Do Renewable Portfolio Standards Deliver Cost-Effective Carbon Abatement?

64 Pages Posted: 19 Apr 2019 Last revised: 9 Nov 2020

See all articles by Michael Greenstone

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Ishan Nath

University of Chicago - Department of Economics

Date Written: November 3, 2020

Abstract

The most prevalent and perhaps most popular climate policies in the U.S. are Renewable Portfolio
Standards (RPS) that mandate that renewables (e.g., wind and solar) produce a specified
share of electricity, yet little is known about their efficiency. Using the most comprehensive
data set ever compiled and a difference-in-differences style research design, we find that electricity
prices are 11% higher seven years after RPS passage, largely due to indirect grid integration
costs (e.g., transmission and intermittency). On the benefit side, carbon emissions
are 10-25% lower. The cost per ton of CO2 abatement ranges from $58-$298 and is generally
above $100.

Keywords: Energy, Environment, Renewable Energy, Carbon Emissions, Carbon Abatement, Climate Change, Electricity

JEL Classification: Q2, Q28, Q5, Q52, Q4, Q42

Suggested Citation

Greenstone, Michael and Nath, Ishan, Do Renewable Portfolio Standards Deliver Cost-Effective Carbon Abatement? (November 3, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-62, Available at SSRN: https://ssrn.com/abstract=3374942 or http://dx.doi.org/10.2139/ssrn.3374942

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ishan Nath

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

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