The Institute of Political Economy at Utah State University has produced a report on the costs of Renewable Portfolio Standards (RPS) in North Carolina. Currently, the U.S. has no federal mandate for “renewable” power production. Instead, a majority of states, including North Carolina, have created their own state laws that mandate a certain percentage of their statewide electricity be provided by various renewable sources. RPS legislation ignores market signals and forces ratepayers and utilities to use more expensive electricity from favored sources. The IPE analysis shows how the states RPS efforts have impacted the North Carolina economy.
Common Questions about Renewable Portfolio Standards (RPS)
March 10, 2015
Q1. What is a renewable portfolio standard?
Simply put, an RPS is a state law that mandates a certain percentage of statewide electricity be provided by various government-subsidized, alternative sources of energy production – also known as “renewables.” Many states, like Kansas, North Carolina, Ohio, Colorado and West Virgina have created their own mandate. Most of these laws require that states attain target percentages of electricity that must be utilized by a certain date.
Q2. Why research renewable portfolio standards (RPS)?
Strata, in conjunction with Utah State University Institute of Political Economy (IPE), does research on a variety of subjects related to energy, environmental and land topics. A number of states have recently implemented their own RPS, which uses a combination of mandates and subsidies to promote renewable energy resources. Strata’s study looks at real costs and the impact of economic incentives within the states where RPS has been implemented. We examine the impact on consumers and the prices they pay for energy, the impact on jobs, and other economic consequences of these mandated standards. Our academic focus and standard is to examine a spectrum of economic factors and provide information based on verifiable academic data. We also have ongoing research on a variety of energy sources, including coal, wind, solar, bio-mass, natural gas, and others.
Q3. Where do you find data to use in your research?
Strata’s RPS study is an academic, peer-reviewed research report intended for public consumption. The bulk of data for our RPS analysis comes from the federal Energy Information Administration (EIA), which is considered the most reliable data publicly available.
Q4. How is your research funded?
Strata receives funding from a variety of sources including individuals, foundations, corporations, and government grants. It is our mission to explore the issues with a strict focus on empirical, honest academic research of the highest quality.
Q5. What is your publication process?
Utah State University’s Institute of Political Economy develops questions and ideas that are relevant to the public and policymakers. These questions and ideas are tested according to academic rigor using both time-tested and innovative methodologies. In order to achieve the greatest accuracy and insight, the methods are peer-reviewed and fact checked for accuracy. Our research is intended to be timely and responsive to current issues and trends.
Q6. What are the major takeaways of the RPS studies?
Strata’s RPs findings utilize an innovative method of analysis originally developed by the Federal Reserve Bank of Philadelphia. Through econometric analysis and modeling, the methodology isolates the effects of policy mandates like RPS and outputs general impacts. Our findings show that states with RPS have a significantly higher set of negative economic impacts than states without RPS. Specifically, our research shows that across RPS states, industrial production (measured by electricity sales) is greater than a 13% decline. Additionally, real personal income declines in RPS states by almost 4 percent. For a typical household, this translates to about $4,000 per family in Kansas and slightly more than $3,800 in North Carolina in 2013 alone. As a result, our analysis shows that Kansas has lost over 5,500 jobs and North Carolina has lost 23,769 jobs as a result of RPS mandates to date.
Q7. What is the Institute of Political Economy (IPE)?
Originally founded by Professor Randy Simmons at Utah State University, The Institute of Political Economy is a think-tank and policy analysis center. IPE has grown to include several scholars interested the intersections between free markets, natural resources, public lands, and energy. Scholars also working with IPE include Dr. Chris Fawson, Dr. Ryan Yonk, and a variety of other professors and experts with expertise in our core areas.
Q8. What is Strata Policy?
At Strata, our mission is to help people everywhere make informed decisions about issues that impact the freedom to live their lives. We work to achieve more prosperous and free societies by affecting a change in the climate of ideas. We do this by conducting robust research on energy and environmental issues, informing policy makers, citizens and civic leaders, and by mentoring high-achieving students to become future decision makers. Strata is located in Logan, Utah. We draw from the collective academic strength and ideas from the faculty and students at Utah State University and a strong network of academics and professionals throughout the world.
The Institute of Political Economy at Utah State University has produced a report on the costs of Renewable Portfolio Standards (RPS) in Kansas. Currently, the U.S. has no federal mandate for “renewable” power production. Instead, a majority of states, including Kansas, have created their own state laws that mandate a certain percentage of their statewide electricity be provided by various renewable sources. RPS legislation ignores market signals and forces ratepayers and utilities to use more expensive electricity from favored sources. The IPE analysis shows how the states RPS efforts have impacted the Kansas economy.
Read the full report here:
By Randy T Simmons and Ryan M. Yonk, 2013.
Under the Antiquities Act and through their respective management plans, national monuments fall under strict protection. Because of this, development of potential energy resources is often impossible. This study shows the opportunity cost of designating national monuments by illustrating how much of our potential energy is locked up in these protected public lands. In exploring the natural resources in each national monument we considered both conventional, fossil fuel-based energy potential as well as renewable energy potential. We found that five out of the twelve monuments explored in detail had significant potential for oil and coal development. We also examined solar, geothermal, and wind energy potential in national monuments. Ten monuments had the potential for at least one type of renewable energy development with the majority of these examples being solar potential. Four monuments had the potential for more than one of these types of renewable energy development.
Politics, Economics, and Federal Land Designation: Assessing the Economic Impact of Land Protection—Grand Staircase-Escalante National Monument.
