wang mingyuan renewable energy

7/27/2019 Wang Mingyuan Renewable Energy

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355

Government Incentives toPromote Renewable Energy

in the United StatesWang Mingyuan

In planning its own environmental policies, China has much to learn from the

experiences, both positive and negative, of other countries such as the United Statesthat have had a longer history in trying to enact environmental measures. This is

particularly true with governmental incentives designed to encourage thedevelopment and deployment of renewable energy resources. The following

comment, an overview of United States efforts to promote renewable energy, ispresented in the hopes that it can serve to promote discussions of renewable energyin China.

I.INTRODUCTION

In order to implement a renewable energy system, the United States governmentmust reform its energy regimes. The primary source of greenhouse gases, which arecontributing to climate change, is the nations electrical energy systems using fossil

fuels.1

The economic costs of internalizing what are now energy externalities willrequire a basic reordering of the global economy and each nations economy.

2 If the

United States is to rely less on fossil fuels and turn to renewable sources,environmental laws and government incentives are needed to effectuate thistransition.

Wang Mingyuan is currently an Associate Professor of Law at Tsinghua University School of Law,China. He is also a Legal Consultant to the Legal Affairs Division of the Beijing Bureau ofEnvironmental Protection, a Project Consultant to the American Bar Association-Asia Law Initiative,

and the Executive Director of the Center for Environmental, Natural Resources & Energy Law atTsinghua University. Thank you, John L. Hemmer, for editing this Comment.1ENERGY LAW AND SUSTAINABLE DEVELOPMENT, IUCN Environmental Policy and Law Paper No. 47

(Adrian J. Bradbrook & Richard L. Ottinger, eds., The World Conservation Union 2003), available athttp://www.iucn.org/themes/law/pdfdocuments/Energy-Law/ENERGY-PUB-prelims.pdf.2Id.


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356 TEMPLE JOURNAL OF SCI.TECH.&ENVTL.LAW [Vol. XXIV

A. What is renewable energy?

Generally, renewable energy refers to energy sources that are continuouslyreplenished by the natural world.3 Among others, solar and wind energy are the

most widely used and known sources of renewable energy.There is no single, universally-accepted definition of renewable energy. For

example, according to the Energy Information Portal of the United StatesDepartment of Energy website, renewable energy consists of seven specific forms:

bio-mass, geothermal, hydrogen, hydropower, ocean, solar, and wind energy.4

According to the Clean Energy website of the U.S. Environmental ProtectionAgency (EPA), energy sources such as wind and solar power, geothermal,hydropower, and various forms of biomass are considered renewable sources

because they are continuously replenished on the Earth.5 Some scholars argue thatrenewable energy sources include a considerable number of proven and emergingtechnologies, such as solar energy, wind energy, geothermal energy, ocean thermalenergy, and biomass energy, while other scholars discuss renewable energy without

providing a specific definition. The legal definition for renewable energy involvesany energy derived from the sun.6

For this article, renewable energy refers to energy from existing flows of energy,from on-going natural processes, such as sunshine, wind, biological processes, andgeothermal heat flows.7 One of my primary purposes in exploring the new field ofU.S. renewable energy law is to begin my research on energys legal problems inupcoming years. I will focus on governments promotion of renewable energy inrelevant federal legislation.

B. The Environmental Impacts of Renewable Energy

Solar energy is continuously supplied to the earth by the sun, and this energy canbe converted to electricity. The most widely-used methods of converting solarenergy into electricity are photovoltaic and solar-thermal technologies. According to

the Solar Energy Research, Development, and Demonstration Act of 1974, solarenergy includes both direct and indirect solar sources.8 The direct uses of the sunsrays are primarily in the forms of photovoltaic cells, solar thermal systems, and solar

buildings; the indirect uses of solar sources include biomass energy that relies on the

3U.S. Environmental Protection Agency, Clean Energy Glossary,

http://www.epa.gov/cleanenergy/glossary.htm#R (last visited Sept. 12, 2005).4U.S. Department of Energy, Energy Efficient and Renewable Energy,http://www.eere.energy.gov/index.html (last visited Sept. 12, 2005).5U.S. Environmental Protection Agency,supranote 3.

