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The cost of carbon dioxide abatement from state renewable portfolio standards

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  • Johnson, Erik Paul

Abstract

Renewable portfolio standards (RPSs) have become a popular tool for state governments to promote renewable electricity generation and to decrease carbon dioxide emissions within a state or region. Renewable portfolio standards are a policy tool likely to persist for many decades due to the long term goals of many state RPSs and the likely creation of a federal RPS alongside any comprehensive climate change bill. Even though RPSs have become a popular policy tool, there is little empirical evidence about their costs. Using the temporal and regional variation in RPS requirements, I estimate the long-run price elasticity of supply of renewable electricity generation to be 2.67 (95% CI of 1.74, 3.60). Using my preferred elasticity estimate, I calculate the marginal cost of abatement from RPSs is at least $11 per ton of CO2 compared to a marginal cost of abatement of $3 per ton in the Regional Greenhouse Gas Initiative.

Suggested Citation

  • Johnson, Erik Paul, 2014. "The cost of carbon dioxide abatement from state renewable portfolio standards," Resource and Energy Economics, Elsevier, vol. 36(2), pages 332-350.
    • Handle: RePEc:eee:resene:v:36:y:2014:i:2:p:332-350
    DOI: 10.1016/j.reseneeco.2014.01.001
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    References listed on IDEAS

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    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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