The California "Energy Miracle" (not)

This is a subject we've explored a few times from slightly different angles.
This study looks at electricity usage per person whereas our preferred measure was electricity usage per dollar of GDP generated. We also looked at total BTU's including natural gas and gasoline. More after the jump including one of the better songs about solar.

From Priceonomics:

The California "Energy Miracle"

In a 2008 interview, the Nobel Prize winner in physics and future Secretary of Energy Steven Chu lauded California’s leadership in energy efficiency codes and standards. He specifically remarked on the on the state’s impressive insulation regulations and efficiency standards for appliances. Chu suggested these codes and standards “are as good or better than [those in] just about any other state.”

He followed his discussion of California’s energy regulations with the following statement:

Since the middle 1970s, California's electricity consumption per person has remained essentially flat. The rest of the United States, excluding California, went up something on the order of 60 percent...

This is true: California’s per capita electricity consumption plateaued in 1970, while the rest of the United States saw a substantial increase. And, like many advocates of energy efficiency initiatives, Chu implied that this trend is evidence that California’s energy efficiency policies have been effective. This seems sensible. But is it true?

In his paper, “California energy efficiency: Lessons for the rest of the world, or not?”, the environmental economist Arik Levinson challenges this assumption. He suggests this relationship is a classic case of spurious correlation. “The vast majority of California’s apparent conservation relative to the rest of the country comes from coincidental features of geography and demographics,” writes Levinson.

In a subsequent paper and on the Freakonomics radio show, Levinson voiced his skepticism not just about the impact of California’s energy efficiency policies, but on energy efficiency policy more generally. From Levinson on Freakonomics: 

“My paper, and others like it, provide mounting evidence that these types of regulations don’t reduce energy consumption or pollution nearly as much as promised, if even at all.”

***

Energy efficiency is seen by many as the least painful, and most politically feasible way to achieve energy conservation. Rather than actually change their consumption habits, or pay a carbon tax, people can simply use better light bulbs and more efficient air conditioners. A significant portion of President Obama’s energy policy is to “cut in half” the amount of wasted commercial and residential energy by 2030.

California has long been hailed as a leader in energy efficiency policy. In 1974, the state created the California Energy Commission, an agency that would guide energy efficiency and conservation efforts. That agency would implement some of the strictest codes and standards in the United States. 

Over the next ten years, rules concerning the energy efficiency of refrigerators, freezers, air conditioners, furnaces, dryers, building insulations and more were put into effect.

At just about the same time that this commission made these changes, the average residential electricity use in California began to diverge from the rest of the United States. In 1974, the per capita residential electricity consumption was approximately 7,000 kilowatt hours per person in California and 8,000 in the rest of the country. By 2010, the rest of the country had reached 12,000 kilowatt hours per person, while California’s consumption had not grown. 

Naturally, the concurrence of the implementation of efficiency standards with a divergence between California and the rest of the United States led many to see a causal relationship between the two. The divergence is sometimes referred to as the “Rosenfeld effect”, after Arthur Rosenfeld, a particle physicist whose energy efficiency ideas were deeply influential to the codes and standard adopted by the California Energy Commision. 

The California based energy utility PG&E claims: 

“[E]nergy efficiency policies have had a significant impact on per capita electricity use, which has remained essentially constant in California over the past 30 years—a period during which per capita electricity use has nearly doubled across the U.S. as a whole.” 

A Natural Resources Defense Fund report asserts that the stability of California’s energy consumption is in part “due to investment in research and development of more efficient technologies, utility programs that help customers use those tools to lower their bills, and energy efficiency standards for new buildings and appliances.”

Arik Levinson, an Economics professor at Georgetown University, was deeply skeptical of these claims. He set out to test just how much of the difference between California and the rest of the United States could be accounted for by factors independent from codes and standards. His findings indicate that the “Rosenfeld effect” is a mirage.

Levinson demonstrates that there are three changes over the last 40 years that account for most of the difference between California and the rest of the country that have nothing to do with energy efficiency policy.

First, there is the fact that population has grown much faster in parts of the United States that typically use more electricity to power air conditioners. Since 1963, the populations of the Northeast and Midwest have grown by less than 25%, while the population in energy guzzling parts of the country like the South and Southwest have grown by over 100%. Levinson estimates that this accounts for about 15% of the Rosenfeld effect.

Second, income levels have increased across the United States. With greater wealth, Americans who live in places with extreme Winters and Summers have dedicated their extra income to heating and cooling. The mild weather in California makes spending on heating and cooling less compelling in California, so people have spent their extra income on other things. Levinson estimates this accounts for another 20% of the Rosenfeld effect.

Third and most important, Levinson’s research suggests that over 50% of the Rosenfeld effect can be accounted for by the large decrease in the number of people per home in the rest of the United States, compared to California. From 1960 to 2009, the average household size in California decreased slightly from 3.19 to 3.03 people in a home. In the rest of the country, the change was much more dramatic, with the average household size changing from 3.43 to 2.67. As the chart below from Levinson’s paper demonstrates, larger households tend to use less energy per-person than if the same number of people were living in more, smaller households....MUCH MORE, including some of the counter-arguments.

HT: The Big Picture

Previously on California Dreaming:

December 2007 (9 months before the financial crisis)

The California Miracle: Ain't

This is just a peek behind the curtain. As the truth that California's economy was based on ever-escalating real estate prices becomes clear, the myths of supremacy will be shown to be just that.

Just one example: it's easy to be energy efficient if you make your living swapping paper.
But that activity should not be confused with wealth creation, it's more of a greater fool or musical chairs type of game....

January 2009

A Couple Reasons California Isn't the Energy Efficiency Utopia it Claims to Be

There is a meme that California is the energy efficiency model for the U.S. and even the rest of the world. It is based on the fact that through 2007 the state had grown it's economy by X percent since X (pick a date) while holding per capita energy use flat.
The Wall Street Journal's Environmental Capital blog has two posts today that relay this meme:

Green Ink: California’s Waiver and Clean Tech’s Woes
and:
Get Smart: More Calls for Energy Efficiency to Meet Demand

I had a comment, basically off the top of my head, on why the California experience may not be a good guide:

I’m not sure that California is the best example for the rest of the world.

The state’s policies have resulted in the de-industrialization of the economy. With yesterday’s announcement of the closure of Fab20, Intel no longer manufactures anything in Silicon Valley. INTC hasn’t built a new plant in California since 1988 while building a $2 billion factory in Arizona.
Google built it’s latest server farm in Oregon, based on Cali’s electricity prices.
While the aerospace industry has disappeared from SoCal, it seems to do just fine in WA.
.
Finally, stats on temperature that account for most of California’s apparent efficiency:
Combined heating and cooling degree days for selected cities-
The most energy-demanding cities:...MORE

There's more but I don't remember the links offhand, use the search blog box if interested.

I do remember the song was by some guys who didn't seem to get out in the sun very much: