Factors Affecting the Rise of Renewable Energy in the U.S.: Concern over Environmental Quality or Rising Unemployment?

Abstract

This paper studies the development of renewable energy (RE) in the U.S. by examining the capacity to generate electricity from renewable sources. RE capacity exhibits a U-shaped relationship with per capita income, similar to other metrics for environmental quality (EQ). To explain this phenomenon, I consider several of the environmental Kuznets curve theories that describe the relationship between income and environmental quality (Y-EQ), including evolving property rights, increased demand for improved EQ, and changing economic composition. The results fail to provide support for the Y-EQ theories. I further consider the alternative hypothesis that increases in unemployment lead to increases in relative RE capacity, suggesting that promoting RE projects as a potential job creator is one of the main drivers of RE projects. The results imply that lagged unemployment is a significant predictor of relative RE capacity, particularly for states with a large manufacturing share of GDP.

Keywords

Renewable energy Environmental quality Environmental Kuznets curve Electricity mix Transition Unemployment

Get full access to this article

View all access options for this article.

References

Andreoni

Levinson

(2001). “The simple analytics of the environmental Kuznets curve.” Journal of Public Economics 80 (2): 269-286. https://dx-doi-org.web.bisu.edu.cn/10.1016/S0047-2727(00)00110-9.

Apergis

Payne

(2010). “Renewable energy consumption and growth in Eurasia.” Energy Economics 32 (6):13921397. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.eneco.2010.06.001.

Apergis

Payne

(2011). “The renewable energy consumption-growth nexus in Central America.” Applied Energy 88 (1): 343-347. https://dx-doi-org.web.bisu.edu.cn/10.1016Zj.apenergy.2010.07.013.

Apergis

Payne

(2012). “Renewable and non-renewable energy consumption-growth nexus: Evidence from a panel error correction model.” Energy Economics 34 (3): 733-738. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.eneco.2011.04.007.

Aslanidis

Iranzo

(2009). “Environment and development: Is there a Kuznets curve for CO2 emissions?” Applied Economics 41 (6): 803-810. https://dx-doi-org.web.bisu.edu.cn/10.1080/00036840601018994.

Bergmann

Colombo

Hanley

(2008). “Rural versus urban preferences for renewable energy developments.” Ecological Economics 65 (3): 616-625. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.ecolecon.2007.08.011.

Bhattacharya

Lueck

(2009). “The role of property rights in determining the environmental quality-income relationship.” Ecological Economics 68 (10): 2511-2524. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.ecolecon.2009.04.023.

Blazevic

(2009). “The role of renewable energy sources in regional tourism development.” Tourism and Hospitality Management 15 (1): 25-36.

Bollino

C. A.

(2009). “The willingness to pay for renewable energy sources: The case of Italy with socio-demographic determinants.” The Energy Journal 30 (2): 81-96.

10.

Burke

P. J.

(2010). “Income, resources, and electricity mix.” Energy Economics 32 (3): 616-626. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.eneco.2010.01.012.

11.

Carley

(2009). “State renewable energy electricity policies: An empirical evaluation of effectiveness.” Energy Policy 37 (8): 3071-3081. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2009.03.062.

12.

Carley

(2012). “A clean energy standard: Experience from the states.” Re-view of Policy Research 29 (2): 301-307. https://dx-doi-org.web.bisu.edu.cn/10.1111/j.1541-1338.2011.00553.x.

13.

Carson

(2010). “The environmental Kuznets curve: Seeking empirical regularity and theoretical structure.” Review of Environmental Economics and Policy 4 (1): 3-23. https://dx-doi-org.web.bisu.edu.cn/10.1093/reep/rep021.

14.

Cole

Rayner

Bates

(1997). “The environmental Kuznets curve: An empirical analysis.” Environment and Development Economics 2 (04): 401-416. https://dx-doi-org.web.bisu.edu.cn/10.1017/S1355770X97000211.

15.

Cropper

Griffiths

(1994). “The interaction of population growth and environmental quality.” The American Economic Review 84 (2): 250-254.

16.

Dasgupta

Laplante

Wang

Wheeler

(2002). “Confronting the environmental Kuznets curve.” The Journal of Economic Perspectives 16 (1): 147-168. https://dx-doi-org.web.bisu.edu.cn/10.1257/0895330027157.

17.

Delmas

M. A.

Montes-Sancho

M. J.

(2011). “U.S. state policies for renewable energy: Context and effectiveness.” Energy Policy 39 (5): 2273-2288. https://dx-doi-org.web.bisu.edu.cn/10.10167j.enpol.2011.01.034.

18.

Dinda

(2004). “Environmental Kuznets curve hypothesis: A survey.” Ecological Economics 49 (4): 431-455. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.ecolecon.2004.02.011.

19.

Dong

(2012). “Feed-in tariff vs. renewable portfolio standard: An empirical test of their relative effectiveness in promoting wind capacity development.” Energy Policy 42: 476-485. https://dx-doi-org.web.bisu.edu.cn/10.1016Zj.enpol.2011.12.014.

20.

Denny

Ellerman A.

Schmalensee

Richard

Joskow

P. L.

Montero

J. P.

Bailey

E. M.

(1997). Emissions trading under the U.S. Acid Rain Program: Evaluation of compliance costs and allowance market performance. Massachusetts Institute of Technology Center for Energy and Environmental Policy Research.

21.

Ellis

(1996). “Why promote renewable energy?” OECD Observer 201: 17-20.

22.