642 U.S.C.S. 5552(1) (2005).

7 Hydropower has been excluded from the working definition of renewable energy in this article.

Hydropower is also a very important form of renewable energy because it uses the earths water cycle togenerate electricity; however, due to the construction and operation of dams, especially large-scale dams,

its use can cause adverse environmental impacts involving the flow of rivers, ecosystems, wildlife, soilerosion along the riverbed upstream and downstream, and otherwise harm the people who depend onthose waters. In addition, the construction of hydropower plants can alter sizable portions of land whendams are constructed and lakes are created, flooding land that may have once served as wildlife habitat,farmland, and scenic retreats. Thus, hydropower, especially large-scale hydropower projects, is muchmore controversial than the four forms of renewable energy discussed above. For that reason,hydropower has been excluded.842 U.S.C.S. 5551(3)(1) (2005).


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No. 1] Government Incentives to Promote Renewable Energy in the U.S. 357

suns role in the process of photosynthesis, wind energy, and ocean thermal energyderived from differential solar heating of land and water surfaces.9 Theenvironmental impacts of solar energy are very small except that solar energy

installations prevent the land they occupy from being used for other purposes. Thesephotovoltaic systems can negatively affect wildlife habitats if additional land iscleared for this technology.

Similarly, the environmental impacts of wind energy are very few, except thatlarge wind farms pose aesthetic concerns and wind turbines that are improperlyinstalled or landscaped may introduce soil erosion problems, and noise impacts,depending on the number of wind turbines on the farm. Wind farms can also have anegative impact on birds migration patterns.

Generating electricity from biomass can also affect land resources. Biomasspower plants, much like fossil fuel power plants, require large areas of land forequipment and fuel storage. If these biomass plants burn a waste source such asconstruction wood waste or agricultural waste, they can provide a benefit by freeingareas of land that might otherwise have been used for landfills or waste piles.

Biomass grown for fuel purposes requires large areas of land and, over time, candeplete the soil of nutrients; however, fuel crops can be managed so that theystabilize the soil, reduce erosion, provide wildlife habitats, and serve recreational

purposes. Generally, the environmental impacts of biomass energy are fewcompared to those of traditional fossil fuels, such as coal and oil, because biomass

power plants produce relatively limited emissions such as nitrogen oxides, requireless water for the boiler and cooling system, have less water discharge, producesmaller amounts of solid waste in the form of ash, and contain much lower levels ofhazardous elements.

For geothermal power plants, only a small amount of water used in the process ofcreating electricity may evaporate and, therefore, not returned to the ground. Also,for those geothermal plants that rely on hot, dry rocks for energy, water from localresources is needed to extract the energy from the dry rocks. In this process,groundwater may be contaminated when drilling wells and extracting hot water orsteam; though, this type of contamination can be prevented with proper managementtechniques. In addition, geothermal power plants often re-inject used water backinto the ground through separate wells instead of discharging the used water intosurface sources. This prevents underground minerals or pollutants from beingintroduced into surface waters. Geothermal power plants typically require less landarea than fossil fuel power plants. However, if water is not re-injected into theground after use to maintain pressure underground, it may cause the sinking of thelands surface.

C. Why should government promote renewable energy?

1. Free Market and Market Failure Regarding Renewable EnergyCompared to conventional energy resources such as coal and oil, renewable

energy resources are generally more environmentally-friendly and, therefore, benefitboth the economy and the environment. Unfortunately, while the market mechanism

942 U.S.C.S. 5552(1) (2005).


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generally may not prove renewable energy economically beneficial, sometimes themarket fails to operate in terms of a specific energy market. That is, the market failsto operate in the context of energy and renewably energy. Environmental benefits

resulting from the development and use of renewable energy sources, a form ofpositive externality or market failure, cannot be measured by price signals and,therefore, cannot be incorporated into the market system. Furthermore, because ofthe differences of project scale and the maturity of technology, the costs ofdeveloping and using renewable energy are usually more expensive and lesscompetitive than costs of fossil fuel energy, especially electricity derived from coal-

burning power plants.

