California's Golden Energy Efficiency Opportunity

Ramping Up Success to Save Billions and Meet Climate Goals

As the lowest-cost option, energy efficiency is a critical component in the effort to reach California's long-term climate goals, including the call by Governor Edmund Brown Jr. to double the state’s energy efficiency (which was codified on October 8, 2015) and reduce greenhouse gas emissions 40 percent below 1990 levels by 2030, as well as Governor Arnold Schwarzenegger's 2005 Executive Order calling for an 80 percent reduction by 2050. This report examines the history, benefits, current opportunities, and potential for more energy efficiency with policy improvements and leadership.

Energy Efficiency Leads to Cleaner Air and Supports a Growing Economy

Optimizing energy use saves consumers and businesses money, reduces the need to generate electricity from costly fossil fuel sources, and avoids pollution that harms the environment and Californians' health. The state's long-term commitment to efficiency has reduced the overall electricity needed to serve customers by nearly one-fifth, contributes to keeping residential electric bills lower than the national average, and helps the economy use electricity more productively than the rest of the country. In particular:

  • Since the 1970s, efficiency has saved nearly $90 billion on customers' energy bills and avoided at least 30 power plants. Eleven more plants are expected to be avoided over the next decade;
  • Efficiency also helped keep per capita electricity use flat while the rest of the country increased by 50 percent since the 1970s;
  • Since 2003, energy-cutting programs, building codes, and appliance standards have saved enough electricity to power more than half of California's homes for one year and enough natural gas to serve 2 million homes annually. Together, these efficiency savings have slashed 30 million metric tons of carbon dioxide pollution, equal to the emissions of 6 million cars;
  • Annual low-income efficiency program savings have doubled since 2003, serving nearly 3 million households;
  • Appliance standards have saved more than 10,000 GWh since 2003 (enough to power more than 2 million homes) and homeowners are expected to save $6,000 over 30 years for a house constructed in accordance with the 2013 building energy efficiency code compared with homes built to the previous code; and
  • Public investment in nearly 20 research, development, and demonstration projects is expected to yield almost $10 billion in savings between 2005 and 2025, which is nearly $450 for every $1 invested.

Thanks in part to efficiency, California spends less of its gross domestic product on electricity to power its homes and businesses than other states with comparable populations and economies, and is nearly twice as productive per unit of electricity consumed. In fact, if the state were as inefficient as Texas, Californians would be spending $9.5 billion more on electricity each year and $24 billion more if the state were as inefficient as Florida. Meanwhile, efficiency employment grew by 15 percent from 2002 to 2012 and more than 300,000 positions, or nearly 70 percent of California's green economy jobs, are related to improving energy efficiency in buildings alone.

In addition, California's smart energy policies have helped businesses succeed and continues to support employment opportunities. Not only are local jobs created to upgrade buildings, but the manufacture and delivery of products for those improvements also creates employment. Furthermore, when Californians save money on energy bills through energy efficiency, they tend to invest their savings back into the general economy, helping to create additional jobs and expansion in more labor-intensive services like restaurants and retail.

Launching California to the Next Phase of Efficiency

Meeting California's long-term greenhouse gas reduction goals and doubling energy efficiency savings by 2030 will require improvements in the state's efficiency policies and procedures. The energy and climate agencies, with support from the State Legislature, should build on their recent progress and successes to advance energy efficiency and focus on the areas detailed in the report.

There are a number of critical issues facing California's efficiency efforts, and thankfully many are being addressed in existing energy and climate agency forums. Now is the time to rethink how the state approaches policy and program planning, to prioritize issues to ensure important decisions are made in a timely manner, and put in place important statewide mechanisms to scale up efficiency across California. By leveraging existing policies, inspiring creative approaches, and establishing a collaborative regulatory environment, the state can fully tap into its golden efficiency opportunity to support a productive economy, reduce pollution, and save customers even more money.