Topic: External Impacts of Local Energy Policy: The Case of Renewable Portfolio Standards
Abstract: Renewable portfolio standards (RPSs) are state level policies that require in-state electricity providers to procure a minimum percentage of electricity from renewable sources. Using theoretical and empirical models, we show that RPSs induce out-of-state emissions reductions because states allow for inter state trade of the credits used for RPS compliance. When one state passes an RPS, it increases demand for credits sold by firms in other (potentially non-RPS) states. We find that increasing one state's RPS decreases coal generation and increases wind generation in outside states. The annual aggregate value of avoided criteria coal pollution ranges between $0.4-$2.0 billion.