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Government Incentives to Promote Renewable Energy in the United States

Wang Mingyuan In planning its own environmental policies, China has much to learn from the experiences, both positive and negative, of other countries such as the United States that have had a longer history in trying to enact environmental measures. This is particularly true with governmental incentives designed to encourage the development and deployment of renewable energy resources. The following comment, an overview of United States efforts to promote renewable energy, is presented in the hopes that it can serve to promote discussions of renewable energy in China. I. INTRODUCTION In order to implement a renewable energy system, the United States government must reform its energy regimes. The primary source of greenhouse gases, which are contributing to climate change, is the nations electrical energy systems using fossil fuels.1 The economic costs of internalizing what are now energy externalities will require a basic reordering of the global economy and each nations economy.2 If the United States is to rely less on fossil fuels and turn to renewable sources, environmental laws and government incentives are needed to effectuate this transition.

Wang Mingyuan is currently an Associate Professor of Law at Tsinghua University School of Law, China. He is also a Legal Consultant to the Legal Affairs Division of the Beijing Bureau of Environmental Protection, a Project Consultant to the American Bar Association-Asia Law Initiative, and the Executive Director of the Center for Environmental, Natural Resources & Energy Law at Tsinghua University. Thank you, John L. Hemmer, for editing this Comment. 1 ENERGY LAW AND SUSTAINABLE DEVELOPMENT, IUCN Environmental Policy and Law Paper No. 47 (Adrian J. Bradbrook & Richard L. Ottinger, eds., The World Conservation Union 2003), available at http://www.iucn.org/themes/law/pdfdocuments/Energy-Law/ENERGY-PUB-prelims.pdf. 2 Id.

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A. What is renewable energy? Generally, renewable energy refers to energy sources that are continuously replenished by the natural world.3 Among others, solar and wind energy are the most widely used and known sources of renewable energy. There is no single, universally-accepted definition of renewable energy. For example, according to the Energy Information Portal of the United States Department of Energy website, renewable energy consists of seven specific forms: bio-mass, geothermal, hydrogen, hydropower, ocean, solar, and wind energy.4 According to the Clean Energy website of the U.S. Environmental Protection Agency (EPA), energy sources such as wind and solar power, geothermal, hydropower, and various forms of biomass are considered renewable sources because they are continuously replenished on the Earth.5 Some scholars argue that renewable energy sources include a considerable number of proven and emerging technologies, such as solar energy, wind energy, geothermal energy, ocean thermal energy, and biomass energy, while other scholars discuss renewable energy without providing a specific definition. The legal definition for renewable energy involves any energy derived from the sun.6 For this article, renewable energy refers to energy from existing flows of energy, from on-going natural processes, such as sunshine, wind, biological processes, and geothermal heat flows.7 One of my primary purposes in exploring the new field of U.S. renewable energy law is to begin my research on energys legal problems in upcoming years. I will focus on governments promotion of renewable energy in relevant federal legislation. B. The Environmental Impacts of Renewable Energy Solar energy is continuously supplied to the earth by the sun, and this energy can be converted to electricity. The most widely-used methods of converting solar energy into electricity are photovoltaic and solar-thermal technologies. According to the Solar Energy Research, Development, and Demonstration Act of 1974, solar energy includes both direct and indirect solar sources.8 The direct uses of the suns rays are primarily in the forms of photovoltaic cells, solar thermal systems, and solar buildings; the indirect uses of solar sources include biomass energy that relies on the
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U.S. Environmental Protection Agency, Clean Energy Glossary, http://www.epa.gov/cleanenergy/glossary.htm#R (last visited Sept. 12, 2005). 4 U.S. Department of Energy, Energy Efficient and Renewable Energy, http://www.eere.energy.gov/index.html (last visited Sept. 12, 2005). 5 U.S. Environmental Protection Agency, supra note 3. 6 42 U.S.C.S. 5552(1) (2005). 7 Hydropower has been excluded from the working definition of renewable energy in this article. Hydropower is also a very important form of renewable energy because it uses the earths water cycle to generate electricity; however, due to the construction and operation of dams, especially large-scale dams, its use can cause adverse environmental impacts involving the flow of rivers, ecosystems, wildlife, soil erosion along the riverbed upstream and downstream, and otherwise harm the people who depend on those waters. In addition, the construction of hydropower plants can alter sizable portions of land when dams are constructed and lakes are created, flooding land that may have once served as wildlife habitat, farmland, and scenic retreats. Thus, hydropower, especially large-scale hydropower projects, is much more controversial than the four forms of renewable energy discussed above. For that reason, hydropower has been excluded. 8 42 U.S.C.S. 5551(3)(1) (2005).

