Energy Efficiency Saves California $56 Billion, Creates 1.5 Million Jobs

In case you ever doubted that efficiency was one of the most profitable energy solutions, here’s another batch of evidence:

From 1972 to 2006, California saved $56 billion in electricity costs; created 1.5 million full-time jobs in low-carbon sectors; and added $45 billion in payroll. All from efficiency improvements alone.

So finds an exhaustive new report (pdf) from economist David Roland-Holst of the University of California at Berkeley.

California’s landmark efficiency policies are well-documented. Its per-capita energy usage is 40 percent below the national average. But for the first time ever, Roland-Holst has crunched the historical data to measure the economy-wide impact of that feat and finds:

Had the state not embarked on its ambitious path to reduce emissions over three decades ago, the California economy would be in a significantly more vulnerable position today.

Lower energy use has enabled Californians to spend less on fuel imports and fuel services and more on goods and services, "whose supply chains largely reside within the state, creating a strong 'multiplier' effect of job creation."

Roland-Holst puts it simply:

If you can save money for households on their electricity bills, they will spend that money on more customary spending, like espresso drinks and haircuts.

The result: a million and a half new jobs in California, for Californians among retailers, wholesalers, food processors, transport, farmers and other in-state businesses.

Of course, California's efficiency gains resulted in much slower jobs growth in the carbon fuel supply chain (oil, gas, electric power), as expenditures shifted away from that sector. But: With every new job lost in the energy supply chain, more than 50 new jobs were created across the state's whole economy.

And those jobs, the research reveals, were born in lesser energy-intensive sectors, "further compounding California's aggregate efficiency improvements and facilitating the economy's transition to a low carbon future."

(See page 28 of the report for a graph of net job creation by sector.)

The report, called "Energy Efficiency, Innovation, and Job Creation in California," goes on to forecast the economic effects of the state’s more aggressive policies -- those of AB 32, California’s climate law. The law proposes to reduce emissions to 1990 levels by 2020. If its measures can improve energy efficiency by just one percent per year -- likely -- then California will create another 400,000 new jobs in about a decade.

We find that the proposed package of policies in the state’s Draft Scoping Plan achieves 100 percent of the greenhouse gas emissions reduction targets as mandated by AB 32, while increasing the Gross State Product (GSP) by about $76 billion, increasing real household incomes by up to $48 billion and creating as many as 403,000 new efficiency and climate action driven jobs.

One thing we can conclude: California’s efficiency and climate policies offer a vision for the whole nation to follow. They’re proven models for slashing CO2 emissions and energy usage while achieving net economic benefits.

Without efficiency gains, the state would have been forced to spend billions on 24 new giant power plants.

Now imagine if the feds didn't lag so badly.

Imagine the 100 or so power plants the nation could have avoided by now if Washington had invested in ways to wring more energy out of what we're using, instead of producing and buying more of it. Imagine the explosion of green-collar jobs -- similar to the kind observed in California since the 1970s. But all across the US.

Remember: The report finds that California's innovation on efficiency has helped to soften the blow of the current economic downturn there.

It's just as The Economist explained it:

The only by-product of energy efficiency is wealth.

Just imagine...

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