Federal Reserve Bank of San Francisco

Community Development

Understanding the True Benefits of both Energy Efficiency and Job Creation

Author(s):

March 2014

Community Development Investment Review

Investments in energy efficiency spark opportunities for employment that draw on skillsets that are prevalent in the United States. Moreover, evidence suggests that as companies’ investments in energy efficiency improve their bottom line, their competitiveness increases, which can help bring jobs back to American soil. Furthermore, cost savings from energy efficiency can eventually translate into additional productive spending, creating economic development opportunities and increasing job creation. However, the means through which investment in energy efficiency stimulates net job creation are complex and often misunderstood. Discrepancies between approaches to modeling job creation and measuring it after implementation can lead to conflicting ideas about the effectiveness and value of energy efficiency programs. Thus, in order to increase and maintain support for energy efficiency policies and programs, it is important to flesh out the underlying economic argument and assumptions that drive preliminary analyses. Such efforts can also help us to set appropriate goals and realistic expectations for program implementation and job creation measures.

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