The National Energy Policy states the Government's policies for the planning and management of the nation's energy sector over the next 10 years. The rationale for this time horizon is the 20:30:30 policy target that has been formulated. This policy target envisions a 20 % contribution of renewable energy to the energy mix by 2020 and a 30 % reduction in energy consumption though energy efficiency and conservation efforts. Currently, renewable energy only makes a small contribution of less than 1% towards Palau's total energy supply and experiences are limited to solar PV and solar hot water units. Achieving a target of 20% by 2020 will require expansion into other forms of renewable energy such as wind, waste (landfill gas), hydropower and perhaps marine energy (wave energy and currents). At current world market prices for fuel and local tariffs for electricity, only solar water heaters can be considered financially viable options. I.e. an increased renewable energy contribution will require subsidies or increases in electricity tariffs. Financing a transition towards a greener energy through tariff increases is not considered feasible, given the state of Palau's economy and it is hoped that development partners will assist closing the gap between supply cost for renewable energy and conventional energy. In the field of energy conservation, numerous efforts under way to improve energy efficiency both on the supply and demand side. Achieving a 30 % reduction in primary energy consumption by 2020 is feasible but will require more efforts in demand and supply side management, improvements in transport sector efficiency and the introduction of regulations that curb wasteful practices. Relation between Policy and Strategic Action Plan