Labour Market Impacts of Renewable Portfolio Standards

This paper examines how the U.S. Renewable Portfolio Standards (RPS) policy affects the jobs of renewable energy (RE) (solar, hydropower and wind) and conventional energy (CE) (coal and natural gas) industries through panel data. Exploiting the state-level variations in the RPS target rates, this paper also investigates if any spillover effects of the RPS exist from neighbouring states using a fixed-effects vector decomposition model. Findings indicate that an escalation in the RPS target rate increases employment opportunities within the RE sector, while simultaneously causing a decline in employment within the CE sector. Establishing a positive RPS target rate is crucial because the spillover effect from each state has a significantly positive impact. The decision of a state to set its own RPS target plays a crucial role in shaping the level of spillover effects on job creation.