2. The New Idea and Requirements of Sustainable Development

According to the World Commission on Environment and Development,sustainable development is development that meets the needs of the present withoutcompromising the ability of future generations to meet their own needs.10 It implieseconomic growth and social progress together with the protection of natural

environment, each reinforcing the other. The essence of this form of development isa stable relationship between human activities and the natural world, which does notdiminish the prospects of future generations enjoying a quality of life at least as goodas our own. In other words, sustainable development requires economic growth andsocial development based on balanced ecological systems, which is fair and good for

both present and future generations. From the perspective of the comprehensivedevelopment of the integrated economy-society-environment system, decision-makers today should have to take into account the moral and legal obligationsnecessary to achieve both intra-generational equality and inter-generational equality.

Since the 1992 Earth Summit, sustainable development has been widely acceptedas the right model for our generation, including members of both the developedworld and the developing world. Scholars have also realized that states andgovernments should take special responsibility for the achievement of sustainabledevelopment. For example, the Rio Declaration on Environment and Developmentstresses that

Human beings are at the center of concerns for sustainabledevelopment. They are entitled to a healthy and productive life inharmony with nature11; The right to development must be fulfilledso as to equitably meet developmental and environmental needs of

present and future generations12

; States shall cooperate in a spirit ofglobal partnership to conserve, protect and restore the health andintegrity of the Earths ecosystem. In view of the differentcontributions to global environmental degradation, States havecommon but differentiated responsibilities. The developed countries

acknowledge the responsibility that they bear in the international

10 WORLD COMMISSION ON ENVIRONMENT AND DEVELOPMENT, OUR COMMON FUTURE (Oxford

University Press, 1987).11

Principle 1.12

Principle 3.


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pursuit to sustainable development in view of the pressures theirsocieties place on the global environment and of the technologiesand financial resources they command13; States shall enact effective

environmental legislation. Environmental standards, managementobjectives and priorities should reflect the environmental anddevelopment context to which they apply. Standards applied bysome countries may be inappropriate and of unwarranted economicand social cost to other countries, in particular developingcountries14; National authorities should endeavor to promote theinternalization of environmental costs and the use of economicinstruments, taking into account the approach that the pollutershould, in principle, bear the cost of pollution, with due regard tothe public interest and without distorting international trade andinvestment

15; States and people shall cooperate in good faith and in

a spirit of partnership in the fulfillment of the principles embodiedin this Declaration and in the further development of international

law in the field of sustainable development.16

Agenda 2117

addresses the pressing problems of today and also aims atpreparing the world for the challenges of the next century. Its successfulimplementation is, first and foremost, the responsibility of governments; nationalstrategies, plans, policies and processes are crucial in achieving this. Internationalcooperation should support and supplement national efforts. In this context, theUnited Nations system plays a key role. Other international, regional and sub-regional organizations should also be called upon to contribute to this effort. The

broadest public participation and the active involvement of non-governmentalorganizations and other groups should also be encouraged.

The development and use of renewable energy is a desirable model for theachievement of sustainable development because, on the whole, it is much more

beneficial for energy security, public health and environmental safety, which arecommon challenges facing all societies and states in the modern world, especiallythe U.S. and other developed countries.

3. Global Warming and International Regimes on Greenhouse Gases

It is generally accepted that the Earths surface temperature has risen in the pastcentury, with accelerated warming during the past two decades. Furthermore, mostof the warming is attributable to human activities, which have altered the chemicalcomposition of the atmosphere through the buildup of greenhouse gasesprimarilycarbon dioxide, methane, and nitrous oxide.

Actions have been taken at the international and local levels, to reduce, avoid, andbetter understand the risks associated with greenhouse gases and global warming.

13Principle 7.

14Principle 11.

15Principle 16.

16Principle 27.

17Sec. 1.3.


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Among them, the United Nations Framework Convention on Climate Change andthe Kyoto Protocol are the key commitments and measures taken to control andreduce the amount of greenhouse gases released by the international community.

