Even California Can Do More to Advance the Clean Energy Economy

A new report released this week by the Legislative Analyst’s Office recommends that the California Legislature develop a comprehensive strategy for meeting the state’s energy efficiency and alternative energy goals. Included in the report are recommendations for the state to specify its energy efficiency and alternative energy goals, determine how programs should fit together to achieve the state’s goals, and clarify how to evaluate the effectiveness of the programs.

Pursuing such a comprehensive strategy will be particularly important as California decides how to effectively invest the revenues generated from its cap-and-trade auctions and the recent passage of Proposition 39, which is expected to raise over $2.5 billion for energy efficiency measures and renewable energy in California schools and other public buildings.

Over the years and as a result of an array of clean energy programs like efficiency, renewables, and alternative fuels, Californians today enjoy benefits such as lower electricity bills on average than the rest of the country and job creation while reducing the state’s carbon footprint.

Based on the recommendations of the LAO report, NRDC agrees this is a good time to step back and look at how the state can better guide programs and policies as well as improve coordination around the state’s multiple clean energy efforts. It is also an opportunity for the Governor and energy agencies – including the California Public Utilities Commission, California Energy Commission, California Air Resources Board, California Independent System Operator, and the public power community – to work together to develop a vision that will put California on track to meet its 2050 clean energy goals.

Impressive benefits from efficiency and alternative energy programs

The combined benefits that result from these programs are impressive, only a few of which are highlighted below. Over the years, the state:

  • Made energy efficiency its top priority resource: Energy efficiency continues to be the cheapest and fastest way to meet our energy needs and reduce pollution. Since the 1970s, energy efficiency programs (from both the investor owned utilities and publicly owned utilities) as well as building codes and appliance standards have avoided the need for 30 large power plants, and helped ensure that our economy operates more efficiently than the rest of the country (CA produces twice as much GDP per kWh compared to the rest of the U.S.). Energy efficiency programs and codes and standards have saved Californians more than $50 billion and created jobs both in the efficiency industry as well as in the local economy when Californians spend their utility bill savings on local goods and services.
  • Established an aggressive renewable energy goal for 2020: The state’s utilities are on track to meet the 33 percent renewable portfolio standard by 2020. According to the California Public Utilities Commission, this program has created a robust and competitive market for renewable energy, and resulted in enough renewable energy to avoid six large power plants. 
  • Required strong alternative fuels and clean car regulations: Alternative and low carbon fuel programs, clean car standards, and smart growth are also critical components to meet the state’s climate goals and greatly benefit Californians.
  • Set the most aggressive climate goal in the nation through AB 32, California’s Global Warming Solutions Act. AB 32 is on track to help California reduce its carbon pollution by 20 percent by 2020.

In addition to these programs, the state also adopted the world’s first greenhouse gas emissions performance standard for power plants in 2006, and reinvigorated the state’s research and development program.

Where to go next?

While these programs clearly provide substantial benefits to Californians and we have a strong foundation upon which to build, the state must and can ramp up these efforts. And there are a number of opportunities for how California can do it. For example, just a few weeks ago, the California Air Resources Board launched the nation’s first economy-wide cap-and-trade auction to put a cap on pollution, and in November, California voters overwhelmingly passed Proposition 39, which is expected to raise billions of dollars for energy efficiency and renewable energy in California.

In addition, the following recommendations are examples of strategies that California could pursue to ramp up its energy efficiency efforts:

  • Prioritize Strategic Efforts: The state’s legislature and agencies should focus their resources, policies and oversight on top priority strategic efforts, such as ensuring that all new buildings and products are dramatically more efficient, and upgrading all existing buildings.
  • Use Efficiency to Avoid New Infrastructure: The energy agencies should collaborate to develop a standard process to reduce forecasts of demand to account for efficiency savings, before determining the need for new power plants, wires or pipelines.
  • Increase Statewide and Regional Collaboration: The state should encourage statewide collaboration on programs whenever possible, and encourage cooperation to transform markets and work with long-time clean energy leaders in the Northwest and other regions to further enhance California’s efforts.
  • Steadily Increase Efficiency Efforts: The state should map out a path for steadily increasing efficiency efforts over time, including adopting new policies and programs that advance efficiency across the state (such as efficiency upgrade requirements at the time buildings are sold). The state should also ensure efficiency is properly valued across agencies in the same manner - and adopt rules that encourage long-term and comprehensive savings to enable all implementers to successfully reach state goals.

There is no doubt that California’s policymakers and agencies have done tremendous work to keep California at the forefront of climate policy. The state now has the leadership in place and a golden opportunity to evaluate its strategy and build on existing efforts to take the state take to the next level. Improving program efficacy, coordination, and evaluation will maximize benefits for California, spur continued economic growth, and keep the state a climate leader.

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