Both political candidates claim that America needs to accelerate economic growth. This is accepted as a worthy goal by Paul Krugman, who notes that “some people I respect believe that trying to get …[the growth rate] back up should be a big goal of policy.” But Dr. Krugman then asks HOW we can do it:
"After all, what do we actually know how to do when it comes to economic policy?”
He is unable to identify specific answers in the article because he is looking at the problem from 40,000 feet. If you start with your feet on the ground, however, you can see several big opportunities. One great way to accelerate economic growth is to reduce energy bills for households and businesses through a large-scale program to make our existing homes and buildings more efficient. This will employ hundreds of thousands of people, some who are working on our buildings and some with jobs created by pumping money into the economy that otherwise would have been wasted.
Energy efficiency leads to bill savings
Energy efficiency means using energy more intelligently: getting more for less. Who wouldn’t want to cut their utility bills in half if it meant increasing the level of comfort and security in their home or business? For a typical homeowner, it would mean sealing ducts, eliminating drafts, providing positive fresh air ventilation without the associated drafts of cold air in the winter or humid air in the summer, upgrading insulation, heating and cooling equipment, and in many situations replacing windows and adding solar power systems.
Such a makeover could have sizable upfront costs - between $10,000 - $30,000 a home - but the savings for a typical house would be over $35,000. And the additional comfort and safety would be free.
We already know how to get virtually all homes to undertake these energy makeovers, and to do it in just four years (a year for planning and three years for implementation). Some of our leading utilities have tested programs that were operated on the scale of a small community. The only challenge is to scale them up to a national level, but many utilities already have the capacity to do this. What is missing is the motivation and regulatory approval to do so.
These successful retrofit pilot programs involved very high levels of financial incentive, but there are reasons to expect that the incentives could be reduced drastically over time.
Accelerating economic growth by investing in better buildings
These energy efficiency investments in existing homes and businesses would take the worst-performing segment of the economy—housing—and restore the levels of housing sector jobs we saw during the years preceding the housing bubble ten years ago. These would be clean energy jobs that reduce air pollution and slow climate change as well as improving people’s homes and workplaces. Many of the workers that were doing this work ten years ago can be retrained; others can learn quickly, as many agencies offer job training programs for home energy improvement workers. I have estimated that this program could produce over 300,000 new jobs, on net.
Such a program could also be the most important new initiative to reduce climate pollution. Buildings emit almost 40 percent of the nation’s carbon pollution, so cutting this in half by 2030 would save some 20 percent. This is on top of savings from other successful programs such as appliance efficiency standards and building codes. They fit into a comprehensive program of market-based policies that address the major causes of the 2007-2009 recession, from which half of the nation has yet to emerge.