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suns role in the process of photosynthesis, wind energy, and ocean thermal energy derived from differential solar heating of land and water surfaces.9 The environmental impacts of solar energy are very small except that solar energy installations prevent the land they occupy from being used for other purposes. These photovoltaic systems can negatively affect wildlife habitats if additional land is cleared for this technology. Similarly, the environmental impacts of wind energy are very few, except that large wind farms pose aesthetic concerns and wind turbines that are improperly installed or landscaped may introduce soil erosion problems, and noise impacts, depending on the number of wind turbines on the farm. Wind farms can also have a negative impact on birds migration patterns. Generating electricity from biomass can also affect land resources. Biomass power plants, much like fossil fuel power plants, require large areas of land for equipment and fuel storage. If these biomass plants burn a waste source such as construction wood waste or agricultural waste, they can provide a benefit by freeing areas of land that might otherwise have been used for landfills or waste piles. Biomass grown for fuel purposes requires large areas of land and, over time, can deplete the soil of nutrients; however, fuel crops can be managed so that they stabilize the soil, reduce erosion, provide wildlife habitats, and serve recreational purposes. Generally, the environmental impacts of biomass energy are few compared to those of traditional fossil fuels, such as coal and oil, because biomass power plants produce relatively limited emissions such as nitrogen oxides, require less water for the boiler and cooling system, have less water discharge, produce smaller amounts of solid waste in the form of ash, and contain much lower levels of hazardous elements. For geothermal power plants, only a small amount of water used in the process of creating electricity may evaporate and, therefore, not returned to the ground. Also, for those geothermal plants that rely on hot, dry rocks for energy, water from local resources is needed to extract the energy from the dry rocks. In this process, groundwater may be contaminated when drilling wells and extracting hot water or steam; though, this type of contamination can be prevented with proper management techniques. In addition, geothermal power plants often re-inject used water back into the ground through separate wells instead of discharging the used water into surface sources. This prevents underground minerals or pollutants from being introduced into surface waters. Geothermal power plants typically require less land area than fossil fuel power plants. However, if water is not re-injected into the ground after use to maintain pressure underground, it may cause the sinking of the lands surface. C. Why should government promote renewable energy? 1. Free Market and Market Failure Regarding Renewable Energy Compared to conventional energy resources such as coal and oil, renewable energy resources are generally more environmentally-friendly and, therefore, benefit both the economy and the environment. Unfortunately, while the market mechanism
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42 U.S.C.S. 5552(1) (2005).

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generally may not prove renewable energy economically beneficial, sometimes the market fails to operate in terms of a specific energy market. That is, the market fails to operate in the context of energy and renewably energy. Environmental benefits resulting from the development and use of renewable energy sources, a form of positive externality or market failure, cannot be measured by price signals and, therefore, cannot be incorporated into the market system. Furthermore, because of the differences of project scale and the maturity of technology, the costs of developing and using renewable energy are usually more expensive and less competitive than costs of fossil fuel energy, especially electricity derived from coalburning power plants. 2. The New Idea and Requirements of Sustainable Development According to the World Commission on Environment and Development, sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.10 It implies economic growth and social progress together with the protection of natural environment, each reinforcing the other. The essence of this form of development is a stable relationship between human activities and the natural world, which does not diminish the prospects of future generations enjoying a quality of life at least as good as our own. In other words, sustainable development requires economic growth and social development based on balanced ecological systems, which is fair and good for both present and future generations. From the perspective of the comprehensive development of the integrated economy-society-environment system, decisionmakers today should have to take into account the moral and legal obligations necessary to achieve both intra-generational equality and inter-generational equality. Since the 1992 Earth Summit, sustainable development has been widely accepted as the right model for our generation, including members of both the developed world and the developing world. Scholars have also realized that states and governments should take special responsibility for the achievement of sustainable development. For example, the Rio Declaration on Environment and Development stresses that Human beings are at the center of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature11; The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations12; States shall cooperate in a spirit of global partnership to conserve, protect and restore the health and integrity of the Earths ecosystem. In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international
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WORLD COMMISSION ON ENVIRONMENT AND DEVELOPMENT, OUR COMMON FUTURE (Oxford University Press, 1987). 11 Principle 1. 12 Principle 3.