By Ryan M. Yonk, Randy T. Simmons, and Brian Steed, 2013
This paper seeks to investigate the conflicting belief regarding the economic impacts of federally designated Wilderness through empirical statistical analysis of the economic conditions present in Wilderness and Non-Wilderness Counties over time. Using U.S. Census Data for all counties across the United States we study the impact of Wilderness by examining whether there is an identifiable difference within the economies of Wilderness and Non-Wilderness Counties over time. Our statistical analysis of economic conditions shows that once federal transfers are controlled for neither total tax receipts nor total payroll appears to be affected by the presence of federally designated wilderness. In other words, Wilderness does not have a positive, monetary affect on the counties in which it resides.
By Ryan M. Yonk, Brian C. Steed, and Randy T Simmons, 2013
Wilderness designations are often praised by conservationists and bemoaned by local government officials. This study uses a quasi-experimental, time series design to evaluate the economic impact of the designation of Wilderness on regional economies. Using census data, we test claims made by many in the environmental community of economic boon resulting from the change in land status and countervailing claims by local political elites of economic disaster. We find a significant negative relationship between the presence of Wilderness and total payroll, tax receipts, and average household income. Thus, there may be some justification for local political elites and residents to be concerned about new Wilderness designations.
By Randy Simmons and Ryan Yonk, 2012.
In an attempt to reconcile, or at least to understand the reasons for differences between competing claims about public lands management, we conducted an analysis of relationships between different public land management regimes and economic conditions in rural counties. For our analysis we use data from the Bureau of Labor Statistics and U.S. Census data for each county in the U.S. dating back twenty-five years. In general, we find that counties with federal lands (especially Wilderness lands) do not have higher per capital income or higher tax receipts. The presence of federally designated Wilderness is associated with a decrease of $679,456.70 per year in total business activity. This finding is both statistically significant and substantive enough to have serious implications for a county’s economic growth. These results are in sharp contrast to claims that Wilderness designations are a draw for visitors and significantly increase economic growth.
By Ryan M. Yonk, Randy T Simmons, and Brian C. Steed, 2011
Establishing national monuments generates a great deal of controversy over the size, formation of boundary lines, restrictions on the use of extractive resources, and other specifics of protection. These controversies have often pitted local officials and residents against broader environmental concerns. The most recent example of controversy over designating national monuments occurred in 2010 over a Department of the Interior (DOI) memorandum titled “Treasured Landscapes.” This internal memorandum from the Department of the Interior highlighted fifteen potential areas that the DOI believed were worthy of increased protection, protection that would most likely come in the form of national monument status.
In conducting the inventory of energy potential for each site we focused on both traditional fossil fuel energies, and the renewable potential of each site. We found that relatively few of the sites identified as candidates by the DOI had significant fossil fuel reserves, although many had the potential for shale extraction, including oil shale. We also evaluated the possibility of renewable energy development in each of these potential monuments and found that most of the potential monuments have significant renewable energy possibilities that would be foreclosed by support both the preservation of landscapes like those proposed in the “Treasured Landscapes” memorandum, and who also support increased production of renewable energy. The most significant lesson we draw from these data is that conflicts between priorities, including environmental priorities, will inevitably require trade-offs. Indeed the potential monuments pose significant costs to renewable energy production if the preservationist impulse is followed.
By Ryan M. Yonk, Brian C. Steed, and Randy T Simmons, 2011
This paper seeks to investigate the conflicting belief regarding the economic impacts of federally designated Wilderness through empirical statistical analysis of the economic conditions present in Wilderness and Non-Wilderness counties over time. Using U.S. Census Data for all counties across the United States we study the impact of Wilderness by examining whether there is an identifiable difference within the economies of Wilderness and Non-Wilderness Counties over time. Our statistical analysis of economic conditions shows that once federal transfers are controlled for neither total tax receipts nor total payroll appear affected by the presence of federally designated wilderness.
By Sarah Reale, Randy T Simmons, Ryan M. Yonk, and Brian C. Steed, 2012
Each of the 3,141 counties in the United States is unique, with varying physical characteristics. Among them approximately 287 have areas designated as Wilderness within their boundaries. Arguments about the costs and benefits of having these designated lands within a county have been consistent and often acrimonious. Explorations of the impacts of Wilderness protection on local economies, quality of life, and the tourism industry have been explored in the scholarly literature. Despite these explorations to date no research has been completed in regards to the effects Wilderness Lands on local government tax revenue or spending patterns that are core contentions in the academic and policy literatures.
By Brian C. Steed, Ryan M. Yonk, and Randy T Simmons. 2011.
Wilderness is one of the most contentious issues in American public lands management. Local officials often bemoan Wilderness designations as creating economic hardships by limiting extractive industries, outdoor recreation, and the siting of transportation corridors, water and power lines, and telecommunication facilities. In direct contrast, many environmentalists allege that Wilderness creates economic benefits for local communities through increasing property values and from benefitting the tourism industry. This study explores the economic claims by examining empirical evidence of identifiable differences in the economic conditions of Wilderness and Non-Wilderness Counties. Some Wilderness can have positive economic impacts but our findings indicate that this is not the general rule. We find that when controlling for other types of federally held land and additional factors impacting economic conditions, federally designated Wilderness negatively impacts local economic conditions. Specifically, we find a significant negative relationship between the presence of Wilderness and county total payroll, county tax receipts, and county average household income. By working together with local communities to address their concerns, environmentalists can help develop balanced policy that genuinely acknowledges the local economic costs associated with Wilderness.
Download a summary of the projects we have completed by clicking here.