What is a Renewable Resource?

Robinhood Learn
Democratize Finance For All. Our writers’ work has appeared in The Wall Street Journal, Forbes, the Chicago Tribune, Quartz, the San Francisco Chronicle, and more.
Definition:

A renewable resource is one that has a theoretically endless supply because of its ability to be replenished naturally.

🤔 Understanding renewable resources

Renewable resources are those that naturally replace themselves, meaning we won’t run out of them. Renewable resources play an important role in the U.S economy. Resources such as biofuels and solar energy have become an increasingly central part of the nation’s energy consumption. Though they’re renewable and therefore impossible for us to use up, they are flow-limited, meaning there is only so much available at any one time. Many governments have incentivized the use of renewable resources in addition to nonrenewable ones. This type of resource still makes up just a small portion of our energy consumption, but it’s expected to keep growing. Renewable resources include biofuels, hydropower, geothermal, wind, and solar. Outside of energy, renewable resources may refer to goods such as wood and fish.

Example

Renewable resources have been around forever — We just haven’t been taking much advantage of some of them until more recently. Solar energy is one that has grown in popularity in recent decades. Today, most anyone can buy solar panels to help generate renewable energy for their home or business. Unlike other energy sources that we’ve used, solar power replenishes constantly and doesn’t release pollutants into the air.

Takeaway

A renewable resource is like a bank account that is constantly being replenished…

Plenty of people have been in a situation where they check their bank account balance and realize they’re getting a bit low. But imagine if your bank account was never empty and had an endless supply of money — though it only had a certain amount of money at any one time. That’s how renewable resources work. We can use them to create energy, and we’ll never run out of them because they naturally replenish. However, the amount we can use at any one time may be limited.

Ready to start investing?
Sign up for Robinhood and get stock on us.Certain limitations apply

New customers need to sign up, get approved, and link their bank account. The cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at rbnhd.co/freestock. Securities trading is offered through Robinhood Financial LLC.

Tell me more…

What is a renewable resource?

Renewable resources are naturally occurring resources that continually replenish themselves, meaning the earth will never run out. Though they naturally replace themselves, that doesn’t necessarily mean they’re always available. Renewable resources are often flow-limited, meaning there’s only so much available at one time. For example, renewable resources such as wind and solar are only available when the wind is blowing or the sun is shining.

Renewable resources are an increasingly popular energy source for creating electricity, heat, and fuel. Renewable resources are a popular alternative to traditional energy sources because of their infinite supply and because they are cleaner and more environmentally friendly. Renewable resources today make up about 11% of energy production in the United States.

How are resources classified?

First, resources can be classified as either renewable or nonrenewable ones. Renewable resources are those that naturally replenish themselves, while nonrenewable resources exist in only a finite amount.

For most of modern history, the United States has relied on nonrenewable resources to provide energy and generate electricity. There are four primary classifications of nonrenewable resources:

  • Oil and petroleum products
  • Coal
  • Natural gas
  • Nuclear

The nation has relied less on renewable resources, though their uses for energy production and electricity generation are increasing quickly. There are five primary classifications of renewable resources:

  • Biomass
  • Hydropower
  • Geothermal
  • Wind power
  • Solar power

What are the types of renewable resources?

There are many different types of renewable resources. The most prevalent resources are biomass, hydropower, geothermal, wind, and solar.

First, biomass refers to the organic material from animals and plants. The biomass process begins with plants absorbing energy from the sun. Then, when those plants are burned, they create heat. Examples of biomass include wood, agricultural crops, food waste, and animal waste.

Often these substances are used to create heat, but they can also be turned into biofuels. Fuels such as ethanol and biodiesel are the results of biomasses. They can be used on their own, though they’re often combined with petroleum-based fuel to use. Biomasses make up about 45% of the total renewable energy use.

Next hydropower refers to the use of water to create energy. Hydropower is one of the original uses of renewable resources in energy production and has been one of the most popular. Humans use hydropower for energy by harnessing the power of water flowing through streams and rivers to create electricity.

The next type of renewable resource is the heat within the earth, which creates geothermal energy. The earth is continuously creating new heat, which people use to create heat and electricity. Geothermal makes up the smallest percentage of renewable energy.

Another renewable resource is the wind, which is a result of uneven temperatures on the earth’s surface. Humans use windmills to collect the wind’s energy and create electricity. The wind energy turns the windmills’ turbines, which pushes energy into a generator to create electricity.

Wind power is also a popular source of energy for farmers. First, farmers use wind power to pump water and process grain on their farms. Farmers are also able to use wind energy as a stable income source, as wind energy companies pay farmers to place their windmills on their land.

The final major renewable resource is sunshine, which people harness to create solar energy. People can use solar energy to heat homes and buildings, greenhouses, and water and to create electricity. Solar energy is inconsistent as the amount of sun varies by season, region, and time of day.

One thing that makes solar energy unique is that it's readily available to anyone — You don’t necessarily need special tools or machinery to harness it. In fact, people have been using sunshine for thousands of years for various purposes — It’s what people have used to grow their crops, dry foods, and warm themselves and their homes. Because it’s so readily available and anyone can purchase solar panels for their home, solar energy is the fastest-growing renewable energy source.

Is water a renewable resource?

Though water is a renewable resource in the sense that it naturally replenishes itself, it’s not renewable for all the purposes that humans use it. One example of a type of nonrenewable water is drinking water. Most of the water that humans use, including for agriculture and drinking water, comes from aquifers, which are deep bodies of groundwater. Aquifers don’t replenish at a rate that keeps up with human consumption. As a result, freshwater is sometimes considered to be a non-renewable resource.

What is renewable energy used for?

