Economics ETDs

Publication Date

9-10-2010

Abstract

The RPS has become the most important instrument in United States to encourage the generation of electricity through the use of renewable energy. In brief, the RPS is a policy mechanism that requires suppliers of electricity to provide a specific percentage of their energy supply from some form of renewable energy. Such a percentage is referred to as the RPS ultimate target. In this thesis factors affecting the adoption of an RPS by U.S. states are investigated. Through statistical regression, this thesis specifically studies the effects of political views, energy endowments, electricity markets, economic factors, and other variables. These factors are related to pollution levels and geographical location in the adoption of an RPS and its ultimate target. Raw data from several federal agencies, national laboratories, and the U.S Census Bureau were collected and used in the analysis. Independent variables are related to energy generation, geographical location in the electricity generation grid, political tendency, economic indicators, electricity market, and pollution. The dependent variable represents the adoption or not of the RPS and its ultimate target. Since only a fraction of the states have adopted an RPS policy and defined a target, data associated with the RPS exhibits what is termed as a corner solution response, meaning that data is continuous and non-negative over strictly positive values, but takes the value zero for some non-trivial fraction of the population. Thus, a Tobit model was used for the analysis. Results indicate that the Tobit model yields a valid representation of the data. For comparison, a model based on an OLS has also been estimated and its results are in agreement with those obtained for the Tobit model.

Degree Name

Economics

Level of Degree

Masters

Department Name

Department of Economics

First Advisor

Grimsrud, Kristine

Second Advisor

Chermak, Janie

First Committee Member (Chair)

Thacher, Jennifer

Language

English

Keywords

Renewable Portfolio Standards, Tobit model

Document Type

Thesis

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