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Barriers to a Renewable Revolution

September 19, 2015
In its 2015 New Energy Outlook, Bloomberg New Energy Finance predicted an explosion in global renewable energy investment. Between now and 2040, an $8 trillion investment in renewables will translate into renewable-powered electricity powering 54% of electricity consumption in OECD countries and 46% globally.[1] Bloomberg’s predictions, made under assumptions of minimal government support, still conclude that global temperatures will rise above 2 degrees Celsius—which means that global warming’s harshest impacts—floods, storms, and expanded disease—will come to pass.[2]

by Shams Haidari

It’s a bleak scenario, and one that demands that we examine why the switch to renewables is not happening at a faster rate. This blog post aims to contribute to that conversation, providing a brief explanation for why renewables represented a mere 10% of US energy use in 2014.[3]

The barriers toward a renewable revolution can be broadly categorized into two groups—one, the high costs still associated with renewables; two, the structure of US utilities. This blog will focus on public policies that have the potential to encourage innovation and, ultimately, bring down the cost of renewable energy. While the cost of renewables is decreasing, renewable energy is still too expensive to compete with fossil fuels in the absence of government support.

The price of renewable energy has decreased dramatically. Solar energy has become the poster child for this phenomenon. A single watt of solar electricity in 1977 cost $76.77—today, solar energy costs $0.60/watt.[4] More generally, in its 2015 Annual Energy Outlook, the International Renewable Energy Agency predicted, “renewable energy sources [sic] has reached parity or dropped below the cost of fossil fuels.[5] Support—at both the state and federal level—has been partly responsible for the rate of renewable energy development.

Individual states have a number of tools to support renewables. Renewable Portfolio Standards (RPSs) set minimum percentages of electricity that must come from renewables; some states set up public funds to invest in renewable projects; and Output-Based Renewable projects create caps on emissions from electricity plants—effectively forcing utility providers to turn toward renewables.[6] However, states are not uniformly invested in renewable development and their degree of interest can vary over time. Recently, The Washington Times referenced the end of RPS policies in West Virginia and Kansas and proposed changes in North Carolina and Michigan as evidence of a general decreased commitment to renewables.[7]

At the federal level, the U.S. stands out for not having a permanent policy to promote renewable technology development and to discourage fossil fuel use.[8] Rather, the U.S. organizes subsidies and credits for renewables on a year-by-year basis and often lumps those subsidies into larger bills. [9] As a result, programs intended to support renewables are often vulnerable to shifts in the political climate or even to changes in public opinion toward other government policies.

The federal government’s other recourse in promoting renewables is to regulate greenhouse gas emissions. However, federal interest in emissions has been inconsistent. The Environmental Protection Agency (EPA) under the Bush Administration insisted that it was not empowered to set emissions regulations for greenhouse gases. [10] The EPA’s continued inaction led Massachusetts to sue the EPA. The court case, Massachusetts v. Environmental Protection Agency (2006) ended with a Supreme Court ruling in Massachusetts’ favor.

In contrast, the Obama Administration has taken an aggressive approach to environmental controls. In June 2013, Barack Obama unveiled his three-pronged Climate Action Plan, aimed at decreasing carbon emissions, prepping for global warming’s impacts, and creating global efforts for a greener future.[11] In pursuit of his first goal, the EPA introduced a draft version of what would become the Clean Power Plan (CPP) in June 2014. The CPP represents the first federal regulation of power plant emissions. The draft version set a goal of reducing carbon emissions by 30% from their 2005 levels and aimed to accomplish the goal by providing emissions reductions standards to each state.[12] States would then be able to craft a specific plan to achieve their assigned reduction goals.

On August 3rd, 2015, the Obama Administration released the final version of the plan. While it maintained the same emphasis on state-created emission reduction programs, it increased the U.S.’ emission reduction target to 32%.[13] The final version is also less encouraging to natural gas than its draft form. Natural gas—which has only recently begun to challenge coal as the dominant fuel for power generation[14]—has been touted as a useful “bridge fuel” in the transition from coal to renewables. However, CPP includes a Clean Energy Incentive Program to promote renewables and the state emissions targets were created with the understanding that renewables could replace natural gas.[15] As the Sierra Club’s Executive Director, Michael Brune, noted, this could mean that “the bridge—the natural gas bridge—has just been declared closed.”[16]

Despite the President’s commitment to CPP’s success, the path toward its enactment is still unclear. Most famously, before the final plan was even revealed, Senator Mitch McConnell asked state governors to disregard their assigned emissions standards.[17] For all of the past support that renewables have received, the stand against future support could stall their progress in the U.S. energy market.