Energy Retailer Research Consortium (2008). Annual Baseline Assessment of Choice in Canada and the United States. Technical report, Distributed Energy Financial Group.

23.

Fischer

Preonas

(2010). “Combining policies for renewable energy: Is the whole less than the sum of its parts?” International Review of Environmental and Resource Economics 4: 51-92. https://dx-doi-org.web.bisu.edu.cn/10.1561/101.00000030.

24.

Green

Yatchew

(2012). “Support schemes for renewable energy: An economic analysis.” Economics of Energy and Environmental Policy 1 (2): 83-98. https://dx-doi-org.web.bisu.edu.cn/10.5547/2160-5890.1.2.6.

25.

Huang

Alavalapati

Carter

Langholtz

(2007). “Is the choice of renewable portfolio standards random?” Energy Policy 35 (11): 5571-5575. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2007.06.010.

26.

Jenner

Chan

Frankenberger

Gabel

(2012). “What drives states to support renewable energy?” The Energy Journal 33 (2): 1-12. https://dx-doi-org.web.bisu.edu.cn/10.5547/01956574.33.2.1.

27.

Long

(1993). “An econometric analysis of residential expenditures on energy conservation and renewable energy sources.” Energy Economics 15 (4): 232-238. https://dx-doi-org.web.bisu.edu.cn/10.1016/0140-9883(93)90012-G.

28.

Madlener

Stagl

(2005). “Sustainability-guided promotion of renewable electricity generation.” Ecological Economics 53 (2): 147-167. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.ecolecon.2004.12.016.

29.

Marques

Fuinhas

Manso

(2011). “A quantile approach to identify factors promoting renewable energy in European countries.” Environmental and Resource Economics 49(3): 351-366.

30.

Marques

A. C.

Fuinhas

J. A.

(2012). “Are public policies towards renewables successful? Evidence from European countries.” Renewable Energy 44: 109-118. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.renene.2012.01.007.

31.

Menegaki

(2011). “Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis.” Energy Economics 33 (2): 257-263. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.eneco.2010.10.004.

32.

Menz

F. C.

Vachon

(2006). “The effectiveness of different policy regimes for promoting wind power: Experiences from the States.” Energy Policy 34 (14): 1786-1796. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2004.12.018.

33.

Oliver

Volschenk

Smit

(2011). “Residential consumers in the Cape Peninsulas willingness to pay for premium priced green electricity.” Energy Policy 39 (2): 544-550. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2010.10.012.

34.

Panayotou

(1999). “The economics of environments in transition.” Environment and Development Economics 4 (04): 401-412. https://dx-doi-org.web.bisu.edu.cn/10.1017/S1355770X99000261.

35.

Rothman

(1998). “Environmental Kuznets curves—real progress or passing the buck?: A case for consumption-based approaches.” Ecological Economics 25 (2): 177-194. https://dx-doi-org.web.bisu.edu.cn/10.1016/S0921-8009(97)00179-1.

36.

Sadorsky

(2009). “Renewable energy consumption and income in emerging economies.” Energy Policy 37 (10): 4021-4028. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2009.05.003.

37.

Sari

Ewing

B. T.

Soytas

(2008). “The relationship between disaggregate energy consumption and industrial production in the United States: An ARDL approach.” Energy Economics 30 (5): 2302-2313. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.eneco.2007.10.002.

38.

Schmalensee

Stoker

T. M.

Judson

R. A.

(1998). “World carbon dioxide emissions: 1950-2050.” Review of Economics and Statistics 80 (1): 15-27. https://dx-doi-org.web.bisu.edu.cn/10.1162/003465398557294.

39.

Shrimali

Kniefel

(2011). “Are government policies effective in promoting deployment of renewable electricity resources?” Energy Policy 39 (9): 4726-4741. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2011.06.055.

40.

Stern

(2004). “The rise and fall of the environmental Kuznets curve.” World Development 32 (8): 1419-1439. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.worlddev.2004.03.004.

41.

Stern

Common

(2001). “Is there an environmental Kuznets curve for sulfur?” Journal of Environmental Economics and Management 41 (2): 162-178. https://dx-doi-org.web.bisu.edu.cn/10.1006/jeem.2000.1132.

42.

Suri

Chapman

(1998). “Economic growth, trade and energy: Implications for the environmental Kuznets curve.” Ecological Economics 25 (2): 195-208. https://dx-doi-org.web.bisu.edu.cn/10.1016/S0921-8009(97)00180-8.

43.

Tahvonen

Salo

(2001). “Economic growth and transitions between renewable and nonrenewable energy resources.” European Economic Review 45 (8): 1379-1398. https://dx-doi-org.web.bisu.edu.cn/10.1016/S0014-2921(00)00062-3.

44.

Wei

Patadia

Kammen

(2010). “Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the U.S.?” Energy Policy 38 (2): 919-931. https://dx-doi-org.web.bisu.edu.cn/10.1016/j.enpol.2009.10.044.

45.

Wiser

Porter

Clemmer

(2000). “Emerging Markets for Renewable Energy The Role of State Policies during Restructuring.” The Electricity Journal 13 (1): 13-24. https://dx-doi-org.web.bisu.edu.cn/10.1016/S1040-6190(99)00101-3.

46.

Yin

Powers

(2010). “Do state renewable portfolio standards promote in-state renewable generation.” Energy Policy 38 (2): 1140-1149. https://dx-doi-org.web.bisu.edu.cn/10.1016Zj.enpol.2009.10.067.