Climate Bill Must Be Strengthened to Spur Investment in Energy Efficiency to Save Consumers $Billions, Create Millions of New Jobs, Support Robust Economy

October 27, 2009

Media Contact(s):

John A. "Skip" Laitner , 202-507-4029, Consultant

Washington, D.C.A report released today by the American Council for an Energy-Efficient Economy (ACEEE) sets the record straight about the long-term economic impacts of cap-and-trade legislation and demonstrates how climate legislation that encourages energy-saving investments will create millions of jobs and save U.S. consumers billions on monthly energy bills. Climate Change Policy as an Economic Redevelopment Opportunity: The Role of Productive Investments in Mitigating Greenhouse Gas Emissions offers critical insights about climate legislation just as U.S. Senate Environment and Public Works Committee Chairman, Senator Barbara Boxer (D-CA), introduces her new climate bill and hosts a week of hearings.  

“Energy efficiency is the 800-pound economic behemoth that senators need to invite into the room,” said ACEEE Executive Director Steven Nadel. “Encouraging even modest investments in energy efficiency will spur innovation, create more jobs, and save consumers money while meeting our environmental responsibilities and increasing our energy security. Unfortunately, the Chairman’s Mark released Friday moves in the wrong direction — instead of increasing allocations to energy efficiency as recommended in this report, they have decreased efficiency allocations relative to the House-passed bill.”

In addition to providing detailed estimates of the job creation, consumer savings, and economic growth impacts of the House-passed energy and climate bill (and improved versions under consideration), the report "unpacks" unreliable studies funded by opponents of cap-and-trade policies. Those studies distort the long-term economic impacts of climate legislation because they assume climate legislation mandates are simply regulatory costs imposed on the economy and fail to account for the economic benefits of investments in energy efficiency.

“By conveniently omitting the proven economic payoffs of energy efficiency investments, opponents of clean energy legislation are painting a misleading picture for policymakers,” said Skip Laitner, the author of the report and Director of ACEEE’s Economic and Social Analysis program. “What’s worse, they’re selling short the ingenuity and commitment of American businesses, workers, and homeowners.”

H.R. 2454, passed by the U.S. House in June, would stimulate investments that save energy and benefit the economy. Improvements to this bill that encourage greater levels of investments in energy efficiency could deliver net energy bill savings of $400 billion by 2030 and nearly $470 billion by 2050,  while also generating more than 2 million additional jobs by 2050 (nearly double the jobs that would be created by H.R. 2454 as passed by the House of Representatives).

Even stronger provisions could yield markedly greater benefits, tripling potential consumer savings. (See the table below for details.) These and other economic gains could be achieved by directing a mere 3 percent of the total investment dollars in the U.S. economy to construction of factories, buildings, equipment, vehicles, appliances, and other investments that meet higher efficiency standards.
 

Impacts of House-Passed H.R. 2454 and Two Improved Versions of the Legislation

Financial and Economic Indicators

H.R. 2454 Basic EE

(Scenario 1)

Enhanced EE

(Scenario 2)

Optimal EE

(Scenario 3)

2030

2050

2030

2050

2030

2050

Baseline Scenario Emissions (MMTCO2e)

7,954

8,879

7,954

8,879

7,954

8,879

             

Carbon Price ($/tCO2e)

$47

$239

$41

$185

$35

$128

             

U.S. Policy Scenario Emissions (MMTCO2e)

3,911

2,095

3,855

2,102

3,742

2,098

   Percent Reduction from Baseline Scenario

51%

76%

52%

76%

53%

76%

             

Financial Impacts (Billion 2007 Dollars)

           

   Policy and Program Cost

12

17

16

20

23

31

   Annual Payments on Investments

119

94

133

112

161

171

   Energy Bill Savings

$485

$321

$548

$600

$637

$926

   Net Consumer Savings

$354

$209

$399

$467

$452

$724

             

Macroeconomic Impacts

           

    Change in employment (thousand jobs)

424

1,176

743

2,001

1,017

2,577

        Percent change from baseline scenario

0.2%

0.4%

0.3%

0.7%

0.4%

0.9%

In its report, ACEEE examined the economic impacts of three policy scenarios designed to meet goals for reducing greenhouse gas emissions and energy waste:

  • H.R. 2454 as passed by the House of Representatives;
  • an improved version containing higher energy savings targets for electric utilities to meet, continued state and municipal energy efficiency programs, and a requirement that electric utilities invest one-third of their free carbon emissions allowances to help customers reduce energy use; and
  • a further improved version of energy and climate legislation that would generate roughly double the energy savings of the House-passed bill.

“Standing by and doing nothing will expose us to the perils of climate change and needlessly double our energy bills,” concluded Laitner. “Clean energy legislation that encourages investments in energy efficiency is the only recipe that will ensure a robust economy, a healthy climate, and satisfied voters.”

Climate Change Policy as an Economic Redevelopment Opportunity: The Role of Productive Investments in Mitigating Greenhouse Gas Emissions is available for free download or a hard copy can be purchased for $25 plus $5 postage and handling from ACEEE Publications, 529 14th St, N.W., Suite 600, Washington, D.C. 20045, phone: 202-507-4000, e-mail: aceee_publications@aceee.org.

The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security, and environmental protection. For information about ACEEE and its programs, publications, and conferences, visit aceee.org.