Although the U.S. is not yet a member of these international documents, as thenumber one greenhouse gases emitter in the world, it faces pressure to reduce itsgreenhouse gas emissions. To that end, the development and use of renewableenergy is one of the most desirable ways to do so.

II.BACKGROUND:THE BRIEF HISTORY OF MODERN ENVIRONMENTAL ENERGY LAWAND POLICY IN THE UNITED STATES

Throughout its history, the U.S. government has not taken an active role in theaffairs of energy and the environment. However, with the breakout of energy crisesand the environmental movement in the 1970s, the U.S. government was forced totake strong counter-measures to strengthen regulation in the energy sector andcontrol environmental activities. In 1970, the Environmental Protection Agency wascreated to monitor and analyze the environment, conduct research, and work closely

with state and local governments to devise pollution control policies. Accordingly,not only were more energy laws and regulations passed to provide affordable energy

by sustaining competitive markets and protecting the economic, environmental, andsecurity interests of the U.S., but more environmental laws and regulations were

passed to assure the protection of the environment against both public and privateactors who might fail to take account of costs or harms inflicted on the ecosystem.

In 1977, the Department of Energy was created and a national energy planemerged for the first time in the U.S. Ever since, government oversight has played acentral role in the energy sector; in recent years, there has been a shift towardsderegulation of various energy industries, with the aim of increasing marketcompetition. It is well known that many environmental issues, in particular air

pollution issues such as greenhouse gases and acid rain, are very closely related to

energy activities, but the legal systems of energy and the environment in the U.S. arelargely independent of each other.

Since the 1980s, the focus of energy policy has been principally driven by theconsiderations of environmental protection and sustainable development. In theU.S., there are specific laws and regulations reconciling energy and environmentdirectly, bridging these two areas. These laws and regulations are usually calledclean energy law, or energy-environment law. Among the multitude of laws,most belong to the area of renewable energy law. Some examples of clean energylaw are as follows: Solar Energy Research and Development Act of 1974, WindEnergy Improvement Act of 1980, Biomass Energy and Alcohol Fuels Act of 1979,Geothermal Energy Research Development and Demonstration Act of 1974,Geothermal Energy Act of 1980, and the Energy Policy Act of 1992, all of which aremore environment-friendly than ordinary energy laws.


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III.THE LEGAL BASIS OF USGOVERNMENT TO PROMOTE RENEWABLE ENERGY

A. U.S. Government Efforts to Promote Renewable Energy

There is an abundance of well-developed legal instruments through which thegovernment can promote renewable energy, particularly at the state and local levels.The following are the main government incentives: 1) Tax incentives (includingcorporate tax, personal income tax, sales tax and property tax); 2) Grant incentives;3) Loans incentives; 4) Rebates; 5) Industry recruitment incentives; 6)Leasing/Purchase incentives; 7) Production incentives; 8) Public benefit funds; 9)Green power purchasing policies; 10) Renewables portfolio standards; 11)Construction and design policies; 12) Net metering rules; and 13) Generationdisclosure rules.

B. Major Federal Laws, Provisions and Programs

In the U.S., the legal basis for the federal government to promote renewable

energy is an evolving and complex system consisting of related laws, provisions, andprograms at federal, state, and local levels.

1. Major Federal Laws and Provisions

The major federal laws and provisions in the United States are: a) Solar EnergyResearch and Development Act of 1974, encouraging the use of solar energy; b)Geothermal Energy Research Development and Demonstration Act of 1974,enhancing geothermal use; c) Biomass Energy and Alcohol Fuels Act of 1979,

providing incentives for alternate, renewable fuels; d) Energy Tax Act of 1978,encouraging investment in solar, wind technologies and other environmentallyfriendly energy technologies through the use of tax credits; e) Wind EnergyImprovement Act of 1980, providing incentives for development of wind energysystems; f) Geothermal Energy Act of 1980, providing incentives for increasing

production of geothermal energy; g) Renewable Energy and Energy EfficiencyTechnology Competitiveness Act of 1989, promoting research, development,demonstration, and commercial application of renewable energy and energyefficiency technologies; h) Energy Policy Act of 1992, in particular Subchapter VRenewable Energy, promoting increases in the production and utilization of energyfrom renewable energy resources; further advances of renewable energytechnologies; and exports of U.S. renewable energy technologies and services.

