Studies and analysis have recently revealed that there is a solid economic reason for supporting renewable energy: according to the International Energy Agency (http://www.iea.org/) the gap between the median cost of energy produced from atomic, gas natural and coal power plants and the median cost of energy produced from solar or wind is narrowing significantly.
While, in fact, the cost of energy produced from non renewable energy has remained steady (100 $/MWh), over the past five years the median cost of solar energy has dropped from 500 to 200 $/MWh. The median cost is the result of several standards: for example costs for maintenance and dismantling of the different plants.
Talking about the US experience, Obama decided to support the renewable energy through a 1 bn $ increment for loan guarantees and through legislative measures in order to reduce solar panel installation costs for homeowners while Japanese Ministry of Environment invested 2 bn JPY in reducing costs for floating offshore wind turbines.
The strategy adopted during Obama Administration is clearly expressed by the Clean Power Plan, which aims to reduce levels of carbon emissions of 32% compared to 2005 by 2030. It could be a relevant chance to create and enforce investment opportunities in renewable energies, but legal and political uncertainties should be taken into consideration in order to evaluate its actual potential.
The Clean Power Plan of EPA imposes a national target on CO2 emissions, but each state can chose its own plan in order to achieve it. For example, a state could decide either to increase the efficiency of coal-fired plants or to invest on renewable energy efficiency. By September 2016, each state must submit to EPA its emission reduction plan, but the deadline might be postponed to 2018 if EPA considered the plan as inadequate.
The 32% target is not the only one imposed by the EPA in its Plan, it also imposes to reach the 28% of electricity generation from renewable energy by 2030. In the Clean Power Plan incentives are not provided to any form of “clean energy”: only solar and wind sources are strongly supported, while other forms, as geothermal and biomass sources, are not.
Some stakeholders observed that a likely consequence of the draft plan could be the shift from wind and solar energy to natural gas. However, in the final plan it’s assumed that gas capacity will not significantly increase as projected in the draft plan. In the final plan it’s submitted that coal fired generation will decline by 39% to 27% of the US energy mix by 2030.
The Clean Power Plan sets uniform emissions performance rates, although the emission reduction required for fossil fuel power plants can vary significantly in each state. Anyway, the principal aim of the Plan is to compel states to reduce their reliance on coal and to encourage investments in renewable energy and energy efficiency.
The Clean Power Plan is provided by EPA under Obama’s Administration and its development is subject to the result of American presidential Elections of 2016.
Some “coal-states” as Texas, Oklahoma, Ohio and Louisiana had already expressed doubts about complying with the program. In any case, the need to comply with an implementation plan set at federal level might push the states to adopt their own plan. US courts have been invested by the question whether the Environmental Protection Agency has received the power to regulate levels of CO2 emissions by the Congress. The legal debate is expected to be long and it might reach the Supreme Court. By now, just one US appeals court dismissed the suits.
Bottom line: There is a solid economic reason for supporting renewable energy. The Clean Power Plan, provided by EPA under Obama’s Administration, is trying to take advantage of such incentive, but its development is subject to the result of American presidential Elections of 2016 and other legal issues. Actual cost of renewable energy imposes a moral duty to all other Countries (including EU Countries) to follow such example.