Renewable energy is derived from resources that are generally not depleted by human use, such as the sun, wind, and water movement. These primary sources of energy can be converted into heat, electricity, and mechanical energy in several ways. There are some mature technologies for conversion of renewable energy such as hydropower, biomass, and waste combustion. Other conversion technologies, such as wind turbines and photovoltaics, are already well developed, but they have not achieved the technological efficiency and market penetration that many expect they will ultimately reach. Although geothermal energy is produced from geological rather than solar sources, it is often included as a renewable energy resource (and is treated as such in this report). Commercial nuclear power is not generally considered to be a renewable energy resource. Despite fluctuating government policies since the 1970s, a combination of incentives and high energy prices has enabled wind energy to gain a toe-hold in electric power markets and allowed ethanol to secure a modest, but growing, presence in motor fuels markets. Congress is now debating whether to provide additional subsidies, incentives, and mandates to further expand renewable energy use. This report describes the background and primary policy issue areas affecting renewable energy, including budget and funding, tax incentives, electricity regulatory initiatives, renewable fuels, and climate change. The energy crises of the 1970s spurred the federal government, and some state governments, to mount a variety of renewable energy policies. These policies included support for research and development (R&D), technology demonstration projects, and commercial deployment of equipment. For renewable energy, these policies included a focus on the production of both liquid fuels and electricity. The Energy Tax Act of 1978 established a 4 cents per gallon excise tax exemption for ethanol blended into gasoline. This incentive expired, and was extended, several times during the 1980s and 1990s. In some cases, the incentive was modified at the same time that it was extended. The Energy Policy Act of 1992 extended the excise tax exemption and created a tax deduction for clean-fuel vehicles that included those using 85% ethanol (E85). It also established a requirement that federal, state, and other vehicle fleets include a growing percentage of alternative-fueled vehicles, including those using ethanol. In 2000, the General Accounting Office (GAO) reported that the excise tax exemption and the alcohol fuel tax credits had been the most important incentives for renewable fuels. By the time that the Energy Policy Act of 2005 (EPACT) was enacted, a variety of tax, grant, loan, and regulatory provisions had been established for renewable fuels. This included some 17 programs spanning five agencies. At present, the major tax incentives are a 51 cents per gallon excise tax exemption for ethanol blends, a $1 dollar per gallon tax credit for agri-biodiesel (50 cents per gallon for recycled biodiesel), and the alternative motor vehicle tax credit. However, some believe that the Renewable Fuel Standard (RFS) set by EPACT Section 1501—which requires that motor fuels contain increasing amounts of renewable fuel each year through 2012—may now be the most important policy supporting renewable biofuels. The Public Utility Regulatory Policies Act (PURPA, Section 210) created a policy framework that required electric utilities to purchase electricity produced from renewable energy sources. PURPA also empowered the states to set the price for such purchases. PURPA aimed to reduce oil use for power production, encourage the use of renewable energy for power production, and to structure a new dimension of competition to help keep electricity prices down. In the early 1980s, under the influence of PURPA regulation, a convergence of federal and state policies launched commercial deployment of wind and solar energy in California. In particular, the development of early wind farms was driven mainly by a combination of federal and state investment tax credits for wind energy. As the new wind industry developed, two emerging aspects stimulated further policy changes. First, some firms took advantage of the investment tax credits by capturing the tax benefits at the front end and leaving wind machines that operated poorly or not at all. Recognition of this problem eventually led to the creation of a production-oriented tax credit. Second, in order to obtain third party financing, wind farm developers needed to secure agreements for power purchases that fixed the price for a long-term (10 years or more) period. This led the California Public Utility Commission to promote the development of "standard offer" contracts. These contracts reduced investment risk, established stable revenue streams, and helped launch early wind farm developments. Oil and natural gas prices slumped during the mid-1980s, and declined more steeply in the late 1980s. Meanwhile, Congress let the residential solar investment tax credit expire in 1985. Funding for Department of Energy (DOE) renewable energy R&D programs also declined, reaching a low point in 1990. In late 1990 and early 