Renewable Portfolio Standards: Do Voluntary Goals vs. Mandatory Standards Make a Difference?

Abstract

AbstractThis research investigates whether an obligation to meet a Renewable Portfolio Standard (RPS) target in U.S. states affects the policy effectiveness, which is defined as the RPS‐related renewable electricity capacity additions. A voluntary RPS target can serve as a political device for signaling commitment to certain goals, though there is no penalty if the goal is not met. Alternatively, mandatory RPS targets have varying stringency and uneven enforcement. Our results indicate that the compulsoriness of a state RPS is an insignificant determinant of RPS‐related renewable electricity capacity additions. Factors other than whether an RPS target or goal is compulsory are more important in influencing renewable electricity development, including policy stringency. If a state seeks a modest level of renewable electricity development, setting a voluntary goal can sometimes be effective and more efficient. Nonetheless, a mandatory RPS may be required to accomplish a more significant level of renewable electricity deployment.