Cleaner bills, cleaner air: The environmental co-benefits of stringent renewable portfolio standards policy design

Renewable Portfolio Standards (RPS) vary widely in policy design, leading to heterogeneous levels of enforcement stringency across states. This study offers new insights into how these design variations impact environmental outcomes. We compile a new database of all RPS policies passed between 1990 and 2018, documenting their design discrepancies in credit multipliers, exemptions, permitted technologies, and voluntary targets. Using difference-in-differences design, we estimate the causal effect of RPSs and their design stringency on economic and environmental outcomes. Our results suggest that while stringent RPS policies generate sizeable environmental co-benefits, discrepancies within RPS policy design attenuate those co-benefits: 5–9 years post-enactment, the average state under clean RPSs sees SO2 emission decrease by 57.6% and NOx emission decrease by 33.7%; the average state under discrepant RPSs sees a 25.1% decrease in SO2 emissions and no NOx emission reductions. These environmental performance gaps can be explained by discrepancies' impact on the power generation fuel mix — smaller cuts in coal and oil, slower growth in natural gas, and less generation from hydropower and nuclear. Using EPA's CO-Benefits Risk Assessment model, our analysis indicates that RPS policy discrepancies caused forgone health co-benefits of between $12–22 billion from SO2 and NOx emissions annually.