them. It also uses massive quantities of cement which emits greenhouse gases in its production.

Nuclear power is not considered a renewable source because there is only enough uranium to last 1,000 years. But breeder reactors could extend that source. Nuclear is also not considered a viable alternative energy source because its waste is radioactive. Power plant construction also uses a lot of cement. But the use of nuclear energy does not increase greenhouse gases and so should be considered to fight global warming.

Current Usage in the United States

Total 2017 U.S. energy consumption was 97.7 quadrillion British thermal units. The biggest contributor was natural gas at 31.8% and petroleum at 28%. Coal added 17.8% and nuclear power generated 9.6%

Renewable energy generated 11%. Of that, 57% went to producing electricity. Another 23% went for industrial uses, and 13% went to transportation. Only 7% went to residential and commercial uses.

The chart below shows primary energy consumption by source between 1949 and 2018.

Seven Sources

There are seven sources of renewable energy: hydroelectric, biofuels, wind, wood, solar, biomass waste, and wood. In 2017, the biggest source in the United States was hydroelectric. It's followed closely by biofuels, wind, and wood.

Here is a summary for each one:

  1. Hydroelectric - 25%. This source is declining partly because its generators are the oldest. Most were built in the 1930s as part of the New Deal to end the Great Depression. It’s also because its power depends on water flow. Recent droughts have reduced this flow. The water is also demanded by other purposes, such as agriculture and household use and fish migration.
  2. Biofuels - 21%. That’s up from 6% in 2000. In 2017, about 14 billion gallons of fuel ethanol were consumed in the United States. America now uses 40% of its corn crop to make ethanol. But corn is not an efficient fuel source. Biofuel use was spurred by the 2005 Renewable Fuel Standard. It set minimum requirements for the use of renewable fuels, mostly corn ethanol. The goal is 36 billion gallons by 2022. The federal government also subsidized corn. Between 1979 and 2010, the corn industry received $20 billion in federal subsidies. But biofuels are controversial. First, the Sierra Club said destroying grasslands to grow corn for biofuels contributes to greenhouse gas emissions. Second, corn is not an efficient fuel source. Even if all America’s corn were converted to ethanol, it would only meet 4% of U.S. fuel consumption needs. Third, it takes corn out of the food supply, driving food prices higher.
  3. Wind - 21%. This source is growing. In 2017, 40 states had utility-scale wind power projects. The five states with the most electricity generation from wind in 2017 were Texas, Oklahoma, Iowa, Kansas, and California. These states combined produced about 66% of total U.S. wind electricity generation in 2017.
  4. Wood - 19%. The wood and paper industry uses wood waste to generate power. This can safely burn wood chips and debris that would have decomposed, releasing greenhouse gases.
  5. Solar - 6%. This source is one of the fastest-growing. One reason for its growth has been the federal government’s 30% investment tax credit. This is ending for residential users in 2022. Commercial owners will still be able to deduct 20%. Utilities generated 50 billion kilowatt hours and small-scale systems generated 24 billion kWh. Its disadvantage is its reliance on the sun. But many utilities are overcoming this problem with storage systems.
  6. Biomass waste - 4%. In 2015, about 262 million tons of waste was generated. More than half was sent to landfills. About a quarter was recycled, and 9% was composted. The remaining was used as fuel to generate electricity.
  7. Geothermal - 2%. This is heat produced at the earth's core. It uses geysers, hot springs, and hot rocks to generate electricity. It could supply 20% of the nation's electricity. The U.S. Department of Energy says it could reach 60 gigawatts of installed capacity by 2050. It can also directly heat homes. The DOE added that 28 million U.S. households could take advantage of geothermal heat pumps.

Benefits

There are three major advantages to renewable energy: fighting global warming, increasing national security, and creating jobs.

The biggest benefit of most renewable energy sources is that they don't emit the greenhouse gases that cause global warming. For that reason, renewable energy is a powerful tool to prevent further climate change.

Increasing the nations' reliance on renewables diversifies its source of energy. That reduces its dependence on imported fuels and improves national security.

The renewable industry creates economic development and jobs in manufacturing, installation, and operations. The Department of Energy lists sources for job openings and helps you find out what training is needed.

In the United States, renewable energy supplied 10% of electric generation in 2017. Utilities are moving toward more reliance on wind and solar in response to consumer demand. A Deloitte survey found 53% of utility customers said it is very important to them.

