Cost of Going Green: Renewable Energy Policies and Firm Performance Uncertainty

34 Pages Posted: 2 Jul 2024

See all articles by Wonseok Choi

Wonseok Choi

Texas Woman's University

Dongnyoung Kim

California State University San Marcos

Hiro Nishi

The University of Texas at Dallas

Abstract

Utilizing state-level annual electricity production data, we investigate how adopting renewable energy affects firm performance and performance uncertainty. With our novel measure of firm-level exposure to renewable energy, we find that a state’s heavy reliance on renewable energy sources has a notable adverse impact on the productivity and profitability of local firms. Moreover, year-to-year performance uncertainty increases as renewable energy exposure increases, indicating that the intermittent nature of renewable energy sources serves as an implicit cost for local firms. Our findings carry important policy implications, as policymakers should recognize that excessive dependence on renewable energy sources can undermine the financial stability of local firms, at least in the short term.

Keywords: Renewable energy, firm performance, performance volatility, government policies/incentives

Suggested Citation

Choi, Wonseok and Kim, Dongnyoung and Nishi, Hirofumi, Cost of Going Green: Renewable Energy Policies and Firm Performance Uncertainty. Available at SSRN: https://ssrn.com/abstract=4882540 or http://dx.doi.org/10.2139/ssrn.4882540

Wonseok Choi (Contact Author)

Texas Woman's University ( email )

304 Administration Drive
Denton, TX 76204
United States

Dongnyoung Kim

California State University San Marcos ( email )

United States
7607504248 (Phone)

Hirofumi Nishi

The University of Texas at Dallas ( email )

800 W. Campbell Road
Richardson, TX 75080
United States

HOME PAGE: http://jindal.utdallas.edu/faculty/hiro-nishi

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