Policy Tool Interactions and the Adoption of State Renewable Portfolio Standards

We contribute to extant policy theory by focusing on interrelationships between existing policies and innovation. In particular, we call attention to the link between supply-side incentives and demand-side innovation, which has not been systematically investigated. Our research expectation is that supply-side policies generally will complement demand-side policy, leading to a positive impact on the adoption of demand-side innovations. We test this idea by examining adoptions of renewable portfolio standards (RPS), a demand-pull approach targeted to renewable energy generation by utilities, in the American states from 1991 to 2008. Event history models show that an index of supply-side financial incentives has a strong positive influence on RPS adoption. We do not find support for the hypothesis that this effect is contingent on in-state carbon-based energy generation. In conclusion, we argue that the study of policy adoption needs to give greater consideration to the interrelationships among policy instruments.