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JOURNAL OF ACADEMIC RESEARCH IN ECONOMICS

RENEWABLE ENERGIES AS REAL OPPORTUNITIES


TO PROMOTE THE USE OF EXHAUSTIBLE ENERGY
RESOURCES IN ALGERIA: IN REFERENCE TO THE
EXPERIENCE OF U.S.
BERREGUI TIDJANI
Stif University, Algeria
E-Mail: berregui@hotmail.com
Abstract
The present paper, seeks mainly to highlight the role of renewable energies, as real
opportunities to promote the uses of exhaustible energetic resources in Algeria, under the
increasing global demand for energy and increasing environmental and community
awareness, as well as to find alternative energetic strategies based on the specificity of the
national economy through a review of the positives of the experience of U.S in the field of
renewable energies.
Exhaustible Energetic Resources, Sustainable Development, Algeria,
Keywords:
Energetic Strategy, renewable energy.
JEL classification codes: Q2

INTRODUCTION
This research aims mainly to find ways and plans to allow upgrading and
promoting the uses of exhaustible energy resources, in light of the growing global
demand and increased environmental awareness and community, as we seek
through it to highlight the role and prospects of the trend towards renewable energy
as an alternative to the exhaustible energy, in addition to the review and assessment
of case of the U.S. experience in the management of their energetic resources.
World energy consumption by source in 2011: Oil 36%, natural gas 26%, coal
20%, nuclear electric power 7.0%, renewable energy 9%.In the U.S., transportation
accounted for 28% of all energy use and 70% of petroleum use in 2011; 97% of
transportation fuel was petroleum (U.S. Energy Information Administration,
September 2012, p.57).
However, to make this study more realistic, we will drop the theoretical
part of a country - the United States of America that they have great importance
in the global energy markets and occupy a leading position in the reserves of
energetic resources as well as renewable energies in the world, and trying to extract
their experience, in order to benefit from them for Algeria.

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1. INITIATION TO RENEWABLE ENERGIES


The term renewable energy encompasses a variety of power generation
sources. Generally, it refers to electrical power derived from "renewable" resources
such as solar or wind energy, as opposed to "single-use" resources such as coal or
uranium. The most common forms of alternative energy available for homeowner
use today are solar power, wind power and "micro-hydro" power.
Renewable energies are inexhaustible, clean and they can be used in a
decentralized way. Also, they have the additional advantage of being
complimentary, the integration between them being favorable. For example, solar
photovoltaic energy supplies electricity on sunny days (in general with low wind)
while on cold and windy days, which are frequently cloudy, the wind generators
are in position to supply more electric energy. Renewable energy resources need
priority because (Ottinger, 2005):

The overwhelming scientific evidence that anthropological emissions of


greenhouse gases from carbon combustion threaten catastrophic results
from rapid climate change;

The severe health and environmental consequences from fossil fuel


combustion being experienced in every major developing country city;

The high cost, environmental damages and security threats of nuclear


power.

2. ENERGY AND SUSTAINABILITY


Nowadays, many countries of the globe appear finally decided to ensure a
sustainable development and to set up models of social progress and growth, which
do not deteriorate the natural environment. The search for an energy solution
sustainable and compatible with the environment is posted today among the
priorities in the programs of the United Nations for the development and the
environment. This energy solution must pass obligatory by the development of new
clean, nonpolluting and non-dangerous sources of energy for the environment and
must necessarily guarantee sustainability on a human scale contrary to the current
energy solutions (Ainouche and Malek, 2005).

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The environmental state associated with the energy system results from the
impact of driving forces originating from the economic and social dimensions of
the energy system (Figure 1). In turn, the social state is subject to certain driving
forces from the economic dimension. Finally, the institutional dimension can affect
all three other dimensions- social, economic and environmental through
corrective response policy actions affecting the sustainability of the whole energy
system (IAEA/IEA 2001) (Moehner, 2003, p.25).

