One of the most popular climate-change policies in America — renewable energy mandates — is also expensive, a new study says.
Driving the news: Standards in roughly 30 states that require a portion of electricity to come from renewable sources, mostly wind and solar, are driving up power prices and imposing a high cost to reduce carbon dioxide emissions, according to a new report out today by the University of Chicago.
The big picture: Urgency about climate change is growing around the country, with numerous states ramping up their renewable-electricity requirements and lawmakers in Washington mulling new climate policies.
This report, one of the most comprehensive analyses of its kind, questions the conventional wisdom that says renewables mandates are effectively addressing climate change.
“The headline result here and the most important result in the whole exercise: signing up for these policies increases electricity prices, full stop. Second point: what do you get in exchange for that?” — Michael Greenstone, lead author and director, Energy Policy Institute
Where it stands: The study indicates that such mandates do reduce carbon emissions — but at a far higher cost than more market-oriented policies like a carbon tax, said Greenstone, former top economic adviser to President Obama.
- The report analyzed renewable-electricity standards in 29 states and D.C., most of which were put in place in the early to mid 2000s.
By the numbers:
- Compared to states without such mandates, electricity prices increased 11% 7 years after adoption, and 17% after 12 years for the 16 states that have had mandates that long.
- The effective price per ton of carbon dioxide emissions reduced ranges from $130 to $460.
- These numbers are far higher than both existing and proposed policies imposing direct prices on carbon, like a tax or trading system, which range from under $20 to $50 per ton.
- The study estimates that 270 million to 659 million metric tons of CO2 have been reduced over the first 7 years of the mandates. That's equal to the yearly emissions of up to 143 million cars.
But, but, but: The report will undergo peer review, and it's sure to face scrutiny for its controversial conclusions, which could change in that process.
- One expert not affiliated with the study, Harvard University energy fellow Jesse Jenkins, said it inaccurately lumps together state-level mandates.
- "You have a very small sample size (only a handful of policies) and lots of potential confounding variables that make it difficult to cleanly estimate the effect," Jenkins emailed after reviewing the report.
Disclaimer: I'm a journalism fellow at the University of Chicago's Energy Policy Institute, but I had no involvement in writing or reviewing the study.