The price of generating renewable energy might be going down, but renewables are still the expensive energy choice when compared to fossil fuels. Large windmills and colonies of solar panels are often built far away from residential or industrial areas, so their use requires extensive transmission networks.[18] Renewable energy sources also need to be connected to back up energy sources to compensate for shifting wind patterns, the loss of sunlight at nighttime, and other weather changes.[19] These challenges represent additional costs and cause renewable energy plants to operate at a lower capacity than their fossil fuel counterparts. In a 2014 report for The Brookings Institution, Charles R. Frank, Jr., calculated the capacity of gas combined cycle, nuclear, hydro, solar, and wind plants to replace coal plants. Gas combined cycle plants achieved a respectable 91.6% and nuclear came in second, with 89.1%. Wind, solar, and hydro were distant losers—capable of replacing only 26.1%, 15.1%, or 33.9% of a corresponding coal plant’s power generation.[20]

These numbers indicate that renewables are not ready to compete with fossil fuels and make the lack of uniform support for renewables particularly troubling. The cost of generation has decreased, but the development of infrastructure that can support a renewables-based utility market and of technology that can increase the renewable reliability are necessary precursors to the development of a larger U.S. renewable market.

  [1]“Executive Summary” in New Energy Outlook 2015, Seb Henbest, available here: /; Tom Randall, “The Way Humans Get Electricity Is About to Change Forever,” Bloomberg Business, June 23, 2015.

  [2]Randall, “The Way Humans Get Electricity Is About to Change Forever.”

  [3] “FREQUENTLY ASKED QUESTIONS: How Much U.S. Energy Consumption and Electricity Generation Comes from Renewable Sources,” U.S. Energy Information Administration, March 31, 2015; the U.S. Energy Information Administration includes hydroelectric, geothermal, solar, wind, and biomass in its definition of renewables: “Table 10.1 Renewable Energy Production and Consumption by Source (Trillion Btu),U.S. Energy Information Administration/Monthly Energy Review July 2015, July 2015.

  [4] Zoe Schlanger, “Two Numbers: Solar Energy’s Price Drop, Ahead of Schedule, Could Help Save the Planet,Newsweek, July 15, 2015.

  [5]“Press Releases,” International Renewable Energy Agency, January 17, 2015, .

  [6]“State Climate and Energy Program: Renewable Energy,” United States Environmental Protection Agency”l.

  [7]Valerie Richardson, “Renewable Energy Standards Reconsidered as States Question Mandates, Fret over Costs,The Washington Times, July 16, 2015.

  [8]Kelly Sims Gallagher, “Why & How Governments Support Renewable Energy,” Daedalus 42 No. 1 (Winter 2013): 59.

  [9]John Light, “Wind Power Could Get Its Tax Breaks Back,Grist, July 22, 2015.

  [11]“President’s Climate Action Plan Tracker,” Sabin Center for Climate Change Law.

  [12]Adam Vaughan, “Obama’s Clean Power Plan Hailed as US’s Strongest Ever Climate Action, The Guardian, August 3, 2015, 

  [13]Ibid.; for a more complete list of differences between the proposed and final CPP, see MJB&A, “Summary of EPA’s Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (the ’111(d) rule’), MJB&A, August 6, 2015, ; for government documents related to the creation and structure of the CPP, see: “Clean Power Plan for Existing Power Plants,” U.S. Environmental Protection Agency, last updated August 6, 2015.

  [14]Scott Jell, “Electricity from Natural Gas Surpasses Coal for the First Time, But Just for One Month,” Today in Energy, July 31, 2015.

  [15]Rachel Cleetus, “Four Ways the Final Clean Power Plan Limits the Rush to Natural Gas,The Equation (blog), August 7, 2015.   

  [16]Scott Detrow and Elizabeth Harball, “Final Clean Power Plan Shifts Toward Renewables and Away from Natural Gas,” ClimateWire, August 4, 2015.

  [17]Jody Freeman and Richard J. Lazarus, “Larry Tribe and Mitch McConnell’s Flagrant Constitutional Error,Politico, March 25, 2015, 

  [18]“The Economist Explains: Why Is Renewable Energy So Expensive,” The Economist, January 5, 2014..


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