Climate change and renewable energy

Ten percent of the energy consumed across sectors in the United States was from renewable sources in 2016 (10.2 quadrillion Btu out of a total of 97.4 quadrillion Btu). U.S. consumption of renewables is expected to grow over the next 25 years at an average annual rate of 2 percent, higher than the overall growth rate in energy consumption (0.2 percent per year) under a business-as-usual scenario.
Renewables made up nearly 15 percent of electricity generation in 2016, with hydro, wind, and biomass making up the majority. That’s expected to rise to 25 percent by 2030. Most of the increase is expected to come from wind and solar. Non-hydro renewables have increased their share of electric power generation from less than 1 percent in 2005 to nearly 7 percent at the end of 2016 while demand for electricity has remained relatively stable.

In the transportation sector, renewable fuels, such as ethanol and biodiesel, have increased significantly during the past decade. E85 (ethanol transportation fuel) is expected to be the fastest growing renewable energy type, growing at an average annual rate of 9.7 percent over the next 25 years, although it starts from a very low base.
In the industrial sector, biomass makes up 98 percent of the renewable energy use with nearly 60 percent derived from biomass wood, 33 percent from biofuels, and nearly 8 percent from biomass waste.
Uncertainty about federal tax credits, fuel prices, and economic growth will influence the pace of U.S. renewable energy source development.

Renewable Energy Drivers

Factors affecting renewable energy deployment include market conditions (e.g., cost, diversity, proximity to demand or transmission, and resource availability), policy decisions (e.g., tax credits, feed-in tariffs, and renewable portfolio standards) as well as specific regulations. At least 176 countries, more than half of which are developing, had renewable energy policy targets in place at the end of 2016.
Businesses with sustainability goals are also driving renewable energy development by building their own facilities (e.g., solar roofs and wind farms), procuring renewable electricity through power purchase agreements, and purchasing renewable energy certificates (RECs).

Policy Drivers 

Two federal tax credits have encouraged renewable energy: The production tax credit (PTC), first enacted in 1992 and subsequently amended, is a corporate tax credit available to a wide range of renewable technologies including wind, landfill gas, geothermal, and small hydroelectric. For wind, geothermal and closed-loop biomass, the utility receives a 2.2 ¢/kWh ($22/MWh) credit for all electricity generated during the first 10 years of operation. For wind, with an average total system levelized cost of $64/MWh, the PTC represents a 34 percent cost reduction.The investment tax credit (ITC) is earned when qualifying equipment, including solar hot water, photovoltaics, small wind turbines, is placed into service. The credit reduces installation costs and shortens the payback time of these technologies. The Consolidated Appropriations Act (2016) extended the ITC for three years and phases out the PTC by 2020.

Added incentives 

States offer added incentives, making renewables even easier to implement from a cost perspective. 
A renewable portfolio standard requires electric utilities to deliver a certain amount of electricity from renewable or alternative energy sources by a given date. State standards range from modest to ambitious, and qualifying energy sources vary. Some states also include “carve-outs” (requirements that a certain percentage of the portfolio be generated from a specific energy source, such as solar power) or other incentives to encourage the development of particular resources. Although climate change may not be the prime motivation behind these standards, they can deliver significant greenhouse gas reductions and other benefits, including job creation, energy security, and cleaner air. Most states allow utilities to comply with the renewable portfolio standard through tradeable credits that utilities can sell for additional revenue.
In states with a renewable portfolio standard, utilities consider cost, intermittency and resource availability in choosing technologies that satisfy this requirement.
In the U.S. transportation sector, The Energy Policy Act of 2005 created a Renewable Fuel Standard that required 2.78 percent of gasoline consumed in the United States in 2006 to be renewable fuel.
The Energy Independence and Security Act of 2007 created a new Renewable Fuel Standard, which increased the required volumes of to 36 billion gallons by 2022, or about 7 percent of expected annual gasoline and diesel consumption above a business-as-usual scenario.

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