Renewable portfolio standards (RPS) require a certain percentage of the electricity sold by utilities to be from qualifying sources as determined by state statute. RPS are one of the most common state-level environmental policies; 29 states and Washington DC have mandatory standards. Despite their popularity, however, renewable portfolio standards may not achieve their environmental ends in a cost-effective manner.
Basic analysis of the effects of implementing RPS shows only a nominal impact on carbon emissions, but a large impact on electricity prices. Professors at Louisiana State University compared states that had enacted RPS to states that had not, and showed that RPS states have seen neither a decrease in carbon emissions or an increase in renewable energy development relative to non-RPS states. The authors conclude, however, that RPS enactment is associated with a 10.9% to 11.4% increase in electricity prices.
In addition to evidence that RPS enactment is associated with higher electricity prices, there’s also evidence that they are much more expensive than other environmental policies. Academic research estimates that in order to achieve the same emissions reduction, current RPS policies “cost a mind-numbing 18.6 times more than a broader portfolio that includes those low-carbon sources.”
Ultimately, most academic research shows RPS to be expensive and ineffective environmental policies. Considering that one in five households struggled to pay its utility bills without having to give up or reduce its consumption of basic necessities like food or medicine, these findings are a serious challenge to RPS as an effective environmental policy.
Yet, given the inertia surrounding renewable portfolio standards, it’s unlikely that RPS will disappear. There are, however, still many ways in which they may be reformed and made more effective. Moving away from supporting only a select group of renewables in favor of allowing all less carbon-intensive resources is a promising start. Both natural gas and nuclear, for example, are much less carbon intensive than coal. Reforming RPS to be technologically neutral will likely help make RPS more environmentally effective and less costly economically.
On a related note to this discussion, The Breakthrough Institute and The Third Way just released a co-authored report on clean energy standards in contrast with RPS. Here’s a one-pager… Read more »
The suppositions in this question is just full of holes. Almost all State RPS’s have electric utilities bid out the most cost competitive solutions. So the idea that consumers pay… Read more »
What you fail to include in your cost comparison are the massive subsidies for renewables which distorts the market and the dispatching of power based on marginal costs not true… Read more »
Dear Andy, I believe that the difficulties you brought up on cost comparisons, while correct, can be expanded. A popular argument is made that the combination of wind power and… Read more »
Hershel, I completely agree – reliability is a major issue. Building new transmission lines is as difficult, perhaps more so, since more people and environment are affected. We are heading… Read more »
Andrew: Fossil fuel subsides are far greater than renewable energy subsidies, and when the external costs of fossil fuels (health impacts, climate change, etc.) are included, there is no contest…… Read more »
Dan, I have no problem in eliminating all subsidies to level the playing field and applying a carbon price for emissions. At present, unfortunately, clean air credits are not being… Read more »
Andrew: As they say, “past results may not be indicative of future performance.” This applies to using natural gas peaker plants to stabilize the grid as well as sea level… Read more »
I’m having a little trouble understanding how you derived your summary paragraph from the paper to which you link. It shows, in figure 3, that RPS states have a much… Read more »
Dr. Kirk-Davidoff, Thanks for your response! I agree that there are likely specific states where an RPS is a larger factor than others. But I’m more concerned with the overall… Read more »
As pointed out by others above, the premise of this post is full of holes. The purpose of RPS is to help develop the market for low-carbon energy and promote… Read more »
There are a number of fundamental problems with just setting mandates about a specific percentage of a State’s electricity to be produced by renewable energy sources by a specific date.… Read more »
[…] remains murky, individual states can take steps to save at-risk nuclear plants—in particular, by reforming the RPS mandates that currently funnel disproportionate ratepayer dollars to alternative energy sources, while… Read more »