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Greener, cleaner ... and competitive?

Renewables could supply one-quarter of US energy by 2025, with no harm to economy, a study says.

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The last time renewable-energy entrepreneurs were this gung-ho, in the early 1980s, subsidies – not sales – buoyed their business plans. This time may be different. For example:

•So many utility customers signed up for the "GreenChoice" program in Austin, Texas, that the city organized a raffle to decide who would get the last 1,400 slots. The reason: The program's wind-powered electricity was actually cheaper to generate than traditional power.

•Midwestern ethanol plants this summer were producing renewable fuel at a cost of $1.27 a gallon or less, making it competitive with gasoline even without tax subsidies, notes Vernon Eidman, a University of Minnesota professor of agricultural economics.

•A recent study by the RAND Corp. shows the nation's economy would be likely to benefit, rather than be slowed, if the nation achieved the goal of supplying 25 percent of its energy needs from renewable sources by 2025.

While most renewable fuels can't yet compete with their traditional counterparts, their costs of production are falling steadily. If the trend continues, America's energy mix by 2025 could be far greener and cleaner – without damaging the economy – than most analysts could have antici-pated a few years ago.

That development would not only reduce the nation's dependence on oil, it would mean a substantial start on capping its greenhouse-gas emissions, which most scientists link to global warming. And such a move, if the RAND analysis proves correct, would come at little or no cost to the economy.

"At this point, the lines haven't crossed yet where renewables are cheaper than coal power," says Jonathan Naimon, managing director of Light Green Advisors, an institutional money manager focused on environmental investing. "But we do see a lot of opportunity as this process of renewable power getting steadily cheaper continues.... There have been reports over the years saying the long-term costs of renewables are cheaper than fossil simply because you don't pay for fuel."

New findings, new hope for renewables

The RAND Corp. report – issued in November – estimated that if the cost to produce renewable energy continued to fall at its current rate, renewables could provide 25 percent of the nation's power by 2025 at no additional cost to the economy and perhaps even save money.


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