DEFINITION of 'Renewable Resource'

A renewable resource is a substance of economic value that can be replaced or replenished in the same or less amount of time as it takes to draw the supply down. Some renewable resources have essentially an endless supply, such as solar energy, wind energy and geothermal pressure, while other resources are considered renewable even though some time or effort must go into their renewal, such as wood, oxygen, leather and fish. Most precious metals are considered renewable as well; even though they are not naturally replaced, they can be recycled because they are not destroyed during their extraction and use.

BREAKING DOWN 'Renewable Resource'

A renewable resource is different from a non-renewable resource, as once a nonrenewable resource is used, it is depleted and cannot be recovered. As the human population continues to rise, the demand for renewable resources increases.

Types of Renewable Resources

Natural resources are a form of equity, and they're known as natural capital. Biofuel, or energy made from renewable organic products, has gained prevalence in recent years as an alternative energy source to nonrenewable resources such as coal, oil and natural gas. Although prices are still higher for biofuel, the growing scarcity of fossil fuels will result in higher prices, due to supply and demand, and will make the price of biofuel more competitive. Some types of biofuel include biodiesel, an alternative to oil, and green diesel, which is made from algae and other plants.

Other renewable resources include oxygen and solar energy. Wind and water can also be used to create renewable energy. For example, windmills harness the wind's natural power and turn it into energy.

Global Impact of Renewable Resources

Renewable resources have become a focal point of the environmental movement, both politically and economically. Energy obtained from renewable resources puts much less strain on the limited supply of fossil fuels, which are non-renewable resources. The problem with using renewable resources on a large scale is that they are costly, and in most cases, more research is needed to make their use cost-effective.

Adopting sustainable energy is often referred to as "going green," due to the impact on the environment. Energy sources such as fossil fuels damage the environment when burned, leading to global warming and climate change. The first major international accord to curb carbon dioxide emissions and global warming was the Kyoto Protocol, signed in 1997. More recently, global powers met in Paris in 2015 to pledge emissions reductions and focus on higher reliance on renewable resources for energy.

To encourage the use of renewable resources, there are many incentives for using alternative energy. For example, energy taxes put a surcharge on fossil fuels so that the prices of renewable resources are more competitive, and people will be more inclined to switch over. Green funds support eco-friendly and sustainable companies by investing in them, helping to promote environmental awareness.

RELATED TERMS
  1. Conditionally Renewable Policy

    A conditionally renewable insurance policy provision allows the ...
  2. Renewable Energy Certificate (REC)

    A Renewable Energy Certificate is proof of the production of ...
  3. Biofuel

    Biofuel is a type of energy derived from renewable plant and ...
  4. Yearly Renewable Term (YRT)

    A yearly renewable term is a one-year term life insurance policy. ...
  5. Alternative Energy ETF

    An exchange-traded fund that invests in companies engaged in ...
  6. Resource Curse

    The resource curse is a paradoxical situation where countries ...
Related Articles
  1. Investing

    Energy Outlook Favorable As Renewables Pass Coal

    Forecasts for renewable energy have been upgraded as record numbers of solar panels and wind turbines go up.
  2. Financial Advisor

    Preparing Your Portfolio For Climate Change

    A recent White House's report paints an alarming picture of coming climate change. How will you adjust your portfolio to protect your assets?
  3. Investing

    How Low Oil Prices Affect Alternative Fuels

    Cheaper oil may make renewable energy sources such as solar and wind power less attractive.
  4. Insights

    3 Countries That Produce the Most Renewable Energy

    China, the United States and Brazil are the top three producers of energy from renewable sources, with hydroelectric power as the largest asset.
  5. Investing

    Natural Resource Investing

    ETFs and futures are two of the many investment options available to natural resource investors.
  6. Investing

    Big Buys In Renewable Energy

    As oil prices have fallen, so has the alternative energy sector. For investors with a long-term focus, the time could be right to add the sector to an energy portfolio.
  7. Investing

    Green Investors Bolster Socially Responsible Funds

    In Trump era, green fund managers use new cash windfalls to target wind and water tech companies.
  8. Managing Wealth

    Clean Or Green Technology Investing

    Innovations in energy and consumption grow as companies adopt them to reduce costs.
  9. Investing

    Mine For Profits With Natural Resource Sector Funds

    These funds allow everyday investors to get in on the action in this promising sector.
  10. Investing

    All of Apple's Facilities Now 100% Green Powered

    Apple said it reached a goal to power all of its facilities with 100% green energy.
RELATED FAQS
  1. What are the top trends in corporate social responsibility?

    Learn about top trends in corporate social responsibility. Companies are increasing transparency, innovating, investing locally ... Read Answer >>
  2. What country is the world's largest oil producer?

    Learn which countries are considered to be the largest oil producers in the world, whether natural gas and biofuel are taken ... Read Answer >>
  3. How do companies measure labor supply in human resources planning?

    Find out how and why a company's human resources department would measure labor supply, and what policies would address a ... Read Answer >>
  4. What are examples of some of the major global companies in the utilities sector?

    Learn some helpful information about the three largest electric utility companies in the world, as measured by market capitalization. Read Answer >>
Hot Definitions
  1. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  2. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  3. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  4. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  5. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
  6. Ratio Analysis

    A ratio analysis is a quantitative analysis of information contained in a company’s financial statements.
Trading Center