State Policy and Lobbying in a Federal System: Evidence from the Production Tax Credit for Renewable Energy, 1998–2012

Abstract

State policies shape firms’ incentives to lobby in the United States, but the existing lobbying literature mostly ignores these incentives. Using lobbying records for all electric utilities in the United States from 1998 to 2012, we examine how state policies affect federal lobbying by both proponents and opponents of federal support for the renewable energy policy. Our theory predicts that supportive state policies reduce the returns to lobbying by both proponents and opponents. Empirically, we show that when the federal production tax credit for renewable energy is about to expire, electric utilities from states without renewable portfolio standards become more likely to lobby than those from states with these policies. Because the timing of the expiration of the production tax credit is quasi-random, these findings carry a causal interpretation. Using text analysis techniques, we also show that the lobbying efforts are focused on energy and environmental issues while lobbying on unrelated topics remains unaffected.

The home state effect: How subnational governments shape climate coalitions

“…Evidence of a home state effect on national firm preferences and coalition membership has important theoretical and empirical implications. Theoretically, this article contributes to a growing body of work exploring interest group mobilization across federal systems, including with regard to unions, city governments, and firms (Darmofal et al., 2019; Goldstein & You, 2017; Kim et al., 2021; Trachtman, 2023). We expand specifically the notion of the “California effect.” Both state policy and state politics can shape firms' national political behavior, and the effect extends to sectors not exposed to inter‐state trade.…”

“…Recent research has begun to pay greater attention to these effects, including with regard to unions, city governments, and firms (Darmofal et al, 2019;Goldstein & You, 2017). Recent work on firms, in particular Kim et al (2021), explores how exposure to particular state energy policies compels some firms to lobby federally. Here, we study a broader set of mechanisms by which state policy and politics affect the preferences of firms in national policymaking.…”

“…Recent work on firms, in particular Kim et al. (2021), explores how exposure to particular state energy policies compels some firms to lobby federally. Here, we study a broader set of mechanisms by which state policy and politics affect the preferences of firms in national policymaking.…”

Interdisciplinary Vision of the Digitalized Future Energy Systems

“…First, European and Oceania countries have established feed-in tariff that credits a fixed price for renewable production regardless of the market price [73], [74]. Second, in US, production tax credit is provided as tariff to support the expansion of wind energy market [75]. Its mechanism is to pay a fixed amount on top of the market price.…”

Metropolitan water purification facilities towards variability mitigation of the renewable resources: Optimal bid method for small hydropower generators

“…et al [ 19 ] and Goodarzi. et al [ 20 ] asserted introduction of incentivizing policies for mitigation of the variability caused in the power system, whereas the incentive policies thus far have been focused on the tax credits and additional complementary supports from the municipal organizations [ 21 , 22 ]. As the market-based measure mentioned former, the energy market requiring the participants to control the variability within the desired tolerance specified at the system operators’ discretions were introduced in the nations orienting towards carbon neutral power systems such as Great Britain, India, the Republic of Korea and Australia.…”