Renewable fuel deemed feasible

The U.S. could triple the amount of energy produced from renewable sources by 2025 to 18% from the present 6% with little effect on total energy costs, a Rand Corp. study found.

Under the best-case scenario, boosting the use of corn-based ethanol, hydroelectric power and other renewables to 18% could reduce overall spending on energy by 3%, or $40 billion, according to the study, which was released Monday.

In the worst case, energy costs would jump by 6%, or $75 billion. Total energy costs were assumed to rise under all scenarios because overall energy needs are expected to increase.

The results “indicate that expanded use of renewables could be achieved at acceptable costs,” the report stated.

If true, companies including Archer Daniels Midland Corp., VeraSun Energy Corp. and Pacific Ethanol Inc. would benefit from ethanol prices that would be competitive with oil and natural gas.

The Rand study was sponsored by the Energy Future Coalition.

The study outlined more than 1,500 economic models, calculating different possible costs of renewable versus fossil fuels, assuming greater use of ethanol made from switch grass, wood chips and other cellulosic forms by 2020. Most U.S. ethanol currently is made from corn.

Rand is a nonprofit institution based in Santa Monica that conducts research to assist policymakers.