American Economy Threatened by Federal Cuts to Efficiency

The U.S. will put jobs and the economy at risk if proposed cuts to energy efficiency programs get adopted, a Congressional analysis released this month confirms. The report highlights thousands of jobs in every state that are produced by the very programs President Trump seeks to cut. 

The Office of Energy Efficiency and Renewable Energy is critical to our nation’s efforts to drive down the cost of solar, wind and energy efficiency technologies. Every state has benefitted from federal investments in clean energy from direct grants in wind, solar and efficiency to job creation and saving American homes and businesses money. For more detail on how each state has benefited from federal clean energy programs check out this new website from U.S. clean energy business groups.

Millions of jobs at risk

More than 3.3 million jobs stand to be created over the next decade to implement energy-efficiency upgrades, according to the report from Democrats on the Congressional Joint Economic Committee. With 2.2 million people employed in the energy efficiency sector in 2016, this sector already represents a sizeable portion of the national energy economy. And the employment numbers are on the upswing. Energy-efficiency businesses forecast 13 percent growth this year alone -- almost double the 7 percent growth seen from 2015 to 2016.

These jobs are part of a quiet sea change that has been under way since the 1970s. Efficiency standards alone have led to homes and businesses saving some $2 trillion, all while helping the U.S. grow and using fewer resources.

Rural communities, with their higher than average poverty rates, have a strong need for efficiency programs that can both lower energy costs for households and produce good, local jobs. For example, the report notes 4,000 energy efficiency workers in New Mexico and nearly 19,000 in Iowa, working in areas like construction for building upgrades, appliance manufacturing, and product distribution and insulation.

Funding matters: About eight full-time jobs are created for every $1 million invested in efficiency, nearly three times the employment created by the same investment in fossil fuels.

Because everyone benefits, we will all lose

The report emphasizes benefits across a broad swath of constituencies. Programs such as the Weatherization Assistance Program (WAP) provide critical support for upgrades that save money in the long term but carry upfront costs that make it hard for low income people to take advantage. For these households spending a larger share of their money on utility bills than others, WAP is delivering not just relief on electric bills but health and safety benefits via better insulation and clean ventilation systems. The savings from WAP are significant, averaging more than $280 annually per household.

Small businesses, which spend $60 billion a year collectively on energy, also gain from the energy efficiency technologies driven by these programs. They can save 10 to 30 percent on utility costs, improving profitability and often enhancing the work environment for employees.

Other efficiency investments, such as smarter light bulbs and improved refrigerators, deliver important benefits for homes and businesses across all income levels. For every dollar invested in the energy-efficient appliances like those offered through the Energy Star program, consumers get $4 back in savings. By labeling more than 70 types of products including major appliances and office equipment, Energy Star helps consumers and businesses find products that will save them money.

But energy efficiency needs stable support, the Congressional analysis says, in order for businesses to continue investing in upgrades and developing a skilled workforce.

America’s competitiveness will suffer

Energy Star is one of the most successful public-private partnerships in existence (a form of partnership the Administration has said it supports). The program has turned a $50 million annual investment into $30+ billion worth of annual customer utility bill savings, and has resulted in branded sales of more than 5 billion products since its inception. Retailers, builders, manufacturers, and utilities love the program. And really, what’s not to like?

The report focused on Energy Star and WAP, but they aren't the only vulnerable programs. Other critical funding—for DOE funded state-run energy efficiency programs, for example, along with advanced research that produced low cost LEDs and promises to make window retrofits cheaper—is also on the chopping block in Trump's short-sighted budget. Among the Department of Energy divisions that would be hit hardest is the Office of Energy Efficiency and Renewable Energy, which would see its funding slashed by nearly 70 percent—with energy efficiency programs being cut 80 percent. Those cuts imperil job-creating programs far beyond energy efficiency, such as those that promote vehicle technology, solar, and wind.

Continued investment in energy efficiency is also a no regrets way to make progress toward global climate goals. Across the board, the analysis shows, energy efficiency upgrades can reduce annual U.S. carbon dioxide emissions more than 616 million metric tons, or approximately 1.4 billion fewer barrels of oil consumed, for the next 10 years.

Energy efficiency investments have been supported by both parties over the years because they're a simple and cost-effective way to save money, cut emissions, and boost competitiveness. The nation’s economy, not to mention millions of jobs, are in jeopardy if Trump's plan succeeds. Let’s make sure that it doesn’t.

About the Authors

Elizabeth Noll

Legislative Director, Energy & Transportation program

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