Working Paper: NBER ID: w29783
Authors: Don Fullerton; Chi L. Ta
Abstract: Our new analytical general equilibrium model is used to study effects of tightening state Renewable Portfolio Standards (RPS) on electricity price, CO2 emissions, fossil fuel electricity generation, and two kinds of renewable generation. We show how those outcomes depend on key state characteristics such as endowments of potential intermittent and non-intermittent (“dispatchable”) renewable sources and the degree of intermittency. Our three extensions investigate key assumptions. We prove theorems and derive empirical hypotheses about what state characteristics makes RPS programs more effective. Using U.S. state-level data from 1990 to 2015, we find the data are consistent with these hypotheses.
Keywords: Renewable Portfolio Standards; General Equilibrium Model; Electricity Prices; CO2 Emissions; Renewable Generation
JEL Codes: H23; Q28; Q42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Larger endowment of intermittent sources (Q39) | larger reductions in emissions (H23) |
| Larger endowment of intermittent sources (Q39) | smaller positive or larger negative effects on both kinds of renewable use (Q27) |
| Larger endowment of dispatchable renewable sources (Q42) | smaller negative effects on emissions (Q52) |
| Larger endowment of dispatchable renewable sources (Q42) | larger positive or smaller negative effects on renewables (Q42) |
| More intermittency in intermittent sources (Q42) | larger negative effects on emissions (Q52) |
| More intermittency in intermittent sources (Q42) | smaller positive or larger negative effects on renewables (Q42) |
| RPS (R50) | CO2 emissions (L94) |