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Government Incentives to Promote Renewable Energy in the U.S. pursuit to sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command13; States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and development context to which they apply. Standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries14; National authorities should endeavor to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment15; States and people shall cooperate in good faith and in a spirit of partnership in the fulfillment of the principles embodied in this Declaration and in the further development of international law in the field of sustainable development.16

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Agenda 2117 addresses the pressing problems of today and also aims at preparing the world for the challenges of the next century. Its successful implementation is, first and foremost, the responsibility of governments; national strategies, plans, policies and processes are crucial in achieving this. International cooperation should support and supplement national efforts. In this context, the United Nations system plays a key role. Other international, regional and subregional organizations should also be called upon to contribute to this effort. The broadest public participation and the active involvement of non-governmental organizations and other groups should also be encouraged. The development and use of renewable energy is a desirable model for the achievement of sustainable development because, on the whole, it is much more beneficial for energy security, public health and environmental safety, which are common challenges facing all societies and states in the modern world, especially the U.S. and other developed countries. 3. Global Warming and International Regimes on Greenhouse Gases It is generally accepted that the Earths surface temperature has risen in the past century, with accelerated warming during the past two decades. Furthermore, most of the warming is attributable to human activities, which have altered the chemical composition of the atmosphere through the buildup of greenhouse gasesprimarily carbon dioxide, methane, and nitrous oxide. Actions have been taken at the international and local levels, to reduce, avoid, and better understand the risks associated with greenhouse gases and global warming.
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Principle 7. Principle 11. 15 Principle 16. 16 Principle 27. 17 Sec. 1.3.

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Among them, the United Nations Framework Convention on Climate Change and the Kyoto Protocol are the key commitments and measures taken to control and reduce the amount of greenhouse gases released by the international community. Although the U.S. is not yet a member of these international documents, as the number one greenhouse gases emitter in the world, it faces pressure to reduce its greenhouse gas emissions. To that end, the development and use of renewable energy is one of the most desirable ways to do so. II. BACKGROUND: THE BRIEF HISTORY OF MODERN ENVIRONMENTAL ENERGY LAW AND POLICY IN THE UNITED STATES Throughout its history, the U.S. government has not taken an active role in the affairs of energy and the environment. However, with the breakout of energy crises and the environmental movement in the 1970s, the U.S. government was forced to take strong counter-measures to strengthen regulation in the energy sector and control environmental activities. In 1970, the Environmental Protection Agency was created to monitor and analyze the environment, conduct research, and work closely with state and local governments to devise pollution control policies. Accordingly, not only were more energy laws and regulations passed to provide affordable energy by sustaining competitive markets and protecting the economic, environmental, and security interests of the U.S., but more environmental laws and regulations were passed to assure the protection of the environment against both public and private actors who might fail to take account of costs or harms inflicted on the ecosystem. In 1977, the Department of Energy was created and a national energy plan emerged for the first time in the U.S. Ever since, government oversight has played a central role in the energy sector; in recent years, there has been a shift towards deregulation of various energy industries, with the aim of increasing market competition. It is well known that many environmental issues, in particular air pollution issues such as greenhouse gases and acid rain, are very closely related to energy activities, but the legal systems of energy and the environment in the U.S. are largely independent of each other. Since the 1980s, the focus of energy policy has been principally driven by the considerations of environmental protection and sustainable development. In the U.S., there are specific laws and regulations reconciling energy and environment directly, bridging these two areas. These laws and regulations are usually called clean energy law, or energy-environment law. Among the multitude of laws, most belong to the area of renewable energy law. Some examples of clean energy law are as follows: Solar Energy Research and Development Act of 1974, Wind Energy Improvement Act of 1980, Biomass Energy and Alcohol Fuels Act of 1979, Geothermal Energy Research Development and Demonstration Act of 1974, Geothermal Energy Act of 1980, and the Energy Policy Act of 1992, all of which are more environment-friendly than ordinary energy laws.