1991, the Persian Gulf War re-ignited interest in renewable energy. Other nations, notably Japan and Germany, began to undertake more aggressive policies to subsidize renewables, especially wind and solar technologies. In the United States, Congress began to increase funding for the Department of Energy (DOE) renewable energy R&D program. In 1992, the United States became a signatory of the United Nations Framework Convention on Climate Change (UNFCCC). This action forged a new environmental motive for support of renewable energy. These national interests were reflected in the Energy Policy Act of 1992 ( P.L. 102-486 ). For electricity, this law made permanent the 10% business investment tax credit for solar and geothermal equipment. It also created a new renewable energy electricity production tax credit of 1.5 cents per kilowatt-hour (kwh) for wind farms and closed-loop (energy crop) biomass. Climate change concerns spurred other industrialized nations to strengthen renewable energy policies and programs. Through the 1990s, concern about global climate change became an increasingly important motive in the European Union (EU), Japan, and other countries for raising renewable energy production goals and providing incentives to support commercial deployment. The Kyoto Protocol set emission reduction targets for carbon dioxide (CO 2 ) and other greenhouse gases (GHG). After signing the Protocol, these nations intensified their efforts for commercial deployment of renewable energy. In the United States, concern about climate change was largely offset by a concern about the potential effect of the Kyoto CO 2 emission reduction targets on economic growth and competitiveness. As a result of this economic concern, the United States has taken a more limited effort than many other industrialized nations to support renewable energy as a strategy for addressing climate change. The federal government has continued support for existing funding and subsidies. However, aside from the previously mentioned policies, it has not established major new policies and programs like the feed-in tariff in Germany or the European Union's target for producing 20% of its energy from renewables. State action on renewable energy has often supplanted federal action or created models for new federal policies. As one example, California has implemented very aggressive programs for renewable energy. In the mid-1990s, the advent of electric industry restructuring led California state policymakers to create a public goods charge on ratepayer electricity use. Part of the resulting revenue was used to fund renewable energy development and deployment programs. Also, California's electricity shortages in 2000 and 2001 prompted the state to expand its renewable energy programs. Motivated by concern over climate change, California has recently adopted more aggressive actions for renewables. This includes a $3 billion solar deployment initiative, and an increase of its renewable portfolio standard to 33% of total electricity production by 2020. Economic and environmental concerns—namely energy security, international competitiveness, high energy prices, air pollution, and climate change—are now driving policy proposals to support renewable energy R&D and market deployment. In the 110 th Congress, more than 200 bills were introduced that would support renewable energy. In the first session, the Energy Independence Act ( P.L. 110-140 ) and the Consolidated Appropriations Act ( P.L. 110-161 ) increased support for renewable energy. In the second session, the Emergency Economic Stabilization Act ( P.L. 110-343 , Division B) provided several billion in tax incentives for renewables. (For more details on the Energy Independence Act, see CRS Report RL34294, Energy Independence and Security Act of 2007: A Summary of Major Provisions , by [author name scrubbed]; for more details on FY2008 appropriations for DOE's renewable energy programs, see CRS Report RL34009, Energy and Water Development: FY2008 Appropriations , by [author name scrubbed] et al. and CRS Report RL34417, Energy and Water Development: FY2009 Appropriations , by [author name scrubbed] et al. ; for more information about renewable energy laws and bills, see CRS Report RL33831, Energy Efficiency and Renewable Energy Legislation in the 110 th Congress , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].) As part of the strategy to address energy security, climate change, and other national interests, the Energy Policy Act of 2005 (EPACT, P.L. 109-58 ) contained several provisions that authorized new programs and spending for renewable energy. Many of those provisions have either gone unfunded or have been funded below the authorized level. Title 17 of EPACT created a DOE loan guarantee program for certain energy technologies that could improve energy security, curb air pollution, and reduce greenhouse gas emissions. Innovative renewable energy power plants and fuel production facilities would be eligible for a federal loan guarantee covering up to 80% of construction costs. Many view this program as a key element of EPACT that addresses climate change and supports the commercial development of biofuels, such as cellulosic ethanol.