Interactions between state-level emissions reduction policies

Renewable portfolio standards (RPS) have been implemented in many US states as a mechanism to reduce greenhouse gas (GHG) emissions and become more energy independent. One of these states, Colorado, has enacted an RPS requiring 20% of electricity sold within the state come from renewable sources by 2020. In this paper we present results of a dynamic computable general equilibrium model of the state economy to demonstrate the economic impacts of the RPS. Results are presented for the RPS alone and in conjunction with the state's long-term emissions reduction goals. We find that compared to the emissions reduction alone, leakage rates and emissions allowance prices are reduced in early years, but this benefit is lost as the emissions limit becomes more restrictive.