2. Major Federal Programs

The federal government has a number of programs encouraging the research,development, and implementation of renewable energy technologies. These

programs are funded or supported by various federal departments, including the

Department of Agriculture, Department of Energy, Department of Housing andUrban Development, Department of Transportation, Department of Veterans Affairs,Environmental Protection Agency, and the Small Business Administration. The

programs provide various incentives, such as direct funding to individuals, includingresidents and businesses; guaranteed bank mortgages that can be used to purchase orrefinance homes using renewable energy; grants and loans to states and local


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governments; and funding for research and development projects.

Examples of Federal Programs

ENERGY STAR financing and mortgages are offered by private lenders to giveconsumers the incentive to purchase ENERGY STAR-labeled products and homes.The EPA allows lenders to use the ENERGY STAR label on financing products thatmeet EPAs labeling criteria, but it does not fund or insure the financing.

Energy Efficient Mortgage (EEM) can be used by residents to financetechnologies such as photovoltaics, solar water and space heating, and energyefficiency in a new or existing home. Both government-insured and conventionalEEMs are available and are federally-recognized loan programs that can be appliedto most home mortgages. All buyers who qualify for a home loan qualify for theEEM. The EEM is intended to give the buyer of energy-efficient house additional

benefits on top of their usual mortgage deal.

Modified Accelerated Cost Recovery System allows industrial and commercialbusinesses to recover investments in solar, wind and geothermal property, such as

property of solar water heat, solar space heat, solar thermal electric, solar thermalprocess heat, photovoltaics, wind and geothermal electric, through depreciationdeductions. In addition to the MACRS depreciation, under the Job Creation andWorker Assistance Act of 2002, businesses can take an additional thirty-percentdepreciation on solar, wind and geothermal property in the first year.

18 In May 2003,

The Job Creation and Tax Relief Reconciliation Act of 2003 was signed into law,increasing the bonus depreciation to fifty-percent in the first year that the equipmentis purchased and placed into service.

The Renewable Electricity Production Credit (REPC), a per kilowatt-hour taxcredit for electricity generated by qualified energy resources, was originally enactedas part of the Energy Policy Act of 1992, then extended in March 2002 as part of theJob Creation and Worker Assistance Act of 2002. On October 4, 2004, the REPC

was extended once more as part of the Working Families Tax Relief Act of 2004through December 31, 2005. Furthermore, REPC, which formerly only applied towind energy, closed-loop biomass, and poultry waste energy projects, was expanded

by the American Jobs Creation Act of 2004,19

which was signed into law on October22, 2004, to cover the following items: wind, closed-loop biomass, open-loop

biomass, geothermal energy, solar energy, small irrigation power (150 kW - 5 MW),and municipal solid waste.

Under the Solar and Geothermal Business Energy Tax Credit Program ensured bythe Energy Policy Act of 1992, the U.S. federal government offers a ten-percent taxcredit to businesses that invest in or purchase energy property, including solar energyequipment that uses solar energy to generate electricity, to heat or cool a structure, orto provide solar process heat, geothermal energy equipment used to produce,distribute, or use energy derived from a geothermal deposit.

The Renewable Energy Systems and Energy Efficiency Improvements GrantProgram, a program of the Department of Agriculture, has provided funding forfiscal years 2003 and 2004 for eligible agricultural producers and rural small

18Section 101.

19Section 710.


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businesses to purchase renewable energy systems and make energy improvements,including those that derive energy from a wind, solar, biomass, geothermal source,or which derive hydrogen from biomass or water using wind, solar, or geothermal

energy sources.The Executive Order 13,123, issued in 1999, requires federal agencies to increasetheir use of renewable energy to a percentage determined by the Secretary of Energy.In 2000, the Secretary of Energy directed that federal agencies obtain the equivalentof 2.5% of their electricity from renewable resources by 2005. Under this order,solar, wind, biomass and geothermal systems installed after 1990 qualify asrenewable energy resources.

