How CA’s Climate Leadership Yielded A Healthy Economy

NRDC has completed a comprehensive and rigorous comparison, over the four decades since 1975, of the California economy’s energy intensity versus that of the rest of the country. In partnership with independent economist Charles Komanoff, we wanted to determine whether California improved at a faster pace, and if so, whether the result could be attributable in part to lower than average economic or population growth.

The answers to those two big questions are Yes, and No, respectively. California cut its overall energy intensity (measured in fossil fuel consumption per dollar of economic activity) at a significantly faster pace than the rest of the United States, over a period when California’s economy and population grew faster on average than the rest of the United States. If the rest of the country had matched California’s rate of improvement, annual US emissions of carbon dioxide would be lower now by almost 25 percent. That’s about equal to the annual emissions from every passenger vehicle in the nation—or the total annual emissions of Japan, the worlds’ fifth largest emitter (1.2 billion tons). If the energy intensity of California’s economy had improved no faster than that of the other 49 states since 1975, the state’s economy now would be $700 billion smaller.

On a call with reporters, California Energy Commissioner Andrew McAllister said this week “California provides clear evidence that consistent, muscular policies in support of energy efficiency, renewable energy and clean transportation are entirely compatible with both pursuing urgent climate goals and maintaining—in fact enhancing—economic growth. This report does ample justice to our state’s 45-year history working with and alongside market actors in pursuit of both imperatives.” 

The report also outlines the most important policies contributing to this result, including continuously integrated applications of energy efficiency and renewable energy standards, business partnerships across all sectors of the economy, targeted incentives financed through utility bills, and technology innovation investments. 

“Anyone who's been in energy policy since the seventies, as I have, always suspected that California was the U.S. pacesetter in cutting fossil fuel use through energy efficiency and renewables,” said Charles Komanoff, economist, policy analyst and lead author of the report. He also spoke to reporters this week. “Our report establishes just how large a lead California has created, at the very time that this leadership matters most.”

The findings put to rest any suspicions that California may somehow have achieved its clean energy progress by sacrificing its economic health, and they provide encouragement for climate policy leadership that transcends state boundaries

The report is not intended as an exercise in California triumphalism. A preface by Commissioner Andrew McAllister points that the state has much still to learn and to do in order to complete its now longstanding clean energy transition. But the report should encourage other states to speed up their progress and to take advantage of all that already has been learned and done here, even if no one bothers to credit California in the process. 

About the Authors

Ralph Cavanagh

Energy Co-Director, Climate & Clean Energy Program

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