A Very Important Climate Fact That No One Knows

Does the country’s most popular climate policy actually work?

A controversial new study suggests that a type of state policy—usually called a “renewable portfolio standard,” or RPS—may impose large hidden costs on Americans. But a wide range of experts, including engineers, political theorists, and economists, aren’t sure the paper can actually make its case.

As Congress and the White House have failed to do much of anything about climate change, state standards have come to define U.S. climate law. Since 1991, 29 states and the District of Columbia have required that a portion of their electricity come from renewable sources. These RPS policies usually mandate that the state’s power grid use a certain amount of wind and solar energy by a certain year.

RPS standards look like climate policy that can actually win. Just look at Washington State. Last November, voters there overwhelmingly nixed a carbon-tax ballot proposal. But Governor Jay Inslee signed a 100 percent clean-power RPS into state law this Tuesday.

“Among our carbon policies, probably the biggest one we have in the country are RPSes,” Michael Greenstone, an economics professor and the director of the Energy Policy Institute at the University of Chicago, told me. Today, renewable standards already cover about half of the national power grid and about 18 percent of all U.S. emissions. Carbon pricing, meanwhile, only applies to about 9 percent of national emissions, he said.

Yet RPS policies have flourished without much sense of their cost. That’s the question that the new study seeks to answer.

The study, still in draft form and not yet peer-reviewed, finds that renewable standards tend to make electricity more expensive. Seven years after a state passes an RPS, the price of electricity rises by about 11 percent, and a standard unit of power—a kilowatt-hour—becomes about one cent more costly.

“There is a clear upward turn in prices once a state adopts an RPS, and it just kind of marches upwards, another economics researcher at the university.