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III. THE LEGAL BASIS OF US GOVERNMENT TO PROMOTE RENEWABLE ENERGY A. U.S. Government Efforts to Promote Renewable Energy There is an abundance of well-developed legal instruments through which the government can promote renewable energy, particularly at the state and local levels. The following are the main government incentives: 1) Tax incentives (including corporate tax, personal income tax, sales tax and property tax); 2) Grant incentives; 3) Loans incentives; 4) Rebates; 5) Industry recruitment incentives; 6) Leasing/Purchase incentives; 7) Production incentives; 8) Public benefit funds; 9) Green power purchasing policies; 10) Renewables portfolio standards; 11) Construction and design policies; 12) Net metering rules; and 13) Generation disclosure rules. B. Major Federal Laws, Provisions and Programs In the U.S., the legal basis for the federal government to promote renewable energy is an evolving and complex system consisting of related laws, provisions, and programs at federal, state, and local levels. 1. Major Federal Laws and Provisions The major federal laws and provisions in the United States are: a) Solar Energy Research and Development Act of 1974, encouraging the use of solar energy; b) Geothermal Energy Research Development and Demonstration Act of 1974, enhancing geothermal use; c) Biomass Energy and Alcohol Fuels Act of 1979, providing incentives for alternate, renewable fuels; d) Energy Tax Act of 1978, encouraging investment in solar, wind technologies and other environmentally friendly energy technologies through the use of tax credits; e) Wind Energy Improvement Act of 1980, providing incentives for development of wind energy systems; f) Geothermal Energy Act of 1980, providing incentives for increasing production of geothermal energy; g) Renewable Energy and Energy Efficiency Technology Competitiveness Act of 1989, promoting research, development, demonstration, and commercial application of renewable energy and energy efficiency technologies; h) Energy Policy Act of 1992, in particular Subchapter V Renewable Energy, promoting increases in the production and utilization of energy from renewable energy resources; further advances of renewable energy technologies; and exports of U.S. renewable energy technologies and services. 2. Major Federal Programs The federal government has a number of programs encouraging the research, development, and implementation of renewable energy technologies. These programs are funded or supported by various federal departments, including the Department of Agriculture, Department of Energy, Department of Housing and Urban Development, Department of Transportation, Department of Veterans Affairs, Environmental Protection Agency, and the Small Business Administration. The programs provide various incentives, such as direct funding to individuals, including residents and businesses; guaranteed bank mortgages that can be used to purchase or refinance homes using renewable energy; grants and loans to states and local

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governments; and funding for research and development projects. Examples of Federal Programs ENERGY STAR financing and mortgages are offered by private lenders to give consumers the incentive to purchase ENERGY STAR-labeled products and homes. The EPA allows lenders to use the ENERGY STAR label on financing products that meet EPAs labeling criteria, but it does not fund or insure the financing. Energy Efficient Mortgage (EEM) can be used by residents to finance technologies such as photovoltaics, solar water and space heating, and energy efficiency in a new or existing home. Both government-insured and conventional EEMs are available and are federally-recognized loan programs that can be applied to most home mortgages. All buyers who qualify for a home loan qualify for the EEM. The EEM is intended to give the buyer of energy-efficient house additional benefits on top of their usual mortgage deal. Modified Accelerated Cost Recovery System allows industrial and commercial businesses to recover investments in solar, wind and geothermal property, such as property of solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, wind and geothermal electric, through depreciation deductions. In addition to the MACRS depreciation, under the Job Creation and Worker Assistance Act of 2002, businesses can take an additional thirty-percent depreciation on solar, wind and geothermal property in the first year.18 In May 2003, The Job Creation and Tax Relief Reconciliation Act of 2003 was signed into law, increasing the bonus depreciation to fifty-percent in the first year that the equipment is purchased and placed into service. The Renewable Electricity Production Credit (REPC), a per kilowatt-hour tax credit for electricity generated by qualified energy resources, was originally enacted as part of the Energy Policy Act of 1992, then extended in March 2002 as part of the Job Creation and Worker Assistance Act of 2002. On October 4, 2004, the REPC was extended once more as part of the Working Families Tax Relief Act of 2004 through December 31, 2005. Furthermore, REPC, which formerly only applied to wind energy, closed-loop biomass, and poultry waste energy projects, was expanded by the American Jobs Creation Act of 2004,19 which was signed into law on October 22, 2004, to cover the following items: wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power (150 kW - 5 MW), and municipal solid waste. Under the Solar and Geothermal Business Energy Tax Credit Program ensured by the Energy Policy Act of 1992, the U.S. federal government offers a ten-percent tax credit to businesses that invest in or purchase energy property, including solar energy equipment that uses solar energy to generate electricity, to heat or cool a structure, or to provide solar process heat, geothermal energy equipment used to produce, distribute, or use energy derived from a geothermal deposit. The Renewable Energy Systems and Energy Efficiency Improvements Grant Program, a program of the Department of Agriculture, has provided funding for fiscal years 2003 and 2004 for eligible agricultural producers and rural small
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Section 101. Section 710.

