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As states take the lead in confronting climate change, their flagship policy is a program that requires that a certain percentage of the state's electricity come from renewable sources.
But a new working paper co-authored by University of Chicago scholars found that these popular programs—enacted in 29 states and the District of Columbia—are inefficient in reducing carbon emissions and come at a high cost to consumers. They found these Renewable Portfolio Standards increased prices by as much as 17 percent, making the policy's cost of reducing carbon emissions more expensive than current estimates of the benefits.
Urgency - Climate - Challenge - Case - Reductions
"The increasing urgency of climate challenge means that the case for ruthlessly seeking out the least expensive reductions in carbon emissions is rapidly strengthening," said study co-author Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics and director of the Energy Policy Institute at the University of Chicago. "This study joins a growing body of evidence that demonstrates that when climate policies favor particular technologies or target something other than the real enemy—carbon emissions—the result is less effective and more expensive than is necessary. In contrast, the global experiences from carbon markets and taxes make clear that much less expensive ways to reduce CO2 are available right now."
Greenstone and co-authors Richard McDowell of the Massachusetts Institute of Technology and Ishan Nath from the University of Chicago compared states with and without RPS policies, using the most comprehensive dataset compiled to date. They found that RPS programs, which currently cover 64 percent of the electricity sold in the United States, significantly increased retail electricity prices—with prices rising by 11 percent seven years after the policy became law and 17 percent 12 years afterward.
Effect - Years - Passage - Legislation - RPS
The cumulative effect seven years after the passage of the legislation initiating an RPS, consumers in the 29 states studied...
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