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Why Do States Adopt Renewable Portfolio Standards?: An Empirical Investigation

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  • Thomas P. Lyon
  • Haitao Yin

Abstract

Renewable portfolio standards (RPSs) for electricity generation are politically popular in many U.S. states although economic analysis suggests they are not first-best policies. We present an empirical analysis of the political and economic factors that drive state governments to adopt an RPS, and the factors that lead to the inclusion of in-state requirements given the adoption of an RPS. Although advocates claim an RPS will stimulate job growth, we find that states with high unemployment rates are slower to adopt an RPS. Local environmental conditions and preferences have no significant effect on the timing of adoption. Overall, RPS adoption seems to be driven more by political ideology and private interests than by local environmental and employment benefits, raising questions as to when environmental federalism serves the public interest.

Suggested Citation

  • Thomas P. Lyon & Haitao Yin, 2010. "Why Do States Adopt Renewable Portfolio Standards?: An Empirical Investigation," The Energy Journal, , vol. 31(3), pages 133-158, July.
    • Handle: RePEc:sae:enejou:v:31:y:2010:i:3:p:133-158
    DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No3-7
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    References listed on IDEAS

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    Cited by:

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    2. Sankaranarayanan, Sriram & Feijoo, Felipe & Mukherjee, Saral, 2025. "The environmental value of an owned agile power source," Energy, Elsevier, vol. 334(C).
    3. Payne, James E. & Saunoris, James W. & Nazlioglu, Saban & Smyth, Russell, 2024. "Renewable energy production across U.S. states: Convergence or divergence?," Energy Economics, Elsevier, vol. 140(C).
    4. Møller, Karl Magnus, 2024. "Domestic renewable energy industries and national decarbonization policy," Energy Policy, Elsevier, vol. 192(C).
    5. Ann Wolverton & Ron Shadbegian & Wayne Gray, 2022. "The U.S. Manufacturing Sector’s Response to Higher Electricity Prices: Evidence from State-Level Renewable Portfolio Standards," Working Papers 22-47, Center for Economic Studies, U.S. Census Bureau.
    6. Ozturk, Ilhan & Ullah, Sana & Sohail, Sidra & Sohail, Muhammad Tayyab, 2025. "How do digital government, circular economy, and environmental regulatory stringency affect renewable energy production?," Energy Policy, Elsevier, vol. 203(C).
    7. Qin, Quande & Wen, Zhibin & Zhou, Zhihao & Fan, Bi, 2025. "Leveraging social media for new energy vehicle policy diffusion in China: A central-local government interaction analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 195(C).
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    9. Shuddhasattwa Rafiq & Sudharshan Reddy Paramati & Md. Samsul Alam & Khalid Hafeez & Muhammad Shafiullah, 2025. "Does institutional quality matter for renewable energy promotion in OECD economies?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 477-492, January.
    10. Thomas, Pinky & Khurana, Ritika & Etienne, Xiaoli L. & Collins, Alan R., 2023. "The Impacts of State Policies on Renewable Energy Generation Capacity: A County-Level Spatial Panel Analysis," 2023 Annual Meeting, July 23-25, Washington D.C. 335717, Agricultural and Applied Economics Association.
    11. Kim, Dong Min & Zhou, Shan & Wellstead, Adam M., 2025. "New avenues for community solar adoption research: A qualitative comparative analysis of ten U.S. states," Utilities Policy, Elsevier, vol. 95(C).

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