Environment Picture

Report: Energy efficiency, renewable power would give economy a shot of adrenaline

MEC assists energy partner ACEEE in release of important study
Strong policy requirements for energy efficiency programs and renewable power in Michigan will reduce electricity costs, enhance reliability, create up to 10,000 new jobs and reduce air pollution, according to an assessment released by a Washington, DC-based nonprofit.

The report, authored by the American Council for an Energy-Efficient Economy (ACEEE), is a boost for proposals currently under consideration by the Michigan Legislature that would establish efficiency programs and require renewable power.

If the appropriate legislation is adopted, Michigan will see a net employment increase of between 3,900 and 10,000 jobs by 2023 because higher levels of energy efficiency investment by utilities produce greater job growth. That would be the equivalent of adding 25 to 75 small manufacturing plants to the state, according to the report. Furthermore, businesses and households would save more than $2.6 billion on energy bills because a number of expensive new power plants would be avoided.

“We already know that efficiency is the cheapest, cleanest and fastest way for Michigan’s businesses and homeowners to reduce their energy consumption, lower their bills and reduce pollution,” said Dr. Martin Kushler, Director of ACEEE’s Utilities Program. “Now it is clear that efficiency and renewable energy are also powerful economic engines, providing jobs and manufacturing opportunities that Michigan so desperately needs.”

The ACEEE assessment dovetails with several recent economic studies showing that policies encouraging or requiring energy efficiency and clean power will provide more jobs and economic activity than will construction of new coal-fired power plants. Skip Laitner, Chief Economist at ACEEE and the study’s primary author, added: “These results are consistent with analyses that we have conducted in a number of states. If anything, Michigan has even better opportunities because it has not had any energy efficiency programs in over a decade.”

The Michigan Public Service Commission (MPSC) has forecasted state electricity consumption will grow by 1.3% per year during the next 15 years. This study shows that Michigan could nearly eliminate the need for new power plants over that time period, save billions of dollars and create thousands of new jobs in the process.

“The coal-fired power plants that are Michigan’s primary sources of electricity are dirty, outdated technology that are significant contributors to pollution, including heat-trapping carbon dioxide that accelerates global warming,” said Hugh McDiarmid, Jr. of the Michigan Environmental Council. “The beauty of this study is that a policy of energy efficiency and renewable energy saves money and creates more jobs than a path that just relies on building more power plants or buying more electricity. Clean energy is a clear winner on the economics alone. The environmental benefits are essentially a free bonus.”

Moreover, the authors also noted that the economic benefits of energy efficiency and renewable energy analyzed in this study are actually understated because the study did not attempt to include future costs of carbon emissions. Industry experts widely expect that monetary costs are likely to be placed on carbon-based fuels as a result of climate change policies in the coming years. That will further increase the cost savings of “clean energy” resources such as energy efficiency and renewable energy.

Energy efficiency is a particularly beneficial resource for ratepayers. Energy efficiency program costs are invested in local homes and businesses, and the programs use local labor for installation of energy efficiency measures (e.g., high efficiency lights, motors, appliances and other equipment). Furthermore, when ratepayers’ energy costs are reduced, they spend those savings in the local economy. Prior studies have shown that each dollar invested in energy efficiency returns at least $2.50 in savings over the life of the efficient product or process. These are some of the reasons why policies requiring strong energy efficiency programs produce net job growth in the economy.

The ACEEE assessment in this study examined two scenarios.

One was the implementation of the MPSC’s 21st Century Energy Plan base “energy efficiency scenario,” requiring utility-funded energy efficiency program savings of 0.6% to 0.9% of total electricity sales per year, plus a Renewable Energy Standard requiring 7% of each utility’s electricity to be generated from renewable sources by 2015.

The second scenario included a doubling of the energy efficiency policy requirements of the first scenario.

The results demonstrated clearly that the higher the level of energy efficiency program requirements, the greater the net savings to customers, the net job growth, and the net reductions in environmental air emissions.

To obtain a copy of the report, visit the American Council for an Energy-Efficient Economy at http://aceee.org/utility/white-paper.htm.
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