The Renewable Portfolio Standard (RPS) is a renewable energy policy that ensures a minimum amount of renewable energy in the portfolio of electric-generating resources serving a state. This article first analyzes theoretically expected effects of RPS on renewable energy quantities, electricity price, and emissions. With a balanced panel of 48 states for 1990-2008, this paper estimates causal impact of RPS through an econometric model. During these regressions, a new measure for RPS indicator has also been introduced to deal with the heterogeneity problem. This paper also account for the partial effect and the different trends of outcomes in the absence of RPS across states. The estimators imply that RPS on average are effective in having a positive impact on renewable energy share but not that efficient since significantly increasing the electricity price. This research also finds that strengthening RPS can reduce carbon and other emissions but these benefits cannot fully compensate the consumer surplus loss caused by RPS, which finally implies a national-wide RPS is likely to be inefficient even with emission concern. Finally, the breakeven price is estimated, which implies the policies' cost of reducing the emissions. This paper also does same analysis on regional level and concludes that RPS is likely to be efficient in Midwest and in West but not that efficient in Northeast and in South with emission concern.
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