By Benjamin Storrow

Renewable portfolio standards have long prompted grumbling from economists, who would prefer a price on carbon emissions over a mandate on clean electricity sales.

The former, they argue, would enable the market to identify the least-cost form of greenhouse gas reduction, while the latter saddles businesses and consumers with costs.

Unfortunately for the economists, many Americans disagree. Where only one state today employs an economywide cap-and-trade system, 29 have some form of RPS, as the renewable energy targets are commonly known. And RPS mandates are becoming ever more ambitious.

Lawmakers in Nevada last week passed a bill to double their RPS to 50% by 2030. Maryland legislators approved a similar bill a week earlier, though it could be vetoed by Gov. Larry Hogan (R) (Climatewire, April 10).

Then there are New Mexico and Washington state, where lawmakers recently approved legislation requiring all power in future decades to come from carbon-free resources.

It was against that backdrop that researchers at the University of Chicago released a working paper yesterday showing RPS make a costly form of carbon abatement. The authors found RPS standards increase power costs, notably through increased spending on backup generation, transmission and stranded assets (the cost of shutting down fossil fuel plants early).

“RPS policies are probably the most popular climate policy that the United States have currently,” said Michael Greenstone, a University of Chicago economist and the paper’s lead author. “We felt like there wasn’t a lot of information on what their costs and benefits were. It seemed natural to look at what the data were trying to say.”

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