Four states, 11 counties, and 116 cities have committed to 100% renewable energy. In Arizona, a battery plant to store solar energy will be installed instead of a natural gas plant.

The federal government has a mixed track record. The trade war begun by President Donald Trump is hurting the solar industry. He imposed a 30% tariff on crystalline-silicon solar cells and modules imported from China. In 2019, developers will rush to break ground on solar project construction. The federal tax credit falls from 30% to 26% in 2020. The credit for wind projects phases out entirely in 2020. On the positive side, the U.S. Department of the Interior is leasing off-shore areas for wind power.

Future

The United Nations estimates that the world should shift between $3 trillion and $3.5 trillion a year for the next 30 years from fossil fuels to 100% alternative energy including renewables. That’s only a bit more than the $2.4 trillion already invested annually in today’s energy systems.

That level of investment is needed to keep global temperatures from exceeding 1.5°Celsius above levels in 1900. Average temperatures are already 1°C to 1.2°C higher, causing extreme weather and rising sea levels.

By 2025, investments in clean energy must be greater than in fossil fuels. By 2030, investments in coal must end unless it has carbon capture and storage technology. Investments in solar technology must increase from $250 billion a year to several times that.

The chart below shows how energy investment should change in the near future in order to keep global temperatures from rising.

Transportation must transition to electric or zero-emissions. Heating, whether for buildings or industrial use, must switch to electric heat pumps. The BP outlook estimates there will be 300 million electric cars in the United States by 2040. That will drive down oil use by 3 million barrels per day. Even then, 69% of the cars on the road will be powered by gasoline or natural gas.

If the world's governments adhere to the Paris Climate Agreement, then renewables must rise to 33% of the world's demand for power. In 2016, it contributed 4%. Hydroelectric supplied 7%, and nuclear power contributed 4%. The bulk was supplied by oil at 33%, coal at 28%, and natural gas at 24%.

If world governments continue on their current path, then renewables will rise to 14% by 2040. Even in that scenario, oil will supply 22%, gas contributes 19%, and coal adds 10%. According to the BP Energy Outlook, it’s not necessary to completely eliminate carbon fuels to achieve the Agreement’s goals.

In addition, the U.N. says that energy use must decrease. That can be done without changing the standard of living by investments in LEDs, energy-efficient appliances, and better-insulated homes.

Here is a breakout how much should be invested annually in each energy source to keep temperatures from exceeding 1.5 C.

  • Renewable energy: +$200 billion.
  • Energy efficiency: + $120 billion.
  • Nuclear and carbon capture and storage: +$100 billion.
  • Electricity transmission and storage: +$50 billion.
  • Fossil fuel extraction: -$200 billion.
  • Fossil fuel electricity without carbon capture: -$100 billion.

This recommendation isn’t as daunting as it sounds. Many companies are already making the transition. Google and Apple are 100% powered by renewable energy. In addition, carbon taxes could both encourage and pay for this switch.

What You Can Do

On a national level, tell your U.S. Representatives and Senators that you'll be voting on the climate change issue in the next election. You can also advocate that your city or state install more renewable resources. Your support of carbon emissions trading and a carbon tax will strengthen the renewable industry.

On a personal level, here are four things you can do on your own:

  1. Choose renewable energy sources with your utility. Many give you the option. For those that don't, demand that your utility switch to more renewable energy sources.
  2. Buy stocks in renewable energy companies. Here are seven companies well-positioned in 2019. Consult with your financial planner before making any investment decisions.
  3. Install solar panels. There are many incentives to do so. The federal solar tax credit will start decreasing after 2019.
  4. Improve the energy efficiency of your home and receive tax credits.

The Bottom Line

The United States needs to do much more to aggressively shift from dependence on fossil fuels toward reliance on renewable and alternative energy sources. Only a few states have committed to becoming 100% reliant on renewable energy in the next 15-25 years. A couple of companies have made the transition to clean energy.

At present, though, only 11% of U.S. energy consumption is from renewable sources. Hydroelectric power is the most harnessed source, most of which goes to electric generation. Other sources include biofuels, solar radiation, wind, and geothermal heat.

Considerable investments in renewable energy must be made if the world wishes to fight climate change. Heating systems and transportation must be redesigned to run efficiently on electricity alone. These goals must be reached in the next 30 years.