SUMMARY: Renewable energy technologies, which produce energy without using fossil fuels, contribute a small but rapidly growing portion of the world’s energy portfolio. Worldwide investment in the industry totaled $70.9 billion in 2006, up from approximately $45 billion in 2005.

These technologies have the potential to help meet future energy needs, while also addressing increasing concerns about constraints on traditional energy supplies and the environmental impact of fossil fuels.

In addition to increasing capital investment, renewable energy is also receiving increasing attention by policy makers in light of several structural changes in macro conditions, including:

• Rapid economic growth, particularly in the developing world.
• Demographic shifts, including continued population growth and increasing urbanization.
• Energy security concerns, including political instability in certain energy-rich nations.
• Climate change and other environmental concerns related to energy production and consumption.

This paper focuses on six renewable energy technologies: wind power, solar energy, biomass energy, biofuels, geothermal energy and hydroelectric power. In addition, nuclear energy is briefly discussed as a significant but separate alternative to fossil fuels (see pages 22-23).

Each of these renewable energy technologies has its own “environmental footprint,” with frequently contested positive and negative features that are not the subject of this paper. They also each face unique economic challenges that make it difficult for them to compete with energy generated by long-established fossil fuels.

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Contents
1 01 Executive Summary
2 04 Alternative Energy: A Growth Industry
3 08 Alternative Energy Technologies
   09 Wind
   12 Solar – Photovoltaic and Solar Thermal
   14 Biomass
   15 Biofuels
   18 Geothermal
   20 Hydroelectricity
   22 Nuclear
4 24 Policy Options
   24 Feed-In Tariffs
   24 Targets and Mandates
   26 Tax Credits
   26 Cap and Trade Frameworks
   27 Carbon Tax
   27 Loans, Grants and Subsidies
5 28 A Global Survey of Alternative Energy Policies
   28 United States
   38 European Union
   48 Japan
   52 Brazil
   54 India
   58 China
6 60 Conclusion

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