Posted February 5, 2018 | View original publication
Researchers at the University of Nebraska-Lincoln believe that the introduction of a renewable portfolio standard for electricity production can inadvertently reduce green energy use.
Renewable portfolio standards are mandates for electricity providers to procure a certain percent of electricity from renewable sources. In the United States these policies are developed at the state level and details vary by state.
Researchers Karina Schoengold and Konstantinos Giannakas in Nebraska’s Department of Agricultural Economics, and Suparna Bhattacharya of the Public Utility Commission of Oregon found that when standards are implemented, some consumers will curtail their voluntary use of green power. This is expected to be the case especially in states where consumers value green power, already purchase green power in voluntary markets, and the price difference between green and conventional power is low.
“In these cases, there may be economic benefits of renewable portfolio standards but there are very little environmental benefits,” said Schoengold, an associate professor.
The researchers believe that in states like Nebraska, with low voluntary use of green power and plentiful wind energy, a renewable portfolio standard is likely to increase both green power use and conventional power prices.
“If a state wants to increase green energy use, a cap and trade or carbon tax policy is a better way of reaching that goal,” Schoengold said. “A renewable portfolio standard is a second-best policy that works in some circumstances.”
The results of the study were published in a recent issue of Energy Economics.
Funding for the research was provided by the U.S. Department of Agriculture’s National Institute of Food and Agriculture and the Agricultural Research Division at Nebraska.