Across state capitals and in Washington, policymakers are scrambling to address voters’ alarm over electricity bills. The Trump administration is unwinding major climate regulations, Democrats are focusing more on affordability concerns than climate change, and governors are quietly paring back clean energy subsidies and emissions mandates they championed only a few years ago. [some emphasis, links added]
Climate policies are starting to bite, and the political strategy that helped enact them, downplaying costs and obscuring tradeoffs, is becoming harder to sustain as ratepayers see the impact on their bills.
One of the country’s most popular climate policies has largely escaped this scrutiny. More than half of the states have a renewable portfolio standard, or RPS, which requires utilities to source a specified share of electricity from qualifying renewable sources such as wind and solar.
Many standards are scheduled to climb sharply in the coming years. Rhode Island, for example, requires 100% renewable electricity by 2033. Fifteen states plus D.C. will require more than 50% by 2050.
States should take a hard look at these mandates. RPS programs distort electricity markets, favor politically preferred technologies over least-cost generation, and hide costs in ways that make honest debate nearly impossible.
When most states adopted RPS programs in the 2000s, the standards were appealing in part because they avoided putting an explicit price on emissions reductions.
The costs are real, but they are buried in rate-base calculations and other utility expenses, making it harder for ratepayers to see the true price of climate policy.
Obscuring costs does not make them disappear. The most visible channel is direct compliance, as utilities pay for renewable generation or buy renewable energy credits to meet the mandate.
Lawrence Berkeley National Laboratory estimates these compliance costs averaged 4.3% of retail electricity bills in 2024. In some jurisdictions, the share was far higher. New Jersey’s compliance costs reached nearly 12% of bills, and the District of Columbia exceeded 15%.
RPS policies can also raise prices indirectly, through transmission expansion to reach remote wind and solar sites and the expense of backing up intermittent generation.
Estimating the full effect is difficult, and some of the apparent connection between RPS and retail prices reflects preexisting state characteristics rather than the policy itself. But studies of the long-run effects of RPS mandates have found retail prices in RPS states 11 to 17% higher than in comparable non-RPS states.
What is striking is that the evidence that RPS mandates caused large amounts of renewable deployment beyond what federal tax credits and falling technology costs would have driven is weak or inconsistent.
More than 60% of new renewable capacity in 2024 was built outside RPS compliance frameworks. Much of the emissions reductions credited to the policies appear to come not from cleaner supply but from higher prices suppressing electricity demand.
Even if those reductions are worth pursuing, RPS is a costlier path than the alternatives. Economists have long argued that pricing emissions directly, or crediting generators based on their actual emissions intensity, can achieve environmental gains at lower cost.
Renewable mandates ignore cheaper options, such as switching from coal to natural gas, and instead force a binary distinction between “clean” and “dirty” technologies.
The result is a policy that rewards favored resources rather than the cheapest path to lower emissions.
These costs are likely to become more visible.
The One Big Beautiful Bill curtailed the Inflation Reduction Act’s clean-energy tax credits, shifting more of the cost of state renewable mandates from federal taxpayers onto state ratepayers.
In contrast, state targets continue to climb just as electricity demand is projected to grow.
Now is the time to reconsider RPS. Over the past decade, West Virginia, Kansas, Montana, and Texas have variously repealed their standards, converted them to voluntary goals, or let them lapse.
Most recently, the Arizona Corporation Commission voted to repeal the state’s RPS. The state attorney general is challenging the decision, but if it survives, it would be a step in the right direction.
Other states should follow. The best option is outright repeal. Short of that, mandates should be converted into voluntary goals that let governors signal climate commitments without forcing utilities to comply when renewables are not cost-competitive.
At a minimum, states should freeze target increases and remove provisions that add further distortions, such as in-state sourcing requirements or technology-specific quotas.
Electricity affordability is now the defining concern in energy policy. The programs that deserve the most scrutiny are those that distort electricity markets, drive up prices, and achieve their environmental goals less efficiently than the alternatives.
RPS is an easy place to start, especially since rising targets will only push electricity bills higher. Now is the time to reform policies that ask voters to pay more than they should for climate ambition.
Read more at RealClearEnergy
