Are fluctuations in production of renewable energy permanent or transitory?

Hooi Hooi Lean () and Russell Smyth

No 05-12, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This study examines the integration properties of total renewable energy production, as well as production of biofuels and biomass in the United States. To do so we employ Lagrange Multiplier(LM) univariate unit root tests with up to two structural breaks. We conclude that each production series contains a unit root. This result suggests that random shocks, including regulatory changes, to renewable energy production may lead to permanent departures from predetermined target levels. Furthermore, this result implies that positive shocks associated with a permanent policy stance (such as renewable portfolio standards) that increases the production of renewable energy resources will realize more in terms of positively altering the energy mix between renewable energy and energy from fossil fuels than temporary policy stances (such as investment tax credits over a predetermined time horizon).

Pages: 28 pages
Date: 2012-03
New Economics Papers: this item is included in nep-ene and nep-env
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Journal Article: Are fluctuations in US production of renewable energy permanent or transitory? (2013)
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