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businesses to purchase renewable energy systems and make energy improvements, including those that derive energy from a wind, solar, biomass, geothermal source, or which derive hydrogen from biomass or water using wind, solar, or geothermal energy sources. The Executive Order 13,123, issued in 1999, requires federal agencies to increase their use of renewable energy to a percentage determined by the Secretary of Energy. In 2000, the Secretary of Energy directed that federal agencies obtain the equivalent of 2.5% of their electricity from renewable resources by 2005. Under this order, solar, wind, biomass and geothermal systems installed after 1990 qualify as renewable energy resources. C. The General Picture of State and Local Laws, Provisions and Programs: Using California as an Example In addition to federal laws, provisions, and programs promoting renewable energy, almost every state, county, and city in the U.S. has its own set of laws designed to promote renewable energy. The following examples are drawn from the state of California. The Agricultural Biomass to Energy Program was created by California Senate Bill 704, which was enacted into law on September 22, 2003. The program was created to reduce the amount of agricultural fuels that are burned in open fields by providing financial incentives to eligible biomass facilities for each green ton of qualified agricultural biomass purchased and converted into energy by the facility from July 1, 2003 through June 30, 2004. This program was designed and implemented by the Energy Commission. The Property Tax Exemption for Solar Systems is a product of the California Revenue and Taxation Code, section 73. Active solar energy systems installed between January 1, 1999 and January 1, 2006 are not subject to property taxes when assessing property for property tax purposes. The Emerging Renewables Program has been carried out by the California Energy Commission. The primary goal of this program is to stimulate market demand and to develop a self-sustaining market for emerging renewable energy technologies of photovoltaics, solar thermal electric systems, fuel cells using renewable fuels, and small wind turbines that meet certain eligibility requirements, by offering rebates to reduce the initial cost to customers. The Solar or Wind Energy System Credit Program is comprised of personal and corporate income tax credits provided for the purchase and installation of photovoltaic or wind driven systems with a peak generating capacity of up to 200 kilowatts. After January 1, 2004 and before January 1, 2006, the tax credit is equal to 7.5% of the net installed system cost after deducting the value of any municipal, state, or federal sponsored financial incentives, or $4.50 per watt of rated peak generating capacity, whichever is less. A fifteen-percent tax credit was available from Jan 1, 2001 to Dec 31, 2003. The California Franchise Tax Board, in consultation with the California Energy Commission, administers this program. Existing and new building construction requirements have been established by the California Department of General Services, in consultation with the State Energy Resources Conservation and Development Commission. The requirements ensure that solar energy equipment is installed no later than January 1, 2007 on all state

