Renewable Energy Policies Provide Benefits Across State Lines

While the U.S. federal government has clean energy targets, they are not binding. Most economically developed countries have mandatory policies designed to bolster renewable electricity production. Because the U.S. lacks an enforceable federal mandate for renewable electricity, individual states are left to develop their own regulations. 

Marilyn Brown, Regents’ and Brook Byers Professor of Sustainable Systems in Georgia Tech’s School of Public Policy; Shan Zhou, an assistant professor at Purdue University and Georgia Tech Ph.D. alumna; and Barry Solomon, a professor emeritus of environmental policy at Michigan Technological University, investigated how clean electricity policies affect not only the states that adopt them, but neighboring states as well. Using data-driven comparisons, the researchers found that the impact of these subnational clean energy policies is far greater — and more nuanced — than previously known. 

Their research was recently published in the journal Proceedings of the National Academy of Sciences. 

“Analysts are asking if the U.S. should have a federal renewable mandate to put the whole country on the same page, or if individual state policies are sufficient,” Brown said. “To answer that question, it is useful to know if states with renewable energy policies are influencing those without them.”

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 requiring a state’s utility providers to generate a certain percentage of their electricity from renewable resources, such as wind or solar. Many of these standards are mandatory, with utility companies facing fines if they fail to reach targets within a given time.

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

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

Looking into the electricity market is important, because states often purchase electricity from other states through wholesale markets rather than exclusively producing their own power, and the purchased power can be generated from renewables. Utilities in some states may be allowed to meet their own RPS requirements by purchasing renewable energy credits based on the renewable electricity generated in other states. 

In their analyses, the team also considered the concept of “policy stringency.” A stringency measure evaluates a state’s renewable electricity targets relative to the amount currently produced in the state. For example, if a state requires electric utilities to generate 30% of their electricity from renewable sources by 2030 and the state already has 25%, it isn’t a very stringent policy. On the other hand, if a state has a 30% target and only uses 10% renewables currently, it has a more ambitious and stringent RPS.

Though policy experts have used the metric in related work for over a decade, the research team improved the design. 

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

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

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

The authors were surprised to find that a given state’s electricity trading partners did not hold the most influence over renewable generation, but rather the geographical proximity to RPS states. They suggest that past RPS policy research focusing on within-state impacts likely underestimated an RPS’s full impact. While the researchers have not yet identified all factors that can cause spillover effects, they plan to investigate this further. 

“The spillover effect is very significant and should not be overlooked by future research, especially for states without RPSs,” Zhou said. “For states without policies, their renewable electricity generation is very heavily influenced by their neighbors.”

Citation: Shan Zhou, Barry D. Solomon, and Marilyn A. Brown, “The spillover effect of mandatory renewable portfolio standards.” PNAS (June 2024). 
DOI: https://doi.org/10.1073/pnas.2313193121