100 Billion Greenbacks for a Green California Recovery

California policymakers are talking about legislation to fund a green recovery from the Covid-19 pandemic-clobbered economy.

The need for economic stimulus in the next legislative session is "beyond paramount” and it should include “a comprehensive suite of ideas, including investing in advanced technologies,” said Sen. Robert Hertzberg (D-Van Nuys).

The just-signed AB 841 , which streamlines energy efficiency funding and accelerates California’s transportation electrification, is a step toward the $100 billion Hertzberg-Ting Joint Economic Stimulus Plan proposed in July. That is according to Assemblymember Phil Ting (D-San Francisco), AB 841’s author.

A $100 billion stimulus investment in advanced energy technologies can pay big dividends for California, according to a September study from the Analysis Group for Advanced Energy Economy (AEE).

Investments in energy efficiency, renewable energy, and building and transportation electrification would add $727 billion to California’s economy, the study found. It would also create 4.1 million new jobs, increase tax revenues to local and state governments by $45.8 billion, and save consumers $28 billion in annual energy costs.

The AEE report confirms that proposals for stimulus funding of advanced energy technologies are “the right track,” Assemblymember Ting said.

There are, though, “obvious and practical problems” with California’s clean energy goals, U.S. Secretary of Energy Dan Brouillette wrote in Sept. 25 editorial. Because of the variability of renewables and the limited duration of battery storage, “natural gas and nuclear must play a role.”

Union of Concerned Scientists Senior Energy Analyst Mark Specht disagreed. California needs to “drastically reduce natural gas usage,” and Diablo Canyon, California’s one nuclear facility, is set for closure in 2025 under an approved settlement.

California’s electric sector includes an estimated 44% installed renewables capacity in 2020, according to the November 2019 California Public Utilities Commission report . That is far short of its 100% clean energy mandate and economy-wide zero emissions goal set for 2045.

Stimulus funding can support the “massive investments” in California’s renewable generation and battery storage technologies needed to reliably achieve its 2045 goals, Specht said.

What $100 billion buys

By September 2020, cities and states across the U.S. and over 190 countries around the world had developed a recovery plan for the pandemic-induced economic downturn, AEE reported. California legislators see joining that list as “priority number one for next year,” said AEE Managing Director Amisha Rai. Hertzberg and Ting agreed.

A proposed national $2 trillion stimulus package also is possible, depending on the results of the November election. The hypothetical $100 billion California stimulus funding could come through federal legislation and/or California legislation.

It would be invested in advanced “technologies and services” that include building and transportation electrification and efficiency, renewable generation and storage, and power system modernization. The $100 billion is proportional to California’s share of the 2009 American Recovery and Reinvestment Act and the benefits were calculated using an industry-standard macroeconomic modeling tool .

AEE has “no illusion” $100 billion is enough to solve the climate crisis, AEE Managing Director Matt Stanberry. “It would be a down payment on the investments needed to address climate change, but the $727 billion in Gross State Product offers a seven to one payback.”

Energy efficiency investments would boost GSP by $373 billion and 1.9 million jobs. Investments in renewable energy generation would add $163 billion to GSP and over 850,000 jobs, AEE found.

Transportation electrification investments would add $80 billion and 475,000 jobs and energy storage spending would add $46 billion in GSP and nearly 380,000 jobs, it added. Building electrification could grow GSP by $41 billion and add over 320,000 jobs and transmission and grid modernization spending would add $23 billion to GSP and 180,000 jobs. Energy efficiency and rooftop solar would save residential customers $18.4 billion per year and save commercial and industrial customers $8.7 billion per year, the report said. Transportation electrification would save drivers $1.6 billion in fuel costs.

The justification

Investing $100 billion in advanced energy technologies is a sound idea for economic stimulus because models show it will lead to “long-term economy wide savings,” Inclusive Economics Founder Betony Jones, a Clinton administration climate advisor, said. But “we don't now have $100 billion in public money, and if we did, there are more immediate needs.”

On the other hand, a stable climate and a healthy economy are one and the same, Jones added. The key decisions are "who pays and who benefits.”

One hundred billion dollars is “not a big down payment on what California needs,” Pace University Energy and Climate Center Institute for Energy Democracy Fellow and economist Jim Lazar said. “Transforming California’s economy could cost $500 billion to $1 trillion, but we have to do this, or our planet will fry, agriculture will fail, and 7 billion people could starve.”

A $100 billion stimulus is justified by tangible results like lower energy costs, reduced wildfires, better health, increased tax base, and reduced taxes, Lazar said. Jobs are a tangible outcome if they put underemployed and unemployed to work. People suited for jobs in advanced energy technologies “are probably not hurting the most right now.”

The paper shows growth in direct advanced energy technology jobs and indirect supply chain jobs, but it also shows induced jobs that can reinvigorate communities, AEE’s Stanberry responded.

Advanced energy technology stimulus investment will also have tangible benefits because it will impact local communities, including those already hit hard by the recession,” AEE’s Rai added. “Stimulus spending can bring back the local solar and energy efficiency jobs lost during the pandemic and protect California’s “burgeoning” transportation electrification sector, Stanberry said. “That increases the ripple-through because it keeps the dollars in the state .”

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100 Billion Greenbacks for a Green California Recovery

Herman Trabish

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