You only have to watch a few episodes of Mad Men to reflect on the fact that our social norms change with time. Thankfully, we've moved on from an office culture defined by sexism, tobacco and excessive lunch-time drinking -- three-martini luncheon anyone? And yet we've managed to preserve some of the better parts of the 60s, by which I mean pencil skirts and the Beatles.
So, there's hope for change again.
In today's office culture, our over indulgence is of a different variety. We take energy and resources for granted. Just like the 60s, there is a counter-culture -- and today people are more aware than they were a decade ago. We turn off the lights and print double-sided and adjust the thermostat. But there's still a long way to go.
This column is about getting with the times and getting real about energy efficiency. How does it work, how does it effect our lives, and why does it matter? Also, how can we invest in it? This latter point is particularly relevant in California, where we have a statewide debate about how to invest in sustainability.
In a previous column, I talked about California's leadership in addressing sustainability and climate change -- under the "Global Climate Change Solutions Act," or AB32. The post received a number of comments regarding the cost of such leadership. California is leading -- but where to? Into bankruptcy, perhaps, as one commenter suggested. In reality, there are a number of ways California can lead on sustainability and do well economically at the same time. Smart investment is the key -- and energy efficiency is an example of how to be smart.
Where to begin? Luckily, we have some data to rely on here. Other states have, in fact, been showing leadership. Among them, Massachussetts. When the state that gave us the first subway and the first birth control pill had to decide what to do with revenue from auctioning pollution permits under the Regional Greenhouse Gas Initiative (RGGI), Massachusetts chose to invest in energy efficiency. Good choice.
Massachusetts invested 89 percent of the pollution permit revenue in expanding state energy efficiency programs. And it got an estimated return of more than three-to-one on the investment. That's better than private equity!
For every dollar that Massachusetts invested in energy efficiency, GDP in the State increased by an estimated $3.50 (the "multiplier effect"), according to a report by The Analysis Group, a leading economic and financial consulting firm. The total invested by the state was $143 million over two years and resulted in an estimated GDP growth of $498 million and creation of 3,800 jobs.
When Massachusetts -- or any other state -- invests in energy efficiency, five things happen:
- Total use of electricity goes down thanks to improved efficiency
- Electricity prices go down, a natural consequence of a decrease in demand for electricity. When demand for something decreases, so do prices.
- As consumers and businesses pay less for electricity, they have more money to spend on other things.
- When consumers spend this "extra" money, they stimulate the economy, creating jobs and expanding GDP.
- Last but not least -- job security and real income go up. More economic activity means more jobs, and lower energy prices mean a lower Consumer Price Index. When the index goes down, real income goes up.
It's a pretty good deal.
Energy efficiency is the "largest, cheapest, safest, cleanest, fastest, most diverse," way to address our nation's energy -- and sustainability -- challenges, says energy expert Amory Lovins. Our homes and offices use over 40% of our energy. The basic idea is: use technology to work smarter, not harder. Sound familiar? It's the tried and true argument behind technology adoption.
Homeowners in Massachusetts benefit from home energy audits offering tips on how to save energy (and water) -- from lightbulbs to insulation to thermostats to appliances. Then, rebates are available for upgrades on smart energy equipment that make the home more comfortable: heat pumps for water heating, efficient AC, new refrigerators. And homeowners can opt into a "Home MPG" program that gives their home an energy rating for free. Small businesses have access to incentives and financing with short payback periods for upgrades. And commercial businesses receive favorable financing and rebates on upgrades that save significant building energy overall.
Investment by states in these types of programs makes a world of sense. Done right, it not only expands the economy but helps grow a more robust energy efficiency industry in the private sector.
This is a lesson for California and for other states.
There are sound investments that we can make today -- and they're bound to catch on. Soon energy waste will be as much of a bygone as the office smoke fest and the three-martini lunch.
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