State and Federal Renewable Energy Policy: Understanding Influences and Impacts

Abstract

Renewable energy has become a multi-billion dollar industry in the United States with the assistance of billions of dollars in state and federal financial incentives. As renewable energy continues to be discussed as the future of our electrical energy, this topic will become increasingly important in the years to come. To help this young industry, state governments have adopted several hundred policies that are designed to encourage the installation of renewable energy systems. With billions of dollars on the line, it is important to understand what influences the adoption of these policies. While examining the adoption of the twenty-two different types of renewable energy policies that states have adopted, I implement a strategy of analysis that is designed to address several methodological concerns that are typically associated with these types of studies. In the end, the statistical evidence supports my analytical innovations, and I provide a strong understanding of what influences a state to adopt these policies. While understanding what influences a state to adopt these policies is important to our understanding of state politics and policymaking in general, it is also essential to determine if these policies achieve their intended goals of encouraging the installation of renewable energy systems. Previous research suggests that using financial incentives to achieve a policy goal typically fails. Using an improved analytical approach, I examine the influence of these policies on the construction of wind turbines in each state. The results provide evidence that some of these policies provide a strong impact on the construction of wind turbines. Importantly, these results can inform policymakers as to which policies appear to be successful, and which may not be worth the loss of tax revenue.