BACC Editor on Wednesday, 07 September 2011 01:53
Google.org recently released an analysis of the impact clean energy innovation has had on the United States energy system and economy. Using McKinsey and Company’s U.S. Carbon Low Economic Tool, a group of models that estimates the economic implications of energy and climate policies, Google assessed the potential impact various clean energy initiatives could have on the US economy and energy landscape.
Google drew three key conclusions from its analysis: 1) Innovation could pay off big, 2) Speed Matters, and 3) Policy and innovation can enhance each other. First, innovation pays off by reducing energy costs. Reduced energy costs create consumer savings that are circulated back into the economy, which drives growth in the economy outside the energy sector. Innovation also creates new jobs in the technology sector.
Secondly, the speed of innovation matters because delayed breakthroughs equates to delayed benefits. The analysis projected that a five-year delay in the rate of innovation would cost the economy $2.3-3.2 trillion in unrealized GDP gains and 1.2-1.4 million net jobs. Technology innovations that are more quickly developed have a greater advantage in dominating the clean energy future.
Lastly, clean energy policies and innovations are mutually beneficial. Innovations can reduce costs associated with implementing clean energy policies; simultaneously, policies that level out the playing field for clean energy accelerate adoption of clean energy technologies and thereby amplify their economic, environmental and health benefits.
In the study, Google.org also compares a scenario in which the U.S. pursues aggressive “breakthrough” energy innovation to a Business-as-Usual scenario, and finds major discrepancies between the two. If the U.S. were to implement aggressive energy innovation coupled with the advancement of clean policy:
- The economy would grow by over $244 billion in GDP/year
- 1.9 million new net jobs would be created
- U.S. consumers would save over $995/househould/year
- U.S. oil consumption would decrease by over 1.1 billion barrels/year
- Total greenhouse gas emissions in the US would decrease by 21%
The analysis concludes that clean energy innovation is a powerful tool for addressing society’s goals of economic growth, enhanced energy security and environmental health, but stresses that innovation will require effective policy, sustained national investment by public and private institutions, and increased entrepreneurship within the private sector.