The impact of investments in energy efficiency extends well beyond reducing energy costs or addressing the environmental impacts of energy extraction and use. These investments provide jobs for American workers and help them to support their families and communities.
ACEEE has just released a series of six profiles of real world experiences in energy efficiency job creation. These profiles describe programs, policies, investments, partnerships, and business models that have catalyzed regional increases in employment. While previous ACEEE work has provided an analytic framework for how jobs are created through efficiency, this paper focuses on the jobs themselves.
Energy efficiency catalyzes employment opportunities that draw upon the broad range of Americans’ skills. Moreover, as companies’ investments in energy efficiency improve their bottom lines, they experience increased competitiveness, which is a potential contributing factor in bringing jobs back to American soil. Each profile serves as an independent portrait of the various driving forces behind energy efficiency job creation, illustrates the diversity of energy efficiency jobs, and demonstrates the extent to which they draw upon Americans’ existing skills and competencies.
Highlights in the paper distilled from conversations with program representatives and literature review include:
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OPower: Opower is a privately held software company that partners with utilities to develop feedback reports on home energy performance. Since the launch of the company, OPower has grown to employ more than 240 software engineers, programmers, and sales and marketing experts.
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New York City Greener, Greater Buildings Plan: In 2009,The New York City Greener, Greater Buildings Plan was enacted. Four local laws require, among other actions, annual benchmarking of building energy performance and retro-commissioning. A number of firms have employed energy analysts to meet the need for assistance with compliance, and the subsequent demand for assistance in interpreting benchmarking metrics and applying the information to investment decisions. The city estimates that the laws will generate $700 million in savings and create roughly 17,800 construction jobs over 10 years.
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Nissan North America: In 2006, in the aftermath of Hurricane Katrina and amidst rising natural gas prices, Nissan made the decision to prioritize investments in energy efficiency and establish a rigorous energy-management program to control manufacturing costs and become more competitive. By improving the cost-effectiveness of the production process, Nissan is now more competitive, creating and retaining jobs on U.S. soil.
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Ohio Low-Income Weatherization: During the ARRA period, the Corporation for Ohio Appalachian Development (COAD) weatherized 9,000 homes and expanded its workforce by 400 people and catalyzed a total of 188 indirect and induced jobs in Ohio. They are now working on approaches to sustain program funding without ARRA funding. COAD estimates that at full funding, given current demand, the program could support approximately 1,600 jobs over the next 20 years.
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Johnson Controls, Wisconsin Energy Initiative: In 1992, Johnson Controls worked with the State of Wisconsin to implement energy conservation lighting projects, and expanded their efforts in 1998 to include additional efficiency measures. The total effort created 1,500 annual jobs for more than 50 private-sector companies employing architects, engineers, electricians, and maintenance workers.
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General Electric, Appliance Park: Appliance Park in Louisville, Kentucky is the headquarters for General Electric Appliances, which manufactures over 750 ENERGY STAR-qualified lighting and appliance products. A 2010 Tripp Umbach study commissioned by GE shows that the Appliance Park directly and indirectly generates $1.6 billion in the state from local purchasing and other mechanisms, and supports over 12,000 jobs in the state. For every job at Appliance Park, which employs more than 5,000 full-time employees, an additional 1.5 jobs are indirectly supported through vendor purchases or are induced through the re-spending of a GE employee’s wages.
These profiles primarily illustrate jobs arising from the implementation of efficiency measures, from the supply chain supporting this direct implementation, and from additional dollars circulating in the broader economy that are spent by workers in these categories. What we have not emphasized here are the multitude of jobs that are supported when individuals and businesses redirect the money they save by paying lower utility bills. In other words, energy efficiency does more than drive job creation through installation and investment. The subsequent cost savings from energy efficiency can also be used, in part, to support fuller levels of employment in the broader economy.
