GREEN GROWTH: FROM RELIGION TO REALITY - Sustainia

Chapter 5reserves further contributed to more limited resistanceto regulatory policies than seen in coal states (Sweeney2002). Finally, policy makers were also able to take advantageof the established research universities in thearea, forming a symbiotic relationship between regulatorsand the researchers in which regulators funded researchthat in turn greatly benefited policy implementation(Hanemann 2007; Rosenfeld and Poskanzer 2009).This partnership has continued over the last 40 years andplayed a role in shaping future climate policy.Approximately 25% of the reduction in per capita electricityconsumption growth patterns can be attributedto the policy measures described above. The remainderwas driven by a combination of, on the one hand, demographicand structural effects; and on the other, changesto industrial profile. In the first category, postulated demographicand structural effects include: an overall risein electricity prices which continued beyond the OPECoil embargo and resulted in prices correspondingly higherthan those seen in other states; a mild climate; statetrends toward increased urbanization and householdsize; and a perceived environmental ethic in California.Industrial factors are largely composed of the shift awayfrom heavy industry toward non-energy-intensive firms:light industry, services, and IT (Mitchell 2009; Sudarshanand Sweeney 2008). These characteristics are much lessamenable to policy manipulation than is efficiency (Rosenfeldand Poskanzer 2009)."Meanwhile, the California business community’sability to successfully weather and profit from technologicalchange and business innovation during this period,along with the lack of resistance from a powerfulfossil fuels lobby, made California unusually open toenacting further pollution and energy policy"Meanwhile, the California business community’s abilityto successfully weather and profit from technologicalchange and business innovation during this period,along with the lack of resistance from a powerful fossilfuels lobby, made California unusually open to enactingfurther pollution and energy policy. This openness ledboth to policy measures, and to support for research andmodeling that confirmed the practicality of efficiencypolicy and increased political will for it, in something ofa virtuous circle (Hanemann 2007).Some economists argue that California’s history ofenergy efficiency policy in fact exemplifies emissions reductionsas a driver of growth rather than simply beingcompatible with growth. From 1972- 2006 it is calculatedthat Californians saved $56 billion dollars in householdenergy savings due to increased energy efficiency. First,California households redirected expenditures towardsconsumption of goods and services with a higher employmentdensity and away from energy sector that has lowemployment density. Second, these goods and servicesusually had in-state supply chains creating a multiplierin local employment and Gross State Product (GSP)growth. This expenditure switching is estimated to havecontributed over 1 million jobs to the state economy overthe last 30 years. Moreover, energy efficiency programsdisproportionately benefited low-income demographicswho were found to generally spend a significantly higherportion of their income on energy than more affluentdemographics and live in less efficient homes withless efficient appliances. Finally, jobs were created in lessenergy-intensive sectors further contributing to emissionsreductions (Roland-Holst 2008). It is important tonote that this conception of green growth plays out partlyas a competitive local strategy as well as a tool for globalgrowth. While the distributional benefits to employmentpresent in this expenditure switching could be globallyduplicated, the move towards in-state supply chains impliesa loss of wealth elsewhere.2.2 DeregulationRising electricity prices, declining capacity relative toper-capita use, and federal policy trends all made deregulationan apparently attractive prospect to Californiain 1996. Although the deregulation movement was notprimarily designed to address issues of climate change orgreen growth, it has relevance as an example of an attemptto restructure an existing energy system, and of the typesof obstacles that may be encountered in such an effort.Proponents of deregulation argued it would lower pricesthrough the introduction of competition and greaterefficiency into the market. It would create greater marketincentives for building out generation capacity and createmore options for consumers with a more flexible market.At the time of deregulation, electricity prices in Californiawere the highest of any state in the nation. Highrates could be traced back to a myriad of policies implementedfollowing the Oil Embargo of the 1970s, as wellas the limits of the state’s natural resources. Rocketingoil prices in the 1970s and 80s reduced the attractivenessof oil as an electricity generation source. Following nationaldirectives and incentives the state began lookingAverage electricity prices by yearAverage Retail Price All Sectors (c/kWh)Price14121081990 1993 1996 1999 2002 2005 2008 2011YearFigure 2: Average Annual Electricity Price in California,1990-2001 (EIA 2009)Source: http://www.eia.doe.gov/cneaf/electricity/page/sales_revenue.xlsGreen Growth: From religion to reality 53