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buildings and state parking facilities, where feasible, and that solar energy equipment shall be installed as part of the construction of all state buildings and state parking facilities that commences after December 31, 2002. The Renewables Portfolio Standard requires that a retail seller of electricity purchase a specified minimum percentage of electricity generated by eligible renewable energy resources in any given year as a specified percentage of total kilowatt hours sold to retail end-use consumers each calendar year. California Senate Bill No.1078, signed into law on December 12, 2002, established the program. The eligible renewable energy resources include biomass, solar thermal, photovoltaics, wind, geothermal, fuel cells using renewable fuels, small hydropower of thirty megawatts or less, digester gas, landfill gas, ocean wave, ocean thermal, and hydro energy (predominantly from tidal currents). Municipal solid waste is only eligible if it is converted to a clean burning fuel using a non-combustion thermal process first. The Los Angeles Solar Incentive Program is un by the Los Angeles Department of Water & Power Board of Commissioners. The purpose of this solar rebate program is to encourage the use of renewable energy through the installation of photovoltaic systems by residents and businesses in Los Angeles. The Los Angeles Green Power Purchasing Program is one of largest purchases of renewable green power in the U.S. On March 2, 2001, the Los Angeles City Council approved the program and beginning in July 2001, ten-percent of the city governments electricity purchases went towards new, clean, renewable energy sources. This purchase will amount to fifty million-kilowatt hours of electricity annually. With previous commitments from Los Angeles World Airports and the citys water system, the total city government purchase will be more than seventy million-kilowatt hours of new green energy, amounting to fourteen percent of the electricity used by the city government. The Santa Clara Solar Water Heating Program is the nations first municipal solar utility. Since 1975, the City of Santa Clara has taken a leading role in developing and promoting the use of solar energy. That year, the City established the Solar Water Heating Program, under which the City supplies, installs and maintains solar water heating systems for residents and businesses within Santa Clara through its Water & Sewer Utilities Department. Solar equipment is offered by the city for the heating of swimming pools, process water, and domestic hot water. The pieces of hardware (solar collectors, controls and storage tanks) are owned and maintained by the city under a rental agreement; the renter pays an initial installation fee and a monthly utility fee. IV. PERFORMANCE OF GOVERNMENT INCENTIVES TO PROMOTE RENEWABLE ENERGY IN THE UNITED STATES Three key objectives underlie current energy policy: reliability and security, affordability and economic growth, and the environment and public health. For example, the National Energy Policy of the U.S. stresses Reliable, Affordable, and Environmentally Sound Energy for Americas Future, and the European Union energy policy declares that Europes future depends on its energy supply being safe, ecologically sustainable and affordable. Over the past ten years or more, the focus of energy policy worldwide has been driven principally by considerations for the environment and sustainable

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development. Whether the goal is to combat global warming, to encourage investment in a fast-growing new industry, or to provide energy independence and security, many programs in Germany, Japan, Australia and other developed countries have, through subsidy and regulations, created renewable energy markets. However, in the U.S., although the legal measures for the government to promote renewable energy are relatively well-developed, the progress of the renewable energy market and the diversification of the traditional energy prosperity appear to be frustratingly slow. For example, in 2003, only about 3.3% of the energy consumed came from non-hydro renewable energy sources,20 namely solar, wind, biomass and geothermal energy, which is much less than energy derived from petroleum (forty percent), coal (twenty-three percent), natural gas (twenty-three percent), and nuclear sources (eight percent). From a historical perspective, despite great improvements and cost reductions of renewable energy technologies worldwide, the consumption in the U.S. of non-hydro renewable energy sources21 declined from 3.456 quadrillion Btu in 1989 to 3.35 quadrillion Btu in 2003. While the consumption of solar and geothermal energy remained almost unchanged, the consumption of biomass energy declined from 3.062 quadrillion Btu in 1989 to 2.865 quadrillion Btu in 2003, and the consumption of wind energy increased from 0.022 quadrillion Btu in 1989 to 0.108 quadrillion Btu in 2003. The global renewable energy market is booming, mainly because of the great demand created by the Kyoto Protocol and other international environmental agreements, but the U.S. domestic market for renewably energy is declining. The passive position of the U.S. federal government on global warming, its strong and lasting support of fossil fuels industries, and the unequal playing field of the U.S. energy market, are among the key elements that hinder the further development of renewable energy. V. CONCLUSION By observing the U.S. attempts at promoting renewable energy sources, China can make several conclusions about renewable energy development. In the U.S., both market forces and government support play roles in the development of renewable energy. The level of government intervention in the renewable energy market is based upon relevant laws, regulations, ordinances, and programs at the federal, state, and local levels. Observers are confident that renewable energy sources will one day be cost effective and are becoming increasingly aware of environmental concerns associated with conventional power sources. The main problem is that manufacturing needs to be done on a large scale to reduce costs. That level of demand for renewable energy devices, however, will not exist until prices fall to competitive levels. Despite structurally sound renewable energy legal systems and government incentives for the renewable energy industry in the U.S., the actual implementation of renewable energy development is very limited, because strong government support for fossil fuels leads to an unequal playing field in the energy market and an inferior position for the renewable energy industry. With no further incentives for
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Supra note 9. See supra note 9.

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reform and no greater support in substance to renewable energy technologies, there will be little or no success in renewable energy production and consumption. For the successful development of a renewable energy industry in China, there must be a strong legal system to aid implementation and an equal or superior competitive position in the energy market.