More Jobs and Greater Total Wage Income: The Economic Benefits of an Efficiency-Led Clean Energy Strategy to Meet Growing Electricity Needs in Michigan

One of the critical concerns regarding maintaining the robustness of the future Michigan economy is supporting the growing demand for electricity. The challenge is to meet the new demand for electricity in ways that maintain competitive electricity costs and also reduce environmental impacts. In January 2007, the Michigan Public Service Commission (MPSC) released the 21st Century Electric Energy Plan presenting the results of a six-month study by MPSC staff and a number of other interested parties. The conclusions of that study indicated that a combination of energy efficiency and renewable energy technologies could help meet the growing need for electricity in the state. By incorporating those technologies into the resource mix (particularly energy efficiency), the MPSC plan would actually reduce total electric system costs as compared to a "business-as-usual" approach. The question answered in ACEEE’s study is whether this alternative "clean energy" policy scenario could provide additional economic benefits in terms of net growth in jobs and wages in Michigan.

In this report, ACEEE reviews the macroeconomic impacts that likely would unfold under an alternative set of policy recommendations. Generally, we find that cost-effective investments in the combination of energy efficiency and renewable energy generation technologies can actually reduce overall electricity costs, boost net employment, and reduce air pollutants within the state. For example, by 2023 (the last year of this analysis), businesses and households in Michigan are expected to enjoy a net cumulative savings of at least $2.6 billion and likely more. As a result of this greater energy productivity, the state is projected to show a net annual employment increase of between 3,900 and 10,000 jobs (depending on the level of energy efficiency policy pursued — the greater the level of cost-effective energy efficiency investments, the greater the number of net new jobs). This is roughly equivalent to the employment that would be directly and indirectly supported by the construction and operation of 25 to 75 small manufacturing plants within Michigan. In addition, air emissions from conventional power plants could be reduced by 15-28% (also by 2023). The extent to which these benefits are realized will depend on the willingness of business and policy leaders to implement or even expand the kinds of energy efficiency and renewable energy recommendations that are found in MPSC’s 21st Century Electric Energy Plan.