Ways Forward in Energy Markets and the Environment

Renewable energy sources have come to the forefront of energy production policy over the last twenty years. Studies of external and direct costs of both renewable and nonrenewable energy sources have contributed to growing understandings of ways in which these energy sources can be compared in a monetary context. Using data from the U.S. Energy Information Administration (EIA) alongside international data from the International Renewable Energy Agency (IRENA) among other sources, we have developed forecasts for the future costs, both direct and social, of each energy source as well as a difference-in-difference experiment to determine potential effects of state-level energy policy changes on state level energy prices. Forecasting is generally reliable as long as no major shocks to the variables in question present themselves during the period being forecast. This paper finds that renewable energy’s social and direct costs are both forecasted to be lower than nonrenewable energy’s cost even while considering renewable energy’s higher up-front costs. Additionally, statewide energy policy appears to have no significant effect on renewable energy prices in the three years following adoption, so further research with larger datasets is recommended