Do Renewable Portfolio Standards Deliver Cost-Effective Carbon Abatement?

The most prevalent and perhaps most popular climate policies in the U.S. are Renewable Portfolio Standards (RPS) that mandate that renewable sources, such as wind and solar, produce a specified share of electricity, yet little is known about their efficiency. Using a comprehensive data set and a difference-in-differences style research design, we find that electricity prices are 11% higher seven years after RPS passage and carbon emissions are 10-25% lower. Point estimates suggest that the cost per ton of CO2 abatement ranges from $60-$300, though these estimates do not account for possible future cost reductions due to RPS-induced technological progress.