Source: (IAEA/IEA 2001: 1)


Figure 1. Interrelations between sustainability dimensions of the energy sector

From the above figure, we see that Renewable resources hold great
promise for meeting the energy and development needs of all countries throughout
the world, but particularly for developing countries where in many areas
commitment has not been made to fossil fuel dominance and where rural areas may
be served more economically than with traditional resources like kerosene and
diesel fuel. The most advantageous and widely used renewable resources for
energy in developing countries today are wind, photovoltaic, biomass and small
hydroelectric resources (United Nations Development Program, 2000, p.35).
The basic aim of the energy policy in the European Union, is to provide
the consumers the energy, that is produced in accordance with the sustainable
development rules. The European Union has formulated the following targets that
lead to achieving the sustainable development:

fulfilling the obligations of the Kyoto Protocol (Kyoto Protocol to the


United Nations Framework Convention on Climate Change on 11
December 1997), i.e. reduction of carbon dioxide emission in the years
2008 2012 by 8% comparing to the base year (1990),

doubling the share of renewable energy sources in the primary energy mix
of the UE countries from 6% to 12% in 2010,

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increasing till 2010 the energy efficiency by 18% comparing to 1995,

increasing the energy safety.

Building on the experience so far, the Commission will prepare guidelines


to facilitate trade in renewable energy, reducing complexity, such that post-2020
cooperation mechanisms are a simple means of trading renewable energy across
and beyond the EU.
The UK is the windiest country in Europe with off and onshore wind
together having the potential to deliver 30% of the UKs electricity supply by
2020. The UK government is obligated to increase the percentage of its proportion
of energy from renewable sources from 3% in 2009 to 15% by 2020, in the hope of
saving 27 million tons of CO2 a year, under an EU directive.
Renewable source of energy is the best solution for such a problem in the
world. Both India and China, for example, are trying to develop their technology in
this regard. India has the worlds fourth largest wind power industry, while China
is the global leader in harnessing solar energy for hot water. Renewable energy is
very much promoted by the Chinese Government. At the same time as the law was
passed, the Chinese Government set a target for renewable energy to contribute
10% of the countrys gross energy consumption by 2020, a huge increase from the
current 1%. On October 12, 2001, the SETC proposed the Tenth-five Year Plan of
Sustainable Development, which included the Tenth Five Year Plan for New and
Renewable Energy Commercialization Development. The overall ideas are:

The Implementation of sustainable development of China requires the


rapid commercialization development of new and renewable energies

The application of new and renewable energy is an importation option for


the implementation of strategy of development in western region

China joining WTO brought opportunity and challenge for the


commercialization development of new and renewable energy

Africa is well endowed in fossil energy resources, with a high level of


energy self-sufficiency for the Region, but these resources are unevenly
distributed, concentrated in a few countries. In 2004, Africa has a population of
865 million people, accounting for 13.6% of the Worlds population. Meanwhile,
the economic output of the Continent is only around 3% of the Worlds total.
Africas GDP totaled $2212 billion; Southern Africa accounted for 37.1% of this
total, North Africa 32.6%, West Africa 15.4%, East Africa 10.1%, and Central
Africa 4.8% (World Energy Council, 2006).
Africa is one of the Worlds less energy efficient region. It is estimated
that up to 40% of the energy input in production processes across the Continent is
wasted. Africas electricity access rate is estimated at 35.5% (i.e. about 2/3 of the
African population have no access to electricity), the lowest of the Worlds
developing Regions (Middle East 1.8%, LAC 89.2%, East Asia 88.1%, and Asia
42.8%). Electricity connection rate is very low in Sub-Saharan Africa and the IEA

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estimated that if the current trends are pursued, electricity access rate in this region
will be only 51% by 2030, compared to 66% for South Asia and 95% for the DCs
(International Energy Agency [IEA], 2002).
Table 1. Per capita ratios/region
Region
Africa
Asia
China
Non-OECD
Europe and
Eurasia
OECD
Latin America
Middle East

World

GDP (PPP)per
capita (2000
US$)
2 565
9 094
12 434
2 835

0.67
0.66
1.70
3.14

Electricity
Consumption per
capita (kWh)
561
741
2 648
4 200

Energy
Production
(Mtoe)
1 133
1 310
2 085
1 645

4.28
1.20
3.03
1.80

8 012
1 884
3 278
2 730

3 807
751
1 561
12 292

TPES per
capita (toe)

32 114
3 769
1 433
64 244

Source: International Energy Agency, Key world energy statistics 2011, IEA, Paris, 2011,
P 50-51.