Renewable energy has many different uses, and it’s likely scientists will discover even more uses in the future. First, renewable energy is used to create electricity. Hydropower, wind power, solar power, and geothermal heat are all used to create electricity.

Next, renewable energy can be used as a means of heating and cooling homes and buildings. Biomass, geothermal heat, and solar power can all be used to heat and cool buildings.

Finally, renewable energy can be used to create fuel. Biomasses can be turned into fuel, which may eventually be able to replace the use of petroleum-based fuel people use for transportation. A program within the Environmental Protection Agency focuses on replacing nonrenewable fuel resources with renewable ones.

What is the difference between a renewable and nonrenewable resource?

While a renewable resource is one that replenishes itself and therefore can last forever, nonrenewable resources are the opposite. These resources exist in a finite supply, and once we’ve used them, we won’t be able to get them back. There are lots of nonrenewable resources, including oil, coal, natural gas, and nuclear fuel.

Nuclear energy, which relies primarily on uranium for production, is used to create electricity through nuclear reactors. Though nuclear energy is created through the process of nuclear fission, the uranium used in that process is a nonrenewable resource.

Oil, coal, and natural gas are fossil fuels. They’ve been around for millions of years buried by layers of rocks. Because they’re underground, people have to drill and mine to get their hands on these resources. There’s a finite supply of these resources, and eventually, there could be none left.

For most of modern history, nations have relied on fossil fuels to provide energy. Oil and petroleum provide us with the gasoline to power our cars, trucks, and jets, and the heating oil to heat our homes.

Coal provides electric power, making up 27% of electricity in the United States. Industries also use coal — For example, people use coal in the production of steel for cars and bridges.

Finally, natural gas has many different uses, including generating electricity, producing chemicals, and heating homes and buildings.

Fossil fuels are responsible for the vast majority of man-made emissions impacting the environment. The drilling and mining processes can also be dangerous for both humans and the environment. As a result, part of the push for the use of renewable resources is in an effort to replace fossil fuel use.

Additionally, relying on nonrenewable energy resources creates the possibility that eventually the earth will run out of them. Currently, about 80% of the world’s energy use comes from these nonrenewable resources.

What is the history of renewable energy?

For many years, wood was the only resource that people in the United States used to create energy. Wood was responsible for filling all of the heating, cooking, and lighting needs that people had. It wasn’t until the mid-1800s that other resources made an appearance in energy production.

In the mid and late-1800s, the nation began using coal and petroleum to replace some of the energy needs for which they had previously been using wood. The rise of coal and petroleum power skyrocketed, partially as a result of the invention of affordable cars and the increased availability of electricity. Since people began using these resources, they have been the primary source of energy in the United States.

Throughout the past century, people have also been using renewable energy on a far smaller scale. Hydropower was the first renewable resource that people used for energy, dating back to the very start of the 20th century. In fact, up until 2019, hydropower was the form of renewable energy that the nation used most.

It wasn’t until the late 1900s and early 2000s that the nation began to rely on other renewable resources for energy production. These days about 11% of the nation’s energy production comes from renewable resources, though that number will likely increase significantly. In fact, within the next few decades, renewable resources could make up well over half of energy production in the United States.

Why are renewable resources important?

Renewable resources are playing an increasingly important role in energy production in the United States and around the world. The use of renewable resources for energy has drastically increased over the past several decades, and the trend is likely to continue. There are many reasons why renewable resources are so critical.

First, the renewability of these resources means that people can rely on them for energy production without fear of running out. Using less of them can help to ensure their sustainability for longer.

Next, renewable resources are important because they are cleaner for the environment. The vast majority of human global warming emissions come from nonrenewable resources, specifically fossil fuels. These emissions have a harmful impact on the planet, leading to erratic weather, a rising sea level, and the extinction of animals. Renewable resources, on the other hand, have been shown to have little to no negative environmental impacts.

In addition to the improved outcomes for the planet, renewable resources also have better outcomes for public health. The air and water pollution that fossil fuels cause lead to a whole host of serious health issues and cost billions of dollars in public health expenses. The public health risks are far lower with renewable resources.

Finally, renewable energy has some serious economic benefits. The renewable energy sector can and does contribute to the gross domestic product (meaning the value of all goods and services a nation produces) nationally and also contributes to the global economy. The industry already creates jobs for hundreds of thousands of people. The potential for future jobs is even greater.

In addition to the job creation, renewable resources have the economic benefit of creating more stable energy prices. Prices of renewable energy have already dropped considerably since these energy sources became more popular, and they have the potential to drop even more.

Ready to start investing?
Sign up for Robinhood and get stock on us.Certain limitations apply

New customers need to sign up, get approved, and link their bank account. The cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at rbnhd.co/freestock. Securities trading is offered through Robinhood Financial LLC.

2260379

Related Articles

You May Also Like

PARTICIPATION IS POWER™

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Check out Robinhood Financial’s Fee Schedule for details.

Brokerage services are offered through Robinhood Financial LLC, (RHF) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (RHS) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (RHC) (NMLS ID: 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. The Robinhood spending account is offered through Robinhood Money, LLC (RHY) (NMLS ID: 1990968), a licensed money transmitter. A list of our licenses has more information. The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC is not a member of FINRA and accounts are not FDIC insured or protected by SIPC. RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

2784249

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.
Follow us on

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Check out Robinhood Financial’s Fee Schedule for details.

Brokerage services are offered through Robinhood Financial LLC, (RHF) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (RHS) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (RHC) (NMLS ID: 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. The Robinhood spending account is offered through Robinhood Money, LLC (RHY) (NMLS ID: 1990968), a licensed money transmitter. A list of our licenses has more information. The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC is not a member of FINRA and accounts are not FDIC insured or protected by SIPC. RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

2784249

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.