By Eric Mackres, Senior Researcher and Local Policy Lead,
The economic benefits of energy efficiency extend far beyond
lowering energy bills for consumers. Efficiency also contributes to
economic development and job creation. But who benefits most from
these economic opportunities?
At every step of the economic value chain produced by efficiency
investments (see figure below), there are opportunities to target
the economic and social benefits to those households, businesses,
geographies, or sectors for whom they will make the biggest
The results of these choices can include lower costs for low-
and moderate-income families and small businesses; opportunities
for disadvantaged, local workers to get jobs with good wages; and
new and retained economic activity in disinvested communities.
Designing efficiency programs to achieve these goals, in
addition to saving energy, can have benefits that ripple throughout
the economy, helping to address inequality, build a stronger middle
class, and improve economic competitiveness.
Cost Savings for Those Who Need it Most
All households and businesses can benefit from reduced utility
bills from energy efficiency but for low-income households and
small businesses, the cost savings can have a very significant
impact on their overall budget.
For example, while the average U.S. household spends 4% of
income on home energy costs, low-income families spend 17% of their annual income on energy
expenditures. For these families and businesses, cost savings
from energy efficiency can mean the difference between going into
debt (or choosing what to forgo for the month) and being able to
pay for investments like education or new employees.
Programs that provide efficiency services to these cash- and
credit-constrained customers can have positive economic development
impacts on local communities because these customers have other
unmet needs and therefore are more likely than the average customer
to immediately spend the money they save.
For example, every dollar invested in efficiency in low-income
households through the Weatherization Assistance Program results in
$2.53 in energy and non-energy benefits for a
community. Programs that effectively provide efficiency
services to renters, moderate-income households, and small
businesses can have similar strong (although somewhat smaller)
economic development impacts.
Efficiency Creates Jobs
An energy efficiency investment creates more jobs than an
equivalent investment in either the economy on average or in
utility sector and fossil-fuels. As an example, a $1 million
investment in a building efficiency improvement will initially
support approximately 20 jobs throughout the economy.
By comparison, the same $1 million investment in the economy as
a whole supports 17 jobs. As of 2010, at least 830,000 jobs related to energy and
resource efficiency already existed around the U.S. and their
numbers were increasing at an annual rate of 3%.
In addition to the immediate job creation benefits from energy
efficiency program investments, another-and greater-job creation
benefit of efficiency results from the consumer savings on energy
bills. When a business or household lowers their energy costs, they
are then able to spend that money elsewhere in the economy,
resulting in additional jobs.
On average, this shift in spending supports 17 jobs per $1
million compared to the 10 jobs per $1 million supported through
energy generation and distribution.
Local Workers and Businesses Benefit
Most energy efficiency jobs are also local because they often
consist of installation or maintenance of equipment locally. This
is less true of conventional energy supplies and delivery.
Not only do energy utilities often invest more in fuel and
equipment than in employment, but many of the jobs that do exist
are related to obtaining and transporting fuel out of state or, for
multi-state utilities, are administrative jobs outside the
An even more important local employment impact from energy
efficiency is the impact of energy bill savings on the local
economy. Energy expenditures are, more often than not, sent outside
the local economy; out of state or outside the U.S. entirely. If
that money is instead spent on other products or services, it has a
larger impact on local businesses and jobs.
For the U.S. as a whole, one dollar of avoided utility bill
costs has 2.24 times the effect on domestic employment and wages
compared to one dollar spent on utility bills. Similar ratios for
local employment benefits exist at the state and local levels.
Avoided utility costs also benefit local businesses.
For the U.S. as a whole, avoided utility costs result in 1.16 times the local value-added benefits compared
to spending on utility bills.
Efficiency Jobs are Good Jobs
Jobs in efficiency services are well paying and in a growing industry, and
many of them are available to employees without higher education. A
higher percent of clean energy jobs, including those in efficiency,
are accessible to low-credentialed employees compared to the fossil
fuel and utility sectors (48% compared to 42%).
Perhaps even more importantly, clean energy investments also
result in a larger percent of jobs with above-average earnings
potential for low-credentialed employees (29% compared to 13% for
the fossil fuel sector).
Forty-nine percent of existing energy and resource efficiency
jobs are held by employees with a high school
diploma or less. The average wage is $4,900 above the national
median and 75% of employees have middle-wage jobs (where wages fall
within twenty percent of the national median).
Policies that Help Realize the Economic Opportunities of
The benefits of energy efficiency on employment opportunities
and local economic development can be further amplified through
policies that ensure more of the economic benefits from efficiency
remain in local communities. Policies that can target social and
economic benefits to local communities include:
- Improving access to programs for disadvantaged
customers Participation rates in energy efficiency
programs are often low among rental properties, low- and
moderate-income households, and small businesses. Improved outreach
techniques and expanded and tailored programs can help to engage
these hard-to-reach customers. Such program approaches include
"one-stop shop" program designs and partnerships with community
organizations and local governments. These program
opportunities that focus on community benefits can complement
policies that treat efficiency primarily as a utility
- Including non-energy goals in energy efficiency
programs Most energy efficiency programs are not evaluated
based on their non-energy impacts, such as economic development
benefits. Program administrators are primarily interested in
achieving the energy goals assigned to them. If non-energy
benefits-like the creation of jobs and the development of local
businesses-are to be effectively achieved, then they must be
included as formal program goals. More programs and their goals
should be designed to maximize these non-energy benefits in
addition to energy benefits. For example, the District of Columbia
Sustainable Energy Utility is evaluated on metrics for job creation,
local economic investment, and benefits to low-income
households, as well as energy-related benefits.
- Implementing "High Road" policies and
agreements These policies, also called Community Workforce
Agreements, ensure that the benefits of energy efficiency
investments accrue to disadvantaged communities and workers. They
often include provisions for local hiring, living wages and
benefits, and career development and training opportunities for
employees. Clean Energy Works Oregon is a pioneer in using these agreements
to achieve community benefits, a trained workforce,and high-quality
efficiency projects. Organizations like the Emerald Cities Collaborative and Green
for All are working with stakeholders in communities around the
country to expand the use of High Road agreements.
The American Council for an Energy-Efficient Economy is a
nonprofit organization that acts as a catalyst to advance energy
efficiency policies, programs, technologies, investments, and
behaviors. Check here
for more information on ACEEE
Eric Mackres is Senior Researcher and Local Policy Lead at
ACEEE. Eric Mackres works on local and community energy
efficiency initiatives with the Policy Program. He provides
technical assistance to communities that are beginning or expanding
energy efficiency efforts. In addition, he manages ACEEE research
related to local implementation of energy efficiency. This blog was
first published on the ACEEE Blog website and is reprinted here with
the kind permission of the author and of ACEEE.