From the Table 1, we can notice that Africa is the poorest region in the use
of energy but in the same time takes first places in the energy resources reserves.
In addition, many challenges are critical for sustainable economic and social
development, and assured access to secure, affordable and reliable energy. While
this sounds tremendous, it is not beyond reach and may be addressed if all the
stakeholders join forces, as well as means, and strive to bring about required
changes and support the right actions in a sustainable way. The key challenges
faced by the African energy sector are:

Low level of access to commercial energy and huge dependence on


traditional biomass to satisfy basic energy needs, linked with high level of
poverty (energy poverty);

Weak per capita commercial energy consumption;

Huge need for development of a weak energy infrastructure, and

Lack of investment and financing for energy projects.


The obstacles to the SED of Africa are described as shown in the table

below;

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Table 2. The obstacles to Sustainable Energy Development (SED)
Criteria

The Obstacles
-

High growing population with majority suffering from


1-SOCIOpoverty;
DEMOGRAPHIC
- Under-development of rural areas.
- Unfavorable investment climate and non-transparent business
practices;
2-ECONOMIC
- High level of skilled youth unemployment, forcing them to
emigrate in Europe .
3- FINANCIAL
- Lack of financing and investment for energy projects
- Lack of political will and engagement to move forward;
- Weak institutions;
- High level of corruption / bad governance;
4- POLITICAL
- High political risks and linked to that high cost of energy
AND
projects;
INSTITUTIONAL
- Weak participation of the private sector in the energy field;
- Local communities unrest and restiveness and other
disruptive activities of these communities in certain areas.
- Lack of adequate energy infrastructure;
5-ENERGY- Weak energy integration and weak energy efficiencies along
RELATED
the energy chain;
- Weak local content in the oil and gas industry.
Source: 20th World Energy Congress, Rome, Italy, November 11-15, 2007.PDF, P 5-6.

In the past 30 years solar and wind power systems have experienced rapid
sales growth, declining capital costs and costs of electricity generated, and have
continued to improve their performance characteristics. In fact, fossil fuel and
renewable energy prices, and social and environmental costs are heading in
opposite directions and the economic and policy mechanisms needed to support the
widespread dissemination and sustainable markets for renewable energy systems
are rapidly evolving.
Renewable energy sources currently supply somewhere between 15 % and
20 % of worlds total energy demand. The supply is dominated by traditional
biomass, mostly fuel wood used for cooking and heating, especially in developing
countries in Africa, Asia and Latin America. A major contribution is also obtained
from the use of large hydropower; with nearly 20 % of the global electricity supply
being provided by this source. New renewable energy sources (solar energy, wind
energy, modern bio-energy, geothermal energy, and small hydropower) are
currently contributing about two %.

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Table 3. Renewable electricity generation capacity as of end-2003 (gw)


Technology World
World total
China
US
Small hydropower*
56.0
30.0
2.7
Wind power
40.0
0.6
6.4
Biomass power
35.0
2.0
6.7
Geothermal power
8.8
>0.1
2.4
Solar thermal electric power
0.4
0
0.4
Solar photovoltaic power (grid)
1.1
0
0.1
Total renewable power capacity**
142
33
19
* Definitions of small hydropower vary by country, typically up to 10 MW but in a few
cases up to 30 MW.
** Excluding large hydropower.
Source: Martinot, E., Wiser, R., & Hamrin, J., (2012). Renewable energy policies and
markets in the United States, retrieved October 10, 2012, from www.martinot.info/
Martinot_NAR.pdf.

The OECD region will be able to cover more than 54% of its electricity
and more than 13% of heat requirements from renewables in 2030, totaling a final
energy share of 27%, however, in the non-OECD region, the share of renewables
rises to 30% in the High Varian t (Low Variant 18%).Increases due to
renewables account for almost 68% in regard to electricity, while renewable heat
contributes about 17% of final heat demand (IEA, 2006).

3.

ALGERIAN EXPERIENCE AND ALTERNATE ENERGY


SOURCES

Algerias economy is heavily dependent on oil and gas exports, which aim
to achieve an integration rate of 40% of renewables by 2030 relays essentially on
the use of solar energy, regarding the important potential which has the country.
Futhermore, Algerias energy needs are met almost exclusively by hydrocarbons,
mainly natural gas. The other forms of energy are mobilized only when natural gas
cannot be used. The Algerian government has also established an institute for
renewable energy and energy efficiency (IAER), which will play a key role in
training efforts deployed by the country and ensures quality development of
renewable energies in Algeria.
The Algerian government aims to produce 6% of the countrys energy
from renewable sources by 2015 (Ainouche, 2006). Algeria has definitely decided
to pursue an active role within the global mobilization for environmental protection
and the promotion of sustainable development. Promoting renewable energies is
now one of the major pillars of the Algerian policy (Solar potential of about 170
000 TWh / year, is 4000 times the current electricity generation of Algeria).

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Furthermore, its solar power capacity is one of the largest on earth. More
than 2.000.000 km2 receive yearly a sunshine exposure equivalent to 2500 kWh/
m2. In this extend photo-voltaic power is successfully used for water pumping in
order to develop steppe areas irrigation, fort the sake and benefit of remote
southern populations. The program covers two (02) phases:
a)

2011-2020, achievements of 67 projects, with a total capacity of 2600 MW


(54 small projects in photovoltaic, 6 big projects in CSP and 7 small
projects in wind energy).

b)

2021-2030, installation of 9400 MW of renewable electricity generation.

Considering its impact on the national economy, the achievement of the


program will require government support in terms of facilitating collecting of
necessary funds and the compensation of additional costs resulting from the
introduction of renewable energies in the National Electric system. The three
options primarily discussed in this article are:

3.1. SOLAR ENERGY


Solar energy is the ultimate energy source driving the earth. Though only
one billionth of the energy that leaves the sun actually reaches the earth's surface,
this is more than enough to meet the world's energy requirements. Currently solar
power is used in calculators, satellites, emergency road signs, and parking lot
lights. Where the cost of stringing a conventional power line is high (such as for
temporary road signs), solar can be a very cost-effective solution. Some homes
even have solar panels as a means of producing some of their electricity.
Four (4) solar thermal power plants with a total capacity of about 1 200
MW are to be constructed over the period 2016-2020. The 2021-2030 programmes
provide for the installation of an annual capacity of 500 MW until 2023, then 600
MW per year until 2030.

3.2. HYDROELECTRIC ENERGY


Hydroelectric power is generated by using the energy of flowing water to
power generating turbines for producing electricity. Most hydroelectric power is
generated by dams across large-flow Rivers. There is a growing interest in minihydro projects, which avoid many of the problems of the larger dams. While
large dams have become much riskier investment there still remains much
unexploited potential for small hydro projects around the world. It is expected that
growth of hydroelectricity will continue but at a slower rate than that of the 70s
and 80s.

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Although hydroelectricity is generally considered a clean energy source, it


is not totally devoid of greenhouse gas emissions (GHG) and it can often have
significant adverse socio-economic impacts.
Algeria has created a green momentum by launching an ambitious program
to develop renewable energies and promote energy efficiency. The projects for the
domestic production of electricity from renewable energy sources will be carried
out in three phases:

The first phase, between 2011 and 2013, will be devoted to the
achievement of pilot projects to test the different available technologies,

The second phase (2014 2015) will mark the beginning of the
deployment of the program,

The last phase, between 2016 and 2020, will be devoted to the large-scale
deployment of the program.

These phases are a part of Algerias strategy, which is aimed at developing


a genuine solar industry along with a training and capitalization program that will
ultimately enable the use of local engineering and establish efficient know-how,
including in the fields of engineering and project management.

3.3. WIND POWER


Wind has been used as an energy source for millennia; it has been used to
pump water, to power ships, and to mill grains. Areas with constant and strong
winds can be used by wind turbines to generate electricity. Wind power is one of
the most cost-competitive renewables today. Its long-term technical potential is
believed to be five times current global energy consumption, or 40 times current
electricity demand.
In Algeria, the wind resource varies much from a place to another; this is
mainly due to a much diversified topography and climate. Knowing the problems
encountered for the electric power transport in the far areas as well as its high cost.
It would be interesting to consider the application of conversion systems of the
wind power for isolated areas having an appreciable wind potential. The Southwest region shows all the characteristics of sites candidate to the exploitation of
this energy (Ainouche and Malek, 2005).

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342
23.1
17.7
34.1
17.8

Ghardaia

In Amnas

Taman.

Tindouf

2.2

2.8

2.8

2.4

3.1

1.3

1-2

7.6

9.7

8.1

7.6

6.7

4.1

2-3

5-6

9.7

13

10.3 11.6

11.7

13.2

9.1

7.6

16.1

6-7

7.3

13.0 11.3

10.2

12.6 10.9

11.7 11.3 12.1

9.0

11.3 16.0

4-5

12.1 10.0

8.7

3-4

9.2

4.7

7.6

7.0

5.1

11.0

7-8

6.6

3.1

5.3

4.9

4.1

8.1

8-9

6.6

2.7

5.9

6.1

5.4

9.6

9-11

2.5

0.6

1.8

2.5

2.3

3.9

1113

1.1

0.2

0.7

1.3

1.4

2.0

1315

0.3

0.3

0.5

0.6

1.0

1517

0.1

0.1

0.3

0.4

0.3

>17

Sources: Diaf, S. et al. (2007). Assessment of wind energy resource in southern Algeria. Revue des Energies Renouvelables, 10(3), 321 333.

6.4
32.2

Bchar

0-1

Adrar

Site

Wind speed

Table 4. Wind speed distribution at different speeds interval at 10 m above the ground for the six sites

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The analysis shows that there are good prospects for wind energy
utilization except for Tamanrasset. The southwest area located in the west of 0
longitude and between 25 N and 30 N latitudes is the windiest part of southern
Algeria with an average wind speed exceeding 6 m/s for Adrar and 5 m/s for
Tindouf at a height of 10 m.
The Algerian renewable program plans at first, in the period 2011-2013,
the installation of 12 the first wind farm of a power of 10 MW in Adrar. Between
2014 and 2015, two wind farms with a capacity of 20 MW each are to be
developed. Studies will be led to detect suitable sites to realize the other projects
during the period 2016-2030 for a power of about 1700 MW.

4.

USA EXPERIENCE

The United States is the largest economy in the world. It covers an area of
9 826 million square kilometers. They led the world in renewable energy
development for many years. Thus, the American Solar Energy Society (ASES) is
one of the most prominent advocate groups for renewable energy. It believes that
the federal government has the ability to influence the market in regards to
renewable energy use through purchasing decisions. If the government took the
initiative to purchase solar, wind and other renewable energy technologies, the net
manufacturing costs of the technologies would lower significantly.

4.1. ENERGY POLICY


The federal government has a strong preference for market-based
regulations in the energy and environment policy area, extensively using trading
mechanisms to reduce air pollution, and supplier obligations to increase the amount
of biofuels for vehicles. The U.S have been broad advances in federal energy
policy through the Energy Policy Act of 2005 and 2011, Advanced Energy
Initiative, and the Twenty in Ten initiative, which aims to reduce gasoline
consumption by 20% over the next ten years.
In addition, a large amount of new energy policy is being conducted by the
states themselves. Together, these can be seen as components of a comprehensive
energy strategy with five key goals:

Diversify energy supply by promoting alternative and renewable sources of


energy, encouraging the expansion of nuclear energy in a safe and secure
manner, increasing domestic production of conventional fuels, and
investing in science and technology;

Increase energy efficiency and conservation in homes and businesses;

Improve the energy efficiency of cars and trucks;

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Modernize electric power infrastructure and expand the Strategic


Petroleum Reserve.

