Study concludes California economic growth and employment will rise with the degree and scope of transport fuel efficiency standards
|The macro results for four scenarios showed that economic growth and employment rise with the degree and scope of transport fuel efficiency standards. % changes are relative to baseline of No standards scenario. Click to enlarge.|
Aggressive federal fuel economy and California emissions standards will enable California to enjoy a significant reduction in energy dependence and global warming emissions while stimulating statewide economic activity and employment with substantial fuel savings, according to a new study by Dr. David Roland-Holst of UC Berkeley’s Department of Agricultural and Resource Economics, published by the group Next 10.
Using a long-term economic forecasting model that details patterns of vehicle ownership and use across the state, the study—Driving California’s Economy—evaluated scenarios ranging from existing vehicle emissions rules to standards representing higher expectations for emerging advanced technologies. In all case, the study found, direct and induced fuel savings translated into significant emissions reductions and new demand for more job-intensive goods and services. Most of these were in sectors with less import-dependence and more extensive in-state multiplier benefits.
Fuel savings, whether from mile standards or emissions standards, resulted in expenditure shifting, moving demand away from the carbon-fuel supply chain and toward in-state goods, services, and job creation across a broad economic spectrum.
The idea that there is a necessary trade-off between environmental goals and economic growth is a fallacy. In California, we have proven this before with electricity use and, as our study results indicate, we are ready to prove it again with clean cars. Thirty years of efficiency policies in the electric power sector contributed to substantially higher California economic growth and employment. Fuel economy and emissions measures in the vehicle sector will expand incomes and jobs in the same way.
...Generally speaking, the most robust finding of this study...is that statewide economic growth and employment rise with the degree and scope of transport fuel efficiency standards.—Driving California’s Economy
The study examined five scenarios:
No vehicle standards. This assumes California did not adopt state emissions standards and the federal government did not adopt fuel economy standards post 1990. California continues growth at levels forecast y the Department of Finance.
California vehicle standards (Cal). This assumes the Low Carbon Fuel Standard and 2016 state vehicle emissions standards remain unchanged until 2025. Compared to the No Standards scenario, this scenario results in 38,000 additional new jobs; an additional 0.03% growth in GSP and an 8% reduction in GHG emissions for California by the year 2025.
National 4% (Nat4). This assumed the federal government passes a 4% per year increase in fuel economy standards over 2017–2025 (equivalent of a federal 37 mpg average by 2025 and a 46 mpg new vehicle standard by 2025). Compared to the No Standards scenario, this would result in 158,000 additional jobs, an additional 0.82% growth in GSP, and a 14% reduction in trend GHG emissions by 2025.
National 6% (Nat6). This assumes the federal government passes a 6% per year increase in fuel economy standards over 2017–2025 (equivalent of 43 mpg fleetwide average in California by 2025 and a 54 mpg new vehicle standard by 2025). COmpared to the No standards scenario, this would result in 205,000 additional jobs by 2025, and an additional 1.13% growth in GSP. Trend GHG emissions would be reduced by 17%.
Horizon (Hzn). This assumes the 6% per year increase per year in fuel economy standards over 2017–2025 and that the standard drives the development of new advanced vehicle technology, with more aggressive adoption of these efficient vehicles. Compared to the No standards scenario, this would result in an additional 236,000 new jobs, an additional 1.31% growth in GSP by 2025, and a 19% cut in GHG emissions.
|Statewide impact of the scenarios relative to No Standards. Click to enlarge.|
Key findings of the study include:
A cleaner, more efficient passenger vehicle fleet creates significant consumer savings. Savings are reinvested into local economies, a catalyst for economic growth. By reducing fuel use, cleaner, more efficient vehicles save families and businesses money. These savings tend to be spent on goods and services that are less import-dependent and more job-intensive; therefore, they have stronger “multiplier” effects in state, and create more jobs than they displace.
Increasing fuel economy and decreasing emissions from passenger vehicles creates jobs across the economy, far beyond what are thought of as “green” sector and “green collar” jobs. An added benefit: the majority of jobs created by fuel economy savings are in-state service jobs, which cannot be outsourced.
Clean car technologies that act to reduce GHG emission intensity and increase fuel economy are a source of economic growth, job creation, and lower energy costs. As standards at the federal and state level steer the state’s vehicle fleet toward ever-greater fuel efficiency and lower emissions, pressure on long-term California energy prices will be reduced, cutting future household energy costs and boosting energy security for all consumers.
Vehicle fuel economy and emissions standards will lower household energy costs even for those who hold on to their gas-guzzlers. A cleaner, more fuel-efficient vehicle fleet reduces pressure on long-term California energy prices, bringing prices down below business-as-usual projections.
The observed “rebound” effect, which refers to more driving in response to lower energy prices, is very modest in California. The results show that the rebound effect amounts to less than 10% of net fuel savings from federal fuel economy standards, leaving the bulk of benefits to California’s economy intact.
Next 10 is an independent, nonpartisan organization with the mission of educating, engaging and empowering Californians to improve the state’s future. Next 10 was founded and is funded by venture capitalist and philanthropist F. Noel Perry.
David Roland-Holst (2011) Driving California’s Economy: How Fuel Economy and Emissions Standards Will Impact Economic Growth and Job Creation (Research paper No. 1103011)