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Cost-Effectiveness of Renewable Electricity Policies

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  • Palmer, Karen L.
  • Burtraw, Dallas

Abstract

We analyze policies to promote renewable sources of electricity. A renewable portfolio standard raises electricity prices and primarily reduces gas-fired generation. A "knee" of the cost curve exists between 15% and 20% goals for 2020 in our central case, and higher natural gas prices lower the cost of greater reliance on renewables. A renewable energy production tax credit lowers electricity price at the expense of taxpayers and thus limits its effectiveness in reducing carbon emissions; it also is less cost-effective at increasing renewables than a portfolio standard. Neither policy is as cost-effective as a cap-and-trade policy for achieving carbon emissions reductions.

Suggested Citation

  • Palmer, Karen L. & Burtraw, Dallas, 2005. "Cost-Effectiveness of Renewable Electricity Policies," Discussion Papers 10845, Resources for the Future.
  • Handle: RePEc:ags:rffdps:10845
    DOI: 10.22004/ag.econ.10845
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    References listed on IDEAS

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