The Twenty in Ten initiatives were announced in the 2007 State of the
Union speech by the President of the United States, consisting of two major
elements. The first element focuses on the supply side, and sets a mandatory fuels
standard to require 35 billion gallons1 of renewable and alternative vehicle fuels to
be supplied in 2017, nearly five times the current 2012 target which was set in
EPAct 2005. In 2017, it is expected that this will displace 15% of projected annual
gasoline use compared to the business-as-usual prediction.
In the energy bill passed in December 2007, a target of 36 billion gallons
of these fuels was adopted for 2022. The second element of the initiative is
focusing on the demand side, with the reform and modernization of the Corporate
Average Fuel Economy (CAFE) standards for cars and the extension of the
existing Light Truck Rule. It is expected that by 2017, this will reduce projected
annual gasoline use by up to 8.5 billion gallons, a further 5% reduction compared
to business as usual. Together, these measures will bring the total reduction in
projected annual gasoline use to 20%. In the energy bill of 2007, the requirement
was toughened, to a 40% improvement by 2020, raising CAFE standards to an
average of 35 miles per gallon (mpg).

4.2. RENEWABLE ENERGY


The contribution of renewable energy sources to TPES in the United States
fell from 1990 to 2000, owing to a lower growth rate of renewables production,
compared to TPES. The share of renewables then remained stable until 2004, and
between 2005 and 2006, renewables production increased rapidly, both in
electricity generation and transport (IEA, 2007).
The recent rapid increase is due to a mix of rapidly rising prices for fossil
fuels since 2004, deeper environmental concerns, increased hydro availability after
dry years in 2000 and 2001, and wider support policies. Renewable electricity
portfolio standards (RPSs) now exist in half of all the states, and, together with
federal tax credits for wind electricity production and other state-level support
schemes, are very successful in stimulating production. Baseline projections by the
EIA are for a relatively slow growth of the contribution of renewables to energy
supply between now and 2020 (see Table 4), although the most recent revision of
the Annual Energy Outlook has now doubled this prediction. This has to be seen in
the context of a net decline of the contribution of renewables between 1990 and
2005.

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99

total
4.7%

6.7%

109

23

74

2005

5.5%

7.7%

144

16

26

96

2010

Source: IEA Energy Statistics, country submission, 2007, P9.

5.1%

solar/wing/other

shayre of tpes

14

geothermal

6.0 %

23

hydro

share of production

62

Comb, enewables
& waste

1990

Mtoe

5.5%

7.8%

159

18

27

107

2020

Table 5. Renewables in the United States Energy System, 1990 to 2005 (in Mtoe)

5.4%

7.9%

175

21

27

120

2030

-9

11

10

n/a

-36

18

17

46

133

100

17

2005
45

1990
19
0

2020/

2006/

Growth(%)

-1

10

17

2030
12

2030/

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EIA predictions foresee a reasonable growth of the renewables


contribution between 2020 and 2030, But for some technologies and uses of
renewables, in particular wind electricity generation and the use of biomass in
transport, these baseline projections may be too conservative in view of the faster
growth observed in the market-place.

