THE EFFECTIVENESS OF U.S. STATE-LEVEL RENEWABLE PORTFOLIO STANDARDS IN PROMOTING RENEWABLE CAPACITY DEVELOPMENT

Abstract

An increasing awareness of the environmental effects of fossil fuels has accelerated the adoption of policies designed to increase the use of renewable energy for electricity. I use panel data to examine the effectiveness of U.S. state- level Renewable Portfolio Standards (RPS) in promoting wind, solar, biomass, and geo- and hydrothermal modern renewable capacity development. Employing a difference-in-differences design, I estimate whether adopting RPS increases renewable capacity development. I consider a variety of different specifications and conclude that there is no robust effect of RPS on renewable capacity development. However, when I consider the effect of RPS dependent on the renewable potential in the state, RPS has a mild positive relationship with renewable capacity.