C. The General Picture of State and Local Laws, Provisions and Programs: UsingCalifornia as an Example

In addition to federal laws, provisions, and programs promoting renewableenergy, almost every state, county, and city in the U.S. has its own set of lawsdesigned to promote renewable energy. The following examples are drawn from the

state of California.

The Agricultural Biomass to Energy Program was created by California SenateBill 704, which was enacted into law on September 22, 2003. The program wascreated to reduce the amount of agricultural fuels that are burned in open fields by

providing financial incentives to eligible biomass facilities for each green ton ofqualified agricultural biomass purchased and converted into energy by the facilityfrom July 1, 2003 through June 30, 2004. This program was designed andimplemented by the Energy Commission.

The Property Tax Exemption for Solar Systems is a product of the CaliforniaRevenue and Taxation Code, section 73. Active solar energy systems installed

between January 1, 1999 and January 1, 2006 are not subject to property taxes whenassessing property for property tax purposes.

The Emerging Renewables Program has been carried out by the California EnergyCommission. The primary goal of this program is to stimulate market demand andto develop a self-sustaining market for emerging renewable energy technologies of

photovoltaics, solar thermal electric systems, fuel cells using renewable fuels, andsmall wind turbines that meet certain eligibility requirements, by offering rebates toreduce the initial cost to customers.

The Solar or Wind Energy System Credit Program is comprised of personal andcorporate income tax credits provided for the purchase and installation of

photovoltaic or wind driven systems with a peak generating capacity of up to 200kilowatts. After January 1, 2004 and before January 1, 2006, the tax credit is equalto 7.5% of the net installed system cost after deducting the value of any municipal,state, or federal sponsored financial incentives, or $4.50 per watt of rated peakgenerating capacity, whichever is less. A fifteen-percent tax credit was available

from Jan 1, 2001 to Dec 31, 2003. The California Franchise Tax Board, inconsultation with the California Energy Commission, administers this program.

Existing and new building construction requirements have been established by theCalifornia Department of General Services, in consultation with the State EnergyResources Conservation and Development Commission. The requirements ensurethat solar energy equipment is installed no later than January 1, 2007 on all state


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buildings and state parking facilities, where feasible, and that solar energy equipmentshall be installed as part of the construction of all state buildings and state parkingfacilities that commences after December 31, 2002.

The Renewables Portfolio Standard requires that a retail seller of electricitypurchase a specified minimum percentage of electricity generated by eligiblerenewable energy resources in any given year as a specified percentage of totalkilowatt hours sold to retail end-use consumers each calendar year. California SenateBill No.1078, signed into law on December 12, 2002, established the program. Theeligible renewable energy resources include biomass, solar thermal, photovoltaics,wind, geothermal, fuel cells using renewable fuels, small hydropower of thirtymegawatts or less, digester gas, landfill gas, ocean wave, ocean thermal, and hydroenergy (predominantly from tidal currents). Municipal solid waste is only eligible ifit is converted to a clean burning fuel using a non-combustion thermal process first.

The Los Angeles Solar Incentive Program is un by the Los Angeles Departmentof Water & Power Board of Commissioners. The purpose of this solar rebate

program is to encourage the use of renewable energy through the installation of

photovoltaic systems by residents and businesses in Los Angeles.The Los Angeles Green Power Purchasing Program is one of largest purchases of

renewable green power in the U.S. On March 2, 2001, the Los Angeles City Councilapproved the program and beginning in July 2001, ten-percent of the citygovernments electricity purchases went towards new, clean, renewable energysources. This purchase will amount to fifty million-kilowatt hours of electricityannually. With previous commitments from Los Angeles World Airports and thecitys water system, the total city government purchase will be more than seventymillion-kilowatt hours of new green energy, amounting to fourteen percent of theelectricity used by the city government.