4.3. PRODUCTION
The most rapidly growing source of renewable energy supply in the United
States is wind power for electricity generation. In 2005, the United States installed
2 431 MW of wind capacity, followed by another 2 343 MW in 2006, and it is
expected that over 3 000 MW will be installed during 2007. The total installed
capacity now stands at 11 603 MW, and generated some 26 TWh, or 0.6% of US
electricity supply. Because of significant R&D efforts, as well as deployment
programs in other countries, the cost of producing electricity from wind power in
the United States has dropped from USD 0.8 per kilowatt-hour in 1980 (in current
dollars) to USD 0.04 to 0.06 today. Wind power development is driven by the
availability of a federal production tax credit, and in years when this expires, newbuilt rates decline steeply. The United States is also increasing its use of biomass,
primarily in the transport sector.
In the stationary and electricity/heat sectors, however, the use of biomass
is decreasing. The first boost for the use of biomass in the transport sector came
with the EPAct 2005, which mandated an alternative fuel standard for liquid fuels,
and which has since been increased. It was followed by the phasing-out of MTBE
as a gasoline additive in the United States in 2006, and its replacement by ethanol,
most of which is produced from corn. In the State of the Union address in January
2007, the President announced a long-term plan to further increase the contribution
from biofuels to the supply of transport energy, with production of biofuels and
other alternative transport fuels reaching 35 billion gallons by 2017, equivalent to
15% of gasoline demand under the business-as-usual case. Growth of biofuels
production has since increased faster than expected, also aided by a special tariff
that is being applied to prevent imported ethanol from taking the market share from
United States corn-based ethanol. No estimation is available for the production of
heat from solar-thermal collectors, but if collector shipments are taken as an
indication, it has grown rapidly since 1997, when the EIA started collecting the
information. From 721000 m2 collector surface in 1997, shipments grew by 152%
to 1 815 000 m2 by 2006.

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2 494
363 246

gas

total
342 776

7 421

52 075

59 496

529

23 897

253 204

5 650

2000

Source: Renewable information 2007, IEA/OECD Paris, 2007.

68 545

666

solar
71 039

15 323

waste

sold

273 152

hydro

biomass

3 066

wind

1990

373 767

6 574

53 278

60 065

612

22 762

272 447

17 881

2005

403 155

6 641

54 691

63 098

564

22 525

291 103

25 865

2006

Table 6. Renewables in United States Electricity and Heat Supply, 1990 to 2006 (in TJ)

11%

166%

-20%

-11%

-15%

47%

7%

744%

2005/2006

growth

18%

-11%

5%

5%

7%

-6%

15%

358%

2000/2006

JOURNAL OF ACADEMIC RESEARCH IN ECONOMICS

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JOURNAL OF ACADEMIC RESEARCH IN ECONOMICS

4.4. POLICY
The Energy Policy Act of 2005 calls for an increase in the percentage of
electricity generated from renewable sources to 10% by the year 2020, up from the
2005 production of 8.5%. A number of individual states have set goals for
renewable electricity production or sales in their jurisdiction that are considerably
more ambitious. For example, in 2007, 25 states had RPSs governing the
generation or sale of electricity in their state, while three more states had set nonbinding goals. In June 2007, the President proposed a new energy bill for cutting
the projected use of gasoline by 20% over the next ten years, following his 2007
State of the Union address. To achieve this goal, a new Alternative Fuel Standard
was announced that will require that the United States use 35 billion gallons of
alternative fuels by 2017, reducing projected gasoline consumption in 2017 by
15%. Investment in, and use of, renewable energy has been encouraged with a
range of state and federal government incentives. The federal government is
supporting renewables through a mix of tax credits, rebates, and support for R&D,
and an alternative fuel standard for renewable fuels in the transport sector (see
Table 6).
As part of the CAFE standards, the government has encouraged vehicle
manufacturers to produce E85 flex-fuel vehicles. While many such vehicles are
produced, equivalent to 4.7% of all light vehicle sales in 2004, only a small
number of E85 filling stations exist *, amounting to just 0.7% of all filling stations,
so that most flex-fuel vehicles run mainly on gasoline. A number of individual
states use a mix of RPSs, and direct grants, to further increase penetration of
renewables in their jurisdictions. The federal and state-level incentives are
cumulative.
By 2006, 15 states and the District of Columbia had enacted so-called
Public Benefit Funds, which use money raised from electricity ratepayers through
alternative energy requirements and consumers voluntary contributions to fund
R&D as well as deployment of renewable energy technologies. The development
of wind power is driven to a large extent by a federal production tax credit
(initially of USD 15 per MWh generated, but adjusted for inflation and currently
worth USD 20 per MWh) and paid for the first ten years of the projects lifetime.
The credit is due to expire at the end of 2007, but Congress may decide to extend
it. The credit has already expired three times, in 1999, 2001 and 2003, leading to
significant reductions in new connections of wind power in the following years,
2000, 2002, and 2004. The value of the tax credit to producers was about USD 338
million in 2005, assuming that all wind electricity produced benefited from it.

about 1 200, mainly in the corn belt.

