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Efficiency Fuels Economic Growth

by Jeffrey W. Johnson
October 27, 2008 | A version of this story appeared in Volume 86, Issue 43

Through an aggressive state program to cut energy use, Californians reduced their per capita electricity consumption by 40% compared with the national average over 35 years and saved $56 billion in household income, a recent study says. Most important, they redirected $46 billion of that savings to buying goods and services, creating 1.5 million new jobs and boosting the state’s economy, according to the study by David Roland-Holst, an economist at the University of California, Berkeley, Center for Energy, Resources & Economic Sustainability. Although household energy efficiency resulted in a revenue reduction of $1.6 billion and the loss of 23,500 jobs for the energy sector, the report estimates that efficiency increased income and jobs for a host of other sectors, including wholesale and retail trade ($11.2 billion, 457,000 jobs), light industry ($1.1 billion, 41,000 jobs), and chemicals ($258 million, 6,526 jobs). Looking forward, the report projects that implementation of a new state program to cut CO2 emissions to 1990 levels by 2020 may actually spur economic growth through new efficiency measures, leading to 400,000 new jobs and an increase for California’s economy of $76 billion by 2020. The report is available at


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