As demonstrated through our profiles, jobs supported by energy efficiency are diverse and require a variety of skill sets, many of which are abundant in the American workforce today. In sum, energy efficiency should be viewed as a powerful strategy for sustaining enduring employment that utilizes a huge range of Americans’ skills and expertise.
Comments
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Jobs Created Calculation
Thank you for these excellent examples of energy efficient job creation. It was a great article, if every nation gave their examples it would be helpful in supporting energy efficiency initiatives.
A few questions came up on the example calculation you give on pages 15-17. First, where do you obtain the data in figure A-1, is it coming from input/output studies? This is very important because in many of our countries this data is not immediately available, for example in Italy.
I have some minor questions concerning your calculations. In your business as usual scenario you give the data from a project channeled into the construction industry. However, you do not include the amount of 'business as usual' energy savings that would presumably occur without the option 1. What is the reason for this? Perhaps you have already taken it out in option 1. If this is the case, the net energy savings should also reflect this. In Europe we follow this second procedure as you can see in, SAVE contract XVII/4.1031/D/97-032, ‘National and Local Employment Impacts of Energy Efficiency Investment Programmes’ Final report to the Commission April 2000 Volume 1: Summary Report, page 32.
Another difference is the way in which one considers the alternative option 2. It is not always clear what, before hand, the government will do. What if the option 2 was also realized, then the decrease in government budget for financing the energy efficiency programme would probably come from the government sector itself, resulting in job losses with higher labour intensity (21 with your data). This would result in net job losses in the short term. Not knowing exactly what the government's intensions are, and perhaps the government is not alway clear on this point; in Europe we usually consider the alternative, a general reduction in government revenues and jobs. Of course, another point is that not all initiatives are 100% financed by the government, which introduces the method of financing into the estimate.
Again, thanks for an excellent article and excuse my nit-picking.
Thank you for your question.
Thank you for your question. The job multipliers referenced in Figure A-1 are derived from IMPLAN. MIG, Inc. 2009. “IMPLAN US Model 2009 All Sectors.” Hudson, WI: MIG, Inc. We are adding the reference into the published version of the report. If I am understanding your second question correctly, the answer is that the energy savings side of the equation is accounted for in the analysis of the long-term impact of the investment. Here we look at the effect of re-shifting spending patterns away from capital intensive energy production and distribution industries and back into the more labor-intensive economy as a whole. Finally, your observation that this type of analysis can be sensitive to the financing structure for capitalizing project is correct. In this particular scenario, we assumed that the government followed through on its stated intention, and did not perform any additional sensitivity analysis.
Appendix A example
In Appendix A, the author states that 67 net jobs are created in the first year. However, Figure A-2 shows 45 net jobs.
Can someone explain this? Thanks.
Thank you for your question.
Thank you for your question. In the first year of the investment, energy efficiency supports 45 net jobs from the initial investment, and in this scenario (which was simplified for the purposes of providing an example), we assume also recognized energy savings in the first year and supported an additional 22 net jobs. 45+22=67. We also assume that the energy savings continue to be recognized year after year for the useful life of the retrofit measures, supporting an additional 22 jobs per year for 20 years.
Job creation
Casey, thank you for in your blog describing the additional job creation from reducing the cost of energy to ratepayers, and the multiplier effect caused by this increase in wealth. I wish the paper itself had emphasized this more for the following reasons.
In the work that Evergreen Consulting has done for Energy Trust of Oregon using the Implan model, this has been shown to be by far the dominant effect. In other words, the direct jobs, and the induced jobs created by the direct jobs are the tip of the iceberg. Most jobs are created, for low-cost conservation programs, by saving ratepayers money. Conversely, if conservation is done at or above the cost of the gas and power that is avoided, these "wealth-driven" jobs are not created. Most of the benefits come from doing conservation inexpensively. So, to crate the most jobs, our challenge becomes more difficult. It is not only to get most conservation done, but to do it at as low a cost as possible. This creates some need to balance different objectives of job programs.
Thanks again for the excellent case studies