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Are fluctuations in US production of renewable energy permanent or transitory?

  • Lean, Hooi Hooi
  • Smyth, Russell

This study examines the integration properties of total renewable energy production, as well as production of biofuels and biomass in the United States. To do so we use Lagrange Multiplier (LM) univariate unit root tests with up to two structural breaks. We conclude that each production series has a unit root. The result suggests that random shocks, encompassing changes to regulation, to renewable energy production may lead to permanent departures from predetermined target levels. Furthermore, this result implies that permanent positive shocks (such as renewable portfolio standards) that increases the production of renewable energy resources will realize more in terms of positively altering the energy mix between renewable energy and energy from fossil fuels than temporary policy stances (such as investment tax credits over a predetermined time horizon).

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Article provided by Elsevier in its journal Applied Energy.

Volume (Year): 101 (2013)
Issue (Month): C ()
Pages: 483-488

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Handle: RePEc:eee:appene:v:101:y:2013:i:c:p:483-488
DOI: 10.1016/j.apenergy.2012.06.022
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