**Status:**Submitted
**Citation:**David Young and John Bistline. "The Costs and Value of Renewable Portfolio Standards in Meeting Decarbonization Goals."
Renewable portfolio standards are common policy instruments deployed in many U.S. states and other countries. Arguably the primary driver for these standards is their use as a tool to reduce carbon dioxide (CO2) emissions from the electric sector. The cost-effectiveness of this mitigation approach relative to other policies to reduce CO2 emissions is hotly disputed. In this paper, we use the US-REGEN model to evaluate the costs and CO2 emissions reductions of existing and potential renewable portfolio standards in the United States, and compare these mandate-based policies to cap and trade policies that achieve equivalent CO2 reductions. We find that renewable portfolio standards are at least twice, and up to eighteen times, as costly as a technology-neutral cap and trade scheme at achieving CO2 reductions, and that their effectiveness at reducing CO2 emissions depends strongly upon natural gas prices in the future. Market-based instruments to achieve CO2 reductions usually replace existing coal generation with the cheapest alternative, given natural gas and CO2 prices. A mandate for renewables is higher cost both because renewable generation may not be the cheapest alternative to coal generation, and because adding renewable capacity often displaces non-coal generation on the margin when there is no price on CO2.
Link to Journal article: Energy Economics.