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January 23, 2006

Green Saves Green

A couple of new studies have found that California can meet its ambitious 2010 goals for reducing climate-warming emissions at no net cost to consumers.  And, even better, meeting the even more stringent 2020 goals could actually save consumers money:

"It's basically a very good news story," said Ned Helme, president of the Center for Clean Air Policy, an environmental think tank based in Washington, D.C. "We found you could do this very cheaply."

Now, I haven't looked at the studies--and I might not really be able to judge their quality even if I had.  By their nature, studies like this tend to be speculative: they show what could happen, but not necessarily what will.

Still, this seems extremely plausible to me.  Despite a period of relatively high oil and gas prices, energy is still pretty cheap relative to our incomes.  And as a general rule, cheap energy means wasted energy. Consumers tend to demand very short payback periods for energy efficiency investments--usually, just a couple of years at most.  While most businesses would be ecstatic to take advantage of such fast rates of return, most households, apparently, aren't run to the same fianancial standards.  Which means that there's still a lot of very cost-effective energy efficiency investments out there--things that could easily pay back any initial investment in short order.  That's as true in the transportation sector as in the home:  we already know, for example, how to boost vehicle efficiency without compromising safety.

The benefits to consumers from energy effiency investments are, if anything, likely to compound.  Once you hit the payback period, energy efficiency is like a cash cow -- it just keeps saving and saving. (And saving.)  Plus, since most of California's energy from oil, gas, and coal comes from out of state, energy efficiency investments will tend to keep more of California consumers' money circulating in the local economy--which can be an effective way to boost demand for local goods and services.

All in all, I wouldn't be a bit surprised to see a push to reduce global warming emissions resulting in a substantial boost to California's economy over the long term.  But we'll just have to wait and see how the state responds to the news.

Posted by ClarkWD | Permalink

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