348

VOLUME 4 NUMBER 3 DECEMBER 2012

VOLUME 4 NUMBER 3 DECEMBER 2012


4 855
2 988
n/a
n/a
n/a
n/a
n/a

4 000
4 700
5 400
6 100
6 800
7 400
7 500

2006

2007*

2008

2009

2010

2011

2012

n/a

n/a

n/a

n/a

n/a

223

653

imports

Source: Renewable Fuel Association * First six months only.

production

target

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

3 211

n/a

n/a

n/a

n/a

n/a

68%

113%

share

achievement
4 508

target

total

Table 7. The 2005 Renewable Fuel Standard and Ethanol Production to 2012 (In million gallons)

n/a

n/a

n/a

n/a

n/a

7.4%

13.4%

import

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JOURNAL OF ACADEMIC RESEARCH IN ECONOMICS

5. CONCLUSION
In recent years, renewable energy has increasingly attracted public and
policy attention. Particularly, for its potential to contribute to reductions in GHG
emissions. Most interest has focused on the use of renewables in power generation
and as biofuels. The world may be heading towards a global energy crisis due to a
decline in the availability of cheap oil and recommendations to a decreasing
dependency on fossil fuel.
Finally, we believe that the promise of renewable energy has now
become a reality. Both solar photovoltaic and wind energy are experiencing rapid
sales growth, declining capital costs and costs of electricity generated, and
continued performance increase thus, the following concrete proposals for action
should be taken (now) to move forward and should be supported by all the
concerned stakeholders:

350

Development of renewable and alternative energy sources could contribute


significantly to Sustainable Energy Development, in providing access to
modern energy, mitigating GHG emissions, and enhancing energy security
through cooperation and partnership;

Development of innovative financing mechanisms to promote modern


energy access, energy efficiency, renewable energy and clean energy
technologies, technology transfer, carbon markets, etc;

Development and implementation of appropriate energy policies and


strategies that drive changes in the Algeria energy sector (towards a
Sustainable Energy Future),

Development of human and institutional capacities to cope with the


manufacturing, operation, and modification of renewable energy
technologies is critical. Equally important, is the development of the
innovative skills for further development of sustainable markets of
renewable energy technologies.

VOLUME 4 NUMBER 3 DECEMBER 2012

JOURNAL OF ACADEMIC RESEARCH IN ECONOMICS

REFERENCE
Ainouche, A, Malek B. (2005). Algeria and the promotion of renewable energies.
The 18th World Petroleum Congress. Johannesburg, South Africa.
Ainouche, A, Malek B. (2005). Contribution of the Algerian experience in the
reduction of greenhouse gas emissions. The 18th World Petroleum Congress.
Johannesburg, South Africa.
Ainouche, A. (2006). Natural gas and Algerian strategy for renewable energy. 23rd
World GAS Conference. Amsterdam.
International Energy Agency. (2002). World energy outlook. Paris: International
Energy Agency.
International Energy Agency. (2006). Alternative Policy Scenario. World Energy
Outlook.
International Energy Agency. (2007). Energy policies of IEA countries: The United
States review. Paris.
Moehner, A. (2003). Toward a sustainable energy future? A comparison between
U.S. and European energy sectors. Thesis submitted to the graduate faculty of
the Louisiana State University and Agricultural and Mechanical College in
partial fulfillment of the requirements for the degree of Master of Science.
Ottinger, R.L. (2005). Experience with promotion of renewable energy: Successes
and lessons learned. Parliamentarian Forum on Energy Legislation and
Sustainable Development. Cape Town, South Africa.
U.S. Energy Information Administration. (2012). Annual energy review 2011.
September Edition.
United Nations Development Program. (2000). World energy assessment.
World Energy Council. (2006). Energy policy scenario study to 2050 All Africa
data. Draft report for Africa.

VOLUME 4 NUMBER 3 DECEMBER 2012

351

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