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Effect of Natural Gas Prices on Renewable Portfolio Standard Impacts

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  • Christopher Hannum

    (University of Central Asia, Tajikistan.)

Abstract

Climate policy in the United States is often carried out at the state level rather than the national level, including renewable portfolio standards for the electricity generation sector. We assess the impacts of the RPS in the State of Colorado, one of the first to be implemented, using a recursive dynamic CGE model CO-E. The RPS reduces real household income in the state by an annualized value of $134.8 million in 2025 if natural gas prices are low, but results in increased incomes with medium or high natural gas prices although with medium natural gas prices the RPS causes electricity prices to rise. The impacts of the RPS are negatively correlated with those of natural gas price shocks to the overall state economy. As a result, the RPS serves as a partial insurance policy for the State against natural gas price shocks, which adds $4.53 million to the annualized benefit of the policy.

Suggested Citation

  • Christopher Hannum, 2023. "Effect of Natural Gas Prices on Renewable Portfolio Standard Impacts," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 391-403, March.
    • Handle: RePEc:eco:journ2:2023-02-44
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    More about this item

    Keywords

    Electricity; Natural Gas; Energy Policy; Renewable Portfolio Standard; Computable General Equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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