Do Subsidies Extend Lifeline to Coal?

Emphasis on cleaner power sector and the need for maintaining system reliability often have contrasting influence on fossil fueled electricity generation. This paper contributes to the literature by evaluating the impact of capacity subsidies, which were introduced by the northeastern Regional Transmission Organizations to ensure resource adequacy, on the retirements of electricity generation in the US. Using state level data, I present evidence that states with capacity mechanisms have experienced decelerated retirements compared to states with no capacity markets overall, but not for coal-fired generation in particular. Findings also suggest that renewable energy policies like the Renewable Portfolio Standard are more effective in achieving sustainable energy goals.