Renewable energy policies are paying off in different states

Marilyn Brown, Regents’ and Brook Byers Professor of Sustainable Systems at Georgia Tech’s School of Public Policy; Shan Zhou, assistant professor at Purdue University and Georgia Tech Ph.D. graduate; and Barry Solomon, professor emeritus of environmental policy at Michigan Technological University, examined how clean energy policies affect not only the states that adopt them but also neighboring states. Using data-driven comparisons, the researchers found that the impact of these subnational clean energy policies is much larger—and more nuanced—than previously thought.

The results of their research were recently published in the journal Proceedings of the National Academy of Sciences.

“Analysts are asking whether the United States should have a federal renewable energy mandate to get the whole country on the same page, or whether individual state policies are sufficient,” Brown said. “To answer that question, it’s helpful to know whether states with renewable energy policies affect those without.”

Brown, Solomon, and Zhou examined a common clean energy policy tool: the Renewable Portfolio Standard (RPS). Adopted by more than half of U.S. states, RPSs are regulations that require utilities in a state to generate a certain percentage of their electricity from renewable sources, such as wind or solar. Many of these standards are mandatory, and utilities are subject to fines if they fail to meet the targets within a specified time frame.

To examine the impact of these policies across states, the researchers first created a dataset that included 31 years (1991-2021) of annual renewable energy generation data for the 48 U.S. states and the District of Columbia. They then used the dataset to generate state pairs that connected each state to its geographic neighbors or electricity trading partners, allowing them to examine the impact of one pair’s RPS policy on the other’s renewable energy generation—a total of 1,519 pairwise comparisons.

“By looking just at pairs, we can see whether an RPS in one state directly affects renewable energy generation in another state, and if so, whether it’s because they are geographic neighbors or because they participate in the same wholesale electricity market,” Zhou said.

It is important to look at the electricity market because states often purchase electricity from other states through wholesale markets rather than solely producing their own energy, and the energy purchased may be generated from renewable sources. Utilities in some states may be able to meet their own RPS requirements by purchasing renewable energy credits based on renewable energy generated in other states.

The team also considered the concept of “policy stringency” in their analysis. The stringency measure evaluates a state’s renewable energy goals relative to the amount of electricity currently produced in the state. For example, if a state requires utilities to generate 30% of their electricity from renewable sources by 2030, and the state already has 25%, that’s not a very stringent policy. On the other hand, if a state has a 30% goal and currently uses only 10% of its renewable energy, it has a more ambitious and stringent RPS.

Although policy experts have been using this metric in related work for more than a decade, the research team has refined its construction.

“Our stringency variable includes interim targets as well as the current share of renewable energy generation,” Solomon said.

The team found that the amount of renewable energy produced in a state is influenced not only by whether the state has its own RPS, but also by the RPS policies in neighboring states.

“We also learned that the stronger the RPS policy of a neighboring state, the more likely that state is to generate more renewable energy,” Brown said. “It’s all a very interactive network with a lot of co-benefits.”

The authors were surprised to find that a state’s electricity trading partners did not have the greatest impact on renewable generation, but rather the geographic proximity of RPS states. They suggest that previous studies of RPS policies that focused on within-state impacts likely underestimated the full impact of RPS. Although the researchers have not yet identified all the factors that could be causing spillovers, they plan to investigate further.

“The spillover effect is very significant and should not be ignored in future studies, especially for states without RPS,” Zhou said. “For states without policies, their renewable energy production is very dependent on their neighbors.”