The Santa Clara Solar Water Heating Program is the nations first municipal solarutility. Since 1975, the City of Santa Clara has taken a leading role in developingand promoting the use of solar energy. That year, the City established the SolarWater Heating Program, under which the City supplies, installs and maintains solarwater heating systems for residents and businesses within Santa Clara through itsWater & Sewer Utilities Department. Solar equipment is offered by the city for theheating of swimming pools, process water, and domestic hot water. The pieces ofhardware (solar collectors, controls and storage tanks) are owned and maintained bythe city under a rental agreement; the renter pays an initial installation fee and amonthly utility fee.

IV.PERFORMANCE OF GOVERNMENT INCENTIVES TO PROMOTE RENEWABLEENERGY IN THE UNITED STATES

Three key objectives underlie current energy policy: reliability and security,affordability and economic growth, and the environment and public health. For

example, the National Energy Policy of the U.S. stresses Reliable, Affordable, andEnvironmentally Sound Energy for Americas Future, and the European Unionenergy policy declares that Europes future depends on its energy supply being safe,ecologically sustainable and affordable.

Over the past ten years or more, the focus of energy policy worldwide has beendriven principally by considerations for the environment and sustainable


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development. Whether the goal is to combat global warming, to encourageinvestment in a fast-growing new industry, or to provide energy independence andsecurity, many programs in Germany, Japan, Australia and other developed countries

have, through subsidy and regulations, created renewable energy markets. However,in the U.S., although the legal measures for the government to promote renewableenergy are relatively well-developed, the progress of the renewable energy marketand the diversification of the traditional energy prosperity appear to be frustratinglyslow. For example, in 2003, only about 3.3% of the energy consumed came fromnon-hydro renewable energy sources,20namely solar, wind, biomass and geothermalenergy, which is much less than energy derived from petroleum (forty percent), coal(twenty-three percent), natural gas (twenty-three percent), and nuclear sources (eight

percent). From a historical perspective, despite great improvements and costreductions of renewable energy technologies worldwide, the consumption in the U.S.of non-hydro renewable energy sources

21 declined from 3.456 quadrillion Btu in

1989 to 3.35 quadrillion Btu in 2003. While the consumption of solar andgeothermal energy remained almost unchanged, the consumption of biomass energy

declined from 3.062 quadrillion Btu in 1989 to 2.865 quadrillion Btu in 2003, andthe consumption of wind energy increased from 0.022 quadrillion Btu in 1989 to0.108 quadrillion Btu in 2003.

The global renewable energy market is booming, mainly because of the greatdemand created by the Kyoto Protocol and other international environmentalagreements, but the U.S. domestic market for renewably energy is declining. The

passive position of the U.S. federal government on global warming, its strong andlasting support of fossil fuels industries, and the unequal playing field of the U.S.energy market, are among the key elements that hinder the further development ofrenewable energy.

V.CONCLUSION

By observing the U.S. attempts at promoting renewable energy sources, China canmake several conclusions about renewable energy development. In the U.S., bothmarket forces and government support play roles in the development of renewableenergy. The level of government intervention in the renewable energy market is

based upon relevant laws, regulations, ordinances, and programs at the federal, state,and local levels.

Observers are confident that renewable energy sources will one day be costeffective and are becoming increasingly aware of environmental concerns associatedwith conventional power sources. The main problem is that manufacturing needs to

be done on a large scale to reduce costs. That level of demand for renewable energydevices, however, will not exist until prices fall to competitive levels.

Despite structurally sound renewable energy legal systems and governmentincentives for the renewable energy industry in the U.S., the actual implementation

of renewable energy development is very limited, because strong governmentsupport for fossil fuels leads to an unequal playing field in the energy market and aninferior position for the renewable energy industry. With no further incentives for

20Supranote 9.

21See supranote 9.


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reform and no greater support in substance to renewable energy technologies, therewill be little or no success in renewable energy production and consumption.

For the successful development of a renewable energy industry in China, there

must be a strong legal system to aid implementation and an equal or superiorcompetitive position in the energy market.

wang mingyuan renewable energy

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