A new economic analysis conducted by researchers at the University of Tennessee outlines how tapping America’s vast natural resources could produce 25 percent of the nation’s energy supply from renewable sources and potentially result in more than $700 billion in economic activity and 5.1 million new jobs by 2025.

The research team, led by UT agricultural economists Daniel De La Torre Ugarte and Burton English, concluded that with continued advancements in technology and significant shifts in cropping patterns, U.S. farmers, ranchers and foresters can produce 25 percent of the nation’s energy while still providing abundant supplies of food, feed and fiber.

Other members of the team include UT researchers Kim Jensen, Roland Roberts, Marie Walsh, Chad Hellwinckel, Jamey Menard, and Brad Wilson. The study provides an analysis of the impacts to both the agricultural sector and the nation’s economy.

"This cutting-edge research provides the first comprehensive look at how both crop and livestock production might respond to increased demands for renewable energy," said J. Read Smith, co-chair of the 25x’25 Project Steering Committee in a press release. "Not only would reaching the goal drastically reduce our dependence on foreign energy sources, it would also have an extremely favorable impact on rural America and the nation as a whole,” Smith said.

25x'25 is a group of volunteer leaders from the agriculture and forestry communities as well as leaders from business, labor, conservation and religious groups. 25x’25 is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations.
The 25x’25 Project Steering Committee along with the Energy Future Coalition and the Energy Foundation financed the study.

The UT analysis addresses two scenarios:

• The impacts of producing 25 percent of the nation's electric power and motor vehicle fuels from renewable resources, utilizing findings from a new RAND report, and

• An outline of how agriculture and forestry resources could supply 25 percent of the nation’s total energy demands.

Although a variety of renewable energy resources would be needed to meet the 2025 goal – including wind, hydro, solar, and geothermal energy – the UT study focused on the impact of producing the amount of biomass needed from agriculture and forestry.

To meet the 25x’25 vision, contributions from America’s fields, farms and forests could result in the production of 86 billion gallons of ethanol (15 billion from corn and the remainder from residues, wastes, and dedicated energy crops) and 1.2 billion gallons of biodiesel. That amount of biodiesel fuel has the potential to decrease gasoline consumption by 59 billion gallons in 2025.

The report says production of 14.19 quads of energy from biomass and wind sources could replace the growing demand for natural gas, diesel, and/or coal generated electricity. These renewable energy resources could significantly decrease the nation’s reliance on foreign oil, fossil fuels, and enhance the national security of all Americans.

Both scenarios are based on continued yield increases in major crops, strong contributions from the forestry sector, utilization of food processing wastes, and the use of 50-100 million acres for dedicated energy crops, like switchgrass. The study assumes that the technology needed to produce cellulosic ethanol will be available and competitive by 2012.

"Using all of these sources will allow us to meet the 25x'25 renewable energy goal and will add $180 billion to net farm income," said Smith. "In 2025 alone, net farm income would increase by $37 billion compared with USDA baseline projections."

The complete study can be found online at http://www.25x25.org. The new RAND report and related charts are also available at that Web site.

Full report: http://www.25x25.org/storage/25x25/documents/RANDandUT/RAND.pdf
RAND fact sheet: http://www.25x25.org/storage/25x25/documents/RANDandUT/RANDFactSheet.pdf

Economic analysis on the agricultural sector
- University of Tennessee study: http://www.agpolicy.org/ppap/REPORT%2025x25.pdf
- University of Tennessee executive summary:
http://www.25x25.org/storage/25x25/documents/RANDandUT/UT-EXECsummary25X25FINALFF.pdf

Washington, DC
November 13, 2006

U.S. can have renewable energy on large scale at low cost

25x’25 cheaper than conventional energy mix in many cases, according to RAND study

In a finding that should affect the debate over America’s energy future, a new RAND Corporation study released today shows that increasing the use of renewable energy may lower the country’s total future energy costs relative to our current path, under the right conditions regarding energy prices and technology improvements.

"For years, skeptics have said that large-scale use of renewable energy would be technically infeasible or prohibitively expensive," said Reid Detchon, Executive Director of the Energy Future Coalition, which requested the study. "The RAND report undermines these claims. It turns out that, under a number of plausible conditions, significantly increasing our use of renewable energy in the motor fuels and electricity sectors would be both achievable and affordable. Under many scenarios, renewable energy use would cost less in total than continuing with ‘business as usual.’"

The RAND Corporation used energy demand and supply projections prepared by the U.S. Energy Information Administration (EIA) and ran 1,500 separate analyses, varying future costs and rates of technological change for both fossil fuels and renewable energy. The wide range of scenarios allowed RAND to incorporate many different perspectives on the future of renewables without trying to identify a single most likely scenario.

The results were striking. The report states: "Renewable energy is shown in the simulations to lower total energy expenditures in virtually all cases in which current energy price and technology cost trends continue."

The RAND analysis found that renewable energy could produce 25% of U.S. electric power and motor vehicle fuels by 2025 at no additional cost to the economy, as long as renewable technology continues to improve at least 20% in the next 20 years relative to fossil fuel technologies – less than half of the 45% projected by the National Renewable Energy Laboratory (NREL) – and as long as oil prices do not go significantly below EIA projections. By way of context, over the past 20 years renewable technologies on average have improved 57 percent, according to NREL.

If renewable technology improves relative to fossil fuel technology by 50% – roughly consistent with NREL projections – net energy savings would total nearly $30 billion. Meeting interim goals at lower cost on the way to 25x’25 – 10 by ’15 and 20 by ’20 – is even easier, since less would be required in terms of expansion in renewable energy resources.

"25x’25 has enormous implications for both national security and global warming," Detchon said. "RAND found that 25x’25 will cut petroleum consumption by 2.5 million barrels a day, and eliminate 1 billion tons of carbon dioxide emissions every year – all at little or no additional cost. By any definition, that’s a bargain."