Understanding Renewable Energy

What It Means to Power Consumers

These days, 'sustainability' has become a household term. But what does it really mean and how does it apply to your business? Well, that depends on your business. Generally speaking though, sustainability involves meeting the needs of the present without compromising the ability to meet the needs of future generations. In the world of energy, sustainability involves sourcing energy from renewable raw materials that will continue to be available for future generations.

Renewable vs. Non-Renewable Energy

Renewable energy sources can be replenished in a short period of time. The five renewable sources of electricity generation are:
  • Biomass (including wood and wood waste, municipal solid waste, landfill gas, and biogas, ethanol, and biodiesel)
  • Water (hydropower)
  • Geothermal
  • Wind
  • Solar

In addition to being renewable, water, geothermal, solar and wind resources are also "clean" in that they don't emit carbon into the atmosphere as a by-product of generating power. Biomass however contains carbon and therefore emits it into the atmosphere when it is used to generate electricity.

Non-renewable energy sources come out of the ground as liquids, gases and solids. The four nonrenewable energy sources used most often are:

  • Oil
  • Natural gas
  • Coal
  • Nuclear energy

Except for nuclear, the other non-renewable power sources release carbon into the atmosphere as a by-product of electricity generation therefore they are not considered to be "clean".

The Role of Renewable Energy in the United States

According to the EIA, in 2008, about nine percent of electricity in the U.S. was generated from renewable sources. Renewable energy plays an important role in the supply of energy because when renewable energy sources are used, the demand for fossil fuels (such as coal, oil and natural gas) is reduced. In addition, unlike fossil fuels, non-biomass renewable sources of energy (hydropower, geothermal, wind, and solar) do not directly emit greenhouse gases.

Why We Might Have to Use More Renewable Energy

In the past, renewable energy has generally been more expensive to produce and use than fossil fuels. Renewable resources are often located in remote areas and it can be expensive or difficult to build power lines to the cities where the electricity is needed. The use of renewable sources is also limited by the fact that they are not always available - for instance, cloudy days reduce the availability of solar power; calm days reduce wind power and droughts reduce water available for hydropower. The production and use of renewable fuels has grown more quickly in recent years however as a result of higher prices for oil and natural gas, along with growing concerns about the environment. Though the use of renewable fuels is expected to continue to grow over the next 30 years, we still rely on non-renewable fuels to meet most of our energy needs (as shown in the charts below).

Chart of 2008 U.S. Power Industry Net Generation (%) by Fuel

Graph of 2008 U.S. Primary Energy Production by Fuel Source (million Btu)

One major catalyst for moving toward renewable or alternative energy sources is the finite nature of fossil fuels. Even in the absence of a federal renewable portfolio standard, many states have recognized the need to diversify their energy portfolios and to encourage the production of energy from clean renewable sources. In fact, according to the Database of State Incentives for Renewables and Efficiency, 29 states plus the District of Columbia have renewable portfolio standards (RPS) and another six states have renewable portfolio goals. This means that suppliers in those states are required to procure a percentage of their total load from renewable energy resources or, in some cases, make an alternative compliance payment. As suppliers purchase renewable energy from sources such as wind, solar and hydro generators and/or make compliance payments, the renewable energy market generates revenue to continue to expand and develop.

Tracking Your Footprint

The following resources can help you get started on tracking your business' carbon footprint:

Another major catalyst for moving toward renewable or alternative energy sources is the impact that burning fossil fuels has on the environment. When fossil fuels burn (such as in the generation of electricity), they emit carbon dioxide, a greenhouse gas. It is believed that greenhouse gases, which also include methane, nitrous oxide, ozone and chlorofluorocarbons, trap heat within the earth's atmosphere by allowing solar radiation to penetrate while absorbing the infrared radiation returning to space. This in turn causes the earth's temperature to rise, which causes the phenomenon known as climate change. The believed impact of climate change not only includes increases in the earth's temperatures but also rapidly retreating glaciers, thawing permafrost, rising sea levels, unpredictable growing seasons, water scarcity and loss of biodiversity, to name a few.

Since the Obama Administration deems climate change to be one of its top priorities, a U.S. federal climate change policy seems likely in the future. As a result, companies are thinking about the impact such a policy might have on their business - both operationally and economically. Proposals for a national policy have revolved around charging a price for carbon or GHG emissions in order to encourage emitters to lower their emissions or choose alternative fuel sources to replace environmentally unfriendly ones. The price for emitting carbon could be derived from a flat fee per tonne of CO2 emissions or a cap-and-trade scenario whereby a cap is placed on GHG emissions and emissions allowances are bought and sold on the open market.

That said, it is never too soon for businesses to be considering what their GHG emissions profile (or carbon footprint) looks like. Your carbon footprint is a representation of the effect you or your organization have on the climate, in terms of the total amount of greenhouse gases you produce (measured in units of carbon dioxide). If a cap-and-trade program is implemented, industries that are covered by the cap will have obligations to measure, monitor and report emissions and then ensure that the appropriate amount of allowances are purchased to cover their emissions. Therefore, businesses that get a jump-start on understanding, measuring and analyzing their carbon footprint will be able to identify areas where changes can be made that could save money and time later and help them continue to be competitive if and when regulations go into effect. In addition, there could be benefits to voluntary reduction, early action or voluntary reporting for companies that can document these efforts once such regulations go into effect. In fact, public reporting and participation in voluntary GHG programs can enhance a company's image with stakeholders and customers and show how a company is positioned relative to its competitors.

Similar to this, when companies participate in voluntary renewable and sustainability programs, such as purchasing renewable energy credits, implementing energy efficiency initiatives and reducing their energy usage, this can yield environmental, economic and social benefits. Not only does it help the environment and support the development and growth of renewable energy markets, but it can increase a company's reputation in the marketplace, help save money (i.e. through decreased usage and efficiency measures) and increase a company's competitiveness.


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