According to the World Factbook, if California were an independent nation, in 2007 it would have had the World’s tenth largest economy.  It is important not only from a national but also from an international perspective that California has been a leading force in reducing greenhouse gas (GHG) emissions and in developing renewable sources of power generation. A recent study has attempted to determine what this has meant for employment in the State, and what it will mean in the future as California continues to ramp up its efforts to reduce GHG emissions.

In 2002 under Senate Bill 1078 and in 2006 under Senate Bill 107, California’s Renewables Portfolio Standard (RPS) became one of the most ambitious renewable energy standards in the country. The RPS program required electric power corporations to increase procurement from renewable energy resources by at least 1% of their retail sales annually, until they reach 20% by 2010.  In September 2006, the Governor of California signed the Global Warming Solutions Act of 2006 (AB 32) which requires the California Air Resources Board (CARB) to develop regulations and market mechanisms to reduce California’s GHG emissions by 25 percent by 2020, which means rolling GHG emissions back to their 1990 level.  In June 2006, CARB released a Draft Scoping Plan which is a policy roadmap to meet the emissions reduction target of 169 million metric tons of CO₂.  In November of last year Governor Schwarzenegger signed Executive Order S-14-08 to streamline California’s renewable energy project approval process and increase the state’s Renewable Energy Standard (RPS) to 33 percent renewable power by 2020.  29 other states have RPS standards,  but California’s has been the most aggressive.  To get a perspective on how California stacks up nationally, the national average per capita consumption of energy in the US in 2007 was 336.8 million btus.  In California per capita energy consumption was 233.4 million btus, 44% less than the national average.

 An economic study by the University of California at Berkeley and Next 10 examined the employment effects of the state’s energy efficiency policies over the past thirty years.  The study found that between 1972 and 2006  the state’s energy efficiency policies not only saved California consumers a well-documented $56 billion in energy costs, but also enabled California households to redirect their expenditures toward other goods and services which created 1.5 million full time eqivalent jobs with a total payroll of over $45 billion.  California was also able to reduce its dependence on imported energy and direct a greater percentage of its consumption to in-state, employment-intensive goods and services.This resulted in slower growth in energy supply chains, including oil, gas, and electric power, but for every new job foregone in energy, it was found that more than 50 new jobs were created in other sectors of the economy.

Based on this analysis the study projects that the state’s proposed Draft Scoping Plan which aims to achieve the GHG emissions reduction targets mandated by AB 32 will increase the Gross State Product (GSP) by about $76 billion, increase real household incomes by up to $48 billion and create as many as 403,000 jobs in the next 12 years.  The study suggests that the economic benefits of energy efficiency innovation have a compounding effect. The first 1.4 percent of annual efficiency gain produce about 181,000 additional jobs, while an additional one percent yield 268,000 more. It is suggested that the marginal efficiency gains will cost more, but they will have more intensive economic growth benefits.  It is projected that existing energy efficiency programs and the proposed state climate policies will continue the structural shift in California’s economy from carbon intensive industries to more job intensive industries. 

In a separate study it was found that between 1995-2008 green jobs grew 36% while total jobs in the state grew only 13%.  Even in the recession between 2007-2008 when total jobs dropped by 1%, green jobs grew by 5%.  45% of all California green jobs are in the services sector, the largest portion of which is environmental consulting.  Manufacturing represents 21% of all green jobs with half of all green manufacturing jobs split between energy efficiency and energy generation.  From 1995-2008, energy generation employment expanded 61% by nearly 10,000 jobs. Employment in energy efficiency increased 63% in the same period.