U.S. PIRG Education Fund

February 2005

Executive Summary | News Release

Download the full report. (PDF, 1 MB)

America’s current reliance on coal, oil, gas, and nuclear power for electricity generation has left the country with a legacy of environmental and public health problems. This legacy also includes volatile price fluctuations, costing consumers dearly on electricity bills. We can help solve these problems by reducing demand through energy efficiency and diversifying our electricity mix with renewable energy sources. Fortunately, investing in clean energy policies also would generate new high-paying jobs, save consumers and businesses billions of dollars, and boost America’s economy while reducing power plant pollution.

Over the past 50 years, the federal government has provided more than $500 billion in subsidies to the fossil fuel and nuclear industries, investing a fraction of that in energy efficiency and renewable sources of energy such as wind, solar and geothermal. As a result, coal, nuclear power, oil and gas provide more than 91 percent of our electricity needs in the U.S. This dependence on fossil fuels carries severe public health consequences, including asthma attacks, respiratory disease, heart attacks, and premature deaths. Moreover, fossil fuels, such as coal and oil, pollute the environment from the point of extraction to combustion in the form of global warming, acid rain, oil spills and runoff pollution. At the same time, nuclear power has left us with a nuclear waste problem for which no safe solution exists.

Despite the environmental and public health implications of relying on fossil fuels and nuclear power to meet our energy needs, the federal government continues to push energy policies that would offer more of the same. Last year’s federal energy proposals included billions of dollars in new and extended tax breaks for oil and gas drilling, loan guarantees and federal subsidies for building new coal plants, and incentives to build the first new nuclear power plants in 30 years. In total, the 2004 federal energy proposals provided more than $35 billion in new subsidies for fossil fuels and nuclear power. These proposals offered $16 billion—half as much—to fund energy efficiency and renewable energy programs.

This continued investment in fossil fuels and nuclear energy ignores recent research documenting the potential to meet more of our electricity needs with energy efficiency and renewable sources of energy. In fact, the technical potential of wind, clean biomass, and geothermal resources in the United States is four times greater than our current total electricity consumption. Additionally, conservative estimates suggest that energy efficiency programs could reduce our electricity use nationally by
28 percent.

Why then does the federal government continue to subsidize fossil fuels and nuclear power and leave renewable energy sources as peripheral contributors to the country's electricity mix? Proponents of the status quo contend that investing in fossil fuels and nuclear power are essential for a healthy and vibrant economy and that diverting investment to renewables and efficiency will cost us jobs and increase costs to consumers. A growing body of literature, however, shows that investing in energy efficiency and technologies such as wind and solar power boosts local economies and creates jobs. Moreover, investing in renewables and energy efficiency helps to diversify the electricity market and reduces consumer dependence on coal and natural gas, thereby saving consumers money and shielding them from fluctuations in market prices.

This brings us to the central question of this report: what would be the economic and consumer impacts of pursuing clean energy policies? How would a shift in federal policy away from fossil fuels and nuclear power and toward renewable energy and energy efficiency affect the economy, consumers, and the environment in the U.S.?

Specifically, we examined the economic and consumer impacts of pursuing two policies:

- Enacting a 20 percent national renewable energy standard, commonly referred to as a renewable portfolio standard or RPS, which would require the U.S. to generate 20 percent of its electricity from clean energy by the year 2020; and

- Shifting the amount it would cost American taxpayers to subsidize fossil fuels and nuclear power under last year’s federal energy proposals, $35 billion, toward renewable energy and energy efficiency.

We found that implementing these two policies would greatly benefit the economy and consumers in the U.S. while reducing air pollution from power plants.

In the U.S., investing in these clean energy policies would:

- Create 215,308 net jobs in 2020 and a net annual average of 154,589 jobs between 2005-2020;

· Increase wages by $6.8 billion in 2020;

· Increase the gross domestic product (GDP) by an annual average of $5.9 billion between 2005 and 2020;

· Save all consumers—residential, commercial, and industrial—$11 billion on natural gas bills in 2020;

· Save consumers $16.2 billion on electricity bills in 2020;

· Reduce global warming carbon dioxide emissions from power plants by 27 percent of 2002 levels; smog-forming nitrogen oxide emissions by 17 percent of 2002 levels; and soot-forming sulfur dioxide emissions by 19 percent of 2002 levels, all by 2020.

Moreover, the clean energy policies evaluated in this report would create more jobs, raise wages higher, and save consumers in the U.S. more money than last year’s federal energy proposals.

The findings of this report—and hence the title—underscore the benefits of Redirecting America’s Energy. Strong support for energy conservation and efficiency, coupled with increased emphasis on the development of renewable energy, can help solve our current energy problems, provide a significant boost to the economy and move us towards a safer, healthier energy future.

These findings lead us to the following three recommendations:

1. Implement a Renewable Energy Standard

The federal government should implement a national clean energy standard, known as a renewable portfolio standard, to increase the amount of electricity generated from renewable sources of energy to 20 percent of power generation nationally by 2020.

2. Strengthen Energy Efficiency Standards

To save consumers and businesses money and reduce our reliance on fossil fuels and nuclear power, the federal government should raise efficiency standards for key appliances. Minimally, regulators should implement stronger federal standards for residential furnaces and boilers, commercial air conditioners, and distribution transformers.

3. Shift Energy Subsidies Away from Fossil Fuels and Nuclear Power Toward Renewables and Energy Efficiency

Policy-makers should shift federal subsidies toward renewable energy and energy efficiency in order to provide the necessary market incentives to stimulate development and implementation of these technologies.