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California’s classic chart: what really caused the energy savings?

2014 April 1

ca curve

Arik Levinson of Georgetown University presented a controversial paper at last week’s POWER conference hosted by the Energy Institute at Haas, entitled “California Energy Efficiency: Lessons for the Rest of the World, or Not?”. The subject of his paper was a graph that has been well shown around the world of energy policy. The California Energy Commission, former Secretary of Energy Steven Chu, the World Bank, New York Times, Natural Resources Defense Council, and others have all used this graph to help explain the importance of energy efficiency standards (for equipment, appliances, and lighting) in flattening California’s per capita electricity use.

Levinson contends that it actually does not have lessons regarding such energy efficiency standards and the divergence in the paths of California and other U.S. states is mostly due to other demographic patterns, including climate, income, population, and housing characteristics. However, many critics have attacked Levinson as being against efficiency regulations. He emphasizes that his paper is not a critique of such standards and regulations, but rather serves to shine light on the actual reasons for divergence in energy use patterns and expose the need for other evidence of the efficacy of efficiency standards.

There were four reasons for Levinson’s initial suspicion of this graph: 1) other states and the federal government followed with similar regulations soon after California, 2) appliance manufacturers generally followed the California standards nationwide, 3) the gap started before California’s standards were implemented, and 4) the five other states (NV, OR, WA, ID, HI) with the slowest growing per capita energy use after California are all neighbors of California.

His analysis showed that population migration accounted for 15% of the difference, climate and income accounted for 20% of the difference, and population and housing characteristics accounted for 61% of the difference. For migration, he pointed out that between 1960 and 2010, there were major shifts in U.S. population from the north and the midwest to the south and the west, and so he compared California to a control group that was weighted with the new population distribution. For climate and income, he showed that California’s mild climate means that there was less of an increase in heating and cooling needs than in other states. Finally, he noted that California household have grown relative to the rest of the U.S. (California’s household size decreased by only 0.16 members while the rest of the U.S.’s decreased by 0.76 members) and since energy use per capita declines with household size, this clearly played a big role in the flattening of California’s per capita energy use. In the end, these three trends accounted for 88% of the divergence, leaving only 12% remaining that may be due to regulations (or other reasons).

This paper is certainly throwing a lot of cold water on the long-claimed victory of California’s energy efficiency standards’ role in energy savings. But, it does not necessarily mean that standards do not make a difference. After all, it did seriously influence manufacturer behavior as well as other states and the federal government to implement their own efficiency standards. If it weren’t for all of these standards, per capita electricity use would most likely have been higher for both California and the rest of the U.S. Proving these counterfactuals (and how much higher electricity use would have been) is very difficult, and so Levinson’s call for such evidence may not be answered. For full text of his paper, click here.

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