California Says “Yes” to more Energy Efficiency and Renewables

"VotingWhile the November elections—and the flurry of political ads that preceded them—may already seem a distant memory, there’s still much to talk about when it comes to energy. From the Washington Post to USA Today, energy issues figured prominently in the national debate. Looking ahead, energy will continue to occupy an important place in the national conversation, according to Forbes.

Much coverage has focused on energy at a national level, but we also ought to give attention to important developments at the state level. Case in point: California’s Proposition 39.

On the surface, it’s about business and taxes: Prop 39 closes a tax loophole for out-of-state companies and will raise additional annual revenues of $1.1 billion. But Prop 39 is noteworthy because, for the next five years, 50 percent of those revenues will be dedicated to clean energy projects, raising an estimated $2.5 billion. That’s a significant sum of money for advancing clean energy in the state.

The language in Prop 39 recommends that these funds help support efficiency retrofits and alternative energy projects in schools and universities, provide financial and technical assistance for retrofits, and bolster job training and workforce development efforts related to clean energy. Ultimately, though, there’s a great deal of flexibility in how the funds can be put to use, and policymakers and industry leaders are now trying to find the best innovative ways to capture the biggest opportunities.

"Utilities"Fortunately, California has a legacy of putting funds like those generated by Prop 39 to good effect. For example, over the past several years the California Public Utilities Commission has approved annual budgets of over $1 billion for utility programs that promote energy efficiency. These programs have lowered customers’ utility bills while reducing the need for fossil fuel-based power plants. In fact, such programs have helped California continue a remarkable trend—constant per capita electricity consumption, which the state has maintained since the 1970s even as the economy continues to grow.

Meanwhile, California policymakers created the California Solar Initiative, an effort focused on increasing the number of distributed solar installations. The state budgeted $2.2 billion over ten years for the initiative and these funds have helped create a new market for solar energy. By the end of 2012, the California Solar Initiative is expected to have encouraged 1,000 MW of solar installations, a number equivalent to about one large coal-fired power plant.

As California looks ahead, there are a number of exciting opportunities for channeling Prop 39 funds toward innovative projects. The funds could be a tool for finally unlocking financing for deep energy retrofits; California could put the funds toward distributed resources, with the goal of creating a more resilient grid; or California could use the funds to jumpstart a new market for energy storage and become the world’s leader. The possibilities are nearly endless, and they’re more than worth considering. Because doing this right will enable California to generate new prosperity and reduce the environmental impacts of the state’s energy consumption.

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