Ninth Annual Green Innovation Index Finds California Clean Economy Thriving but Emissions-Reduction Challenges Loom

Transportation sector emissions spike, pose major challenge to
state’s 2030 climate goals

SAN FRANCISCO–(BUSINESS WIRE)–As California’s economy continues to grow, the state’s carbon footprint
continues to shrink, albeit at a slower pace than in earlier years due
in part to a spike in transportation emissions.

The ninth annual California
Green Innovation Index — released by the nonpartisan
nonprofit group Next 10 and prepared by Beacon Economics — finds that
the state’s ambitious climate policies have allowed for considerable
economic growth, with California outpacing the growth of other states
during the recovery period following the Great Recession.

Between 2006 — when the state’s landmark climate legislation was adopted
— and 2015, California’s GDP per capita grew by almost $5,000 per
person, nearly double the growth experienced by the U.S. as a whole. At
the same time, per capita emissions in the state decreased by 12
percent. Job growth between 2006 and 2015 in California outpaced rates
experienced prior to 2006, and outpaced total U.S. employment gains by
27 percent.

While the state has made considerable progress decoupling economic
growth from greenhouse gas (GHG) emissions, the rate of emissions
decline appears to be slowing, due in part to a spike in transportation
emissions. On an absolute basis, California’s total GHG emissions fell
only slightly in 2015, down 0.34 percent from 2014. This compares to a
0.73 percent reduction in the previous year and sharper falls in years
before. If current rates of decline continue through 2020, the state
will need to reduce emissions at a rate of 4.97 percent each year in the
decade between 2020 and 2030, and produce even steeper declines in the
period from 2030 to 2050, if it is to meet current climate goals.

“California has experienced tremendous success implementing policies
that incentivize innovation in business, technology and carbon
reduction,” said F. Noel Perry, businessman and founder of Next
10. “But the effects of these efforts seem to be reaching a plateau.
Therefore, it is critical that the next generation of climate policies
be designed to deliver steeper reductions. With uncertainty at the
federal level, California must maintain its success and leadership in
equitably growing the clean energy economy.”

The California Green Innovation Index has tracked key economic
and environmental indicators at the regional, state, national and
international level since 2008. This year’s edition finds California’s
record is especially impressive when it comes to cutting emissions and
energy use per dollar of GDP. The state has become the most
energy-productive major economy in the world, moving up three spots from
2013 to 2014, while also reducing its carbon intensity by 4.5 percent.

“California policies have allowed the state to generate more economic
growth while producing fewer emissions. In 2014, every $10,000 of
economic activity in California resulted in 55 percent fewer CO2
emissions than $10,000 of economic activity yielded in the rest of the
nation,” said Adam Fowler, economist at Beacon
Economics, an independent research and consulting firm that compiled
the Index for Next 10.

However, enormous challenges lie ahead, as the Index shows a
recent spike in transportation emissions. The transportation sector
remains the biggest source of greenhouse gas emissions in the state,
responsible for 38.5 percent of emissions and overshadowing all other
areas of the economy. In 2015, total transportation-related GHG
emissions rose by 2.7 percent, largely due to an increase of 3.1 percent
in emissions from on-road vehicles like cars, trucks and buses. This
increase seems to be a result of a strong economy and lower gas prices
resulting in more vehicles on the road, combined with a housing crisis
that has led to longer commutes.

“Transportation sector emissions vastly outweigh other carbon-producing
areas of California’s economy, and the recent spike should alert
policy-makers that despite our best efforts, more must be done,” said
Fowler. “Cheap gas prices and a strong economy are creating increased
goods movement and prompting Californians to drive more. In addition,
the housing affordability and availability crisis is forcing people to
live increasingly farther away from work, driving up total vehicle miles
traveled in the state by 2.7 billion in 2014, up 0.08 percent from the
previous year. So it’s no surprise that greenhouse gas emissions from
vehicles have been increasing, despite California having the nation’s
most ambitious clean transportation policies.”

Commute times in California increased 2.8 percent between 2014 and 2015,
while at the same time, the state experienced a 4.8 percent decrease in
public transportation trips.

“The data in this year’s Index shows that developing cleaner
transportation options presents both a great challenge and a great
opportunity for the state moving forward,” said Next 10’s Perry.
“Finding a way to reduce emissions by 5 percent each year in the coming
decade will require innovation. Fortunately, that’s something California
has proven it knows how to do.”

Other highlights of this year’s Green Innovation Index
include:

Power sector

• In 2016, energy-related carbon dioxide emissions in the U.S. were 12.5
  percent below their 2006 levels. The decade-long nationwide slide in
  emissions from power production reflects the electric power sector
  shifting away from coal and toward less carbon-intensive fuels.
• Across the U.S., 2015 saw a record number of coal plants discontinue
  operations, accounting for nearly 14 gigawatts of capacity.
• Natural gas production and consumption hit an all-time high in the
  U.S., displacing more-polluting energy sources.
• California’s electric-power sector was responsible for 19.1 percent of
  the state’s greenhouse gas emissions in 2015, down 0.9 percent from
  2014.
• In California, per capita electricity consumption decreased 2.3
  percent from 2014 to 2015. In the rest of the U.S., it decreased 1.8
  percent.
• The state needs to increase renewable generation by 24 percent between
  2017 to 2020. Effective grid management to incorporate this level of
  renewables remains a key challenge for the state.

Renewable energy

• In 2015, California increased renewable electricity to 21.9 percent of
  total electricity generation, up 1.8 percent from the year before.
• In 2015, California’s renewable generation increased 8.3 percent from
  the year before, with solar jumping 40.3 percent and small hydro
  dropping 6.1 percent due to the drought. Wind generated 37 percent of
  the state’s renewable electricity, and for the first time, solar (27
  percent) overtook geothermal (20 percent) as the second-largest source
  of renewable generation.
• Unexpected regions have emerged as solar energy hotspots in recent
  years. Fresno retained the top spot for industrial solar, while Los
  Angeles-Long Beach-Anaheim jumped from 3rd to 1st in commercial
  installations. San Diego-Carlsbad moved to first in residential solar
  installations.
• As of Q1 2017, California leads the nation in installed solar capacity
  with 18,963 megawatts. From 2010 to 2015, California solar generation
  increased by over 1738 percent. By the end of 2016, the state’s
  cumulative installed solar capacity was six times the total of the
  next highest state (North Carolina).
• For the U.S. as a whole, renewable generation increased 0.5 percent,
  to 7.3 percent of total generation in 2015.

Transportation

• As of the end of 2016, about half of all zero-emission vehicles (ZEVs)
  ever sold in the U.S. were bought in California. In the first quarter
  of 2017, ZEVs accounted for nearly 5 percent of the state’s auto sales.
• In 2015, there were 172,895 ZEVs registered in California, up 45.5
  percent from 2014. Over the same time period, traditional gasoline
  vehicle registration increased 1.7 percent.
• The state’s charging infrastructure lags badly. At the time of
  publication, California has only 0.05 public charging outlets per ZEV,
  placing it ahead of only New Jersey and Alaska for availability of
  infrastructure.

Clean jobs

• California has 8.5 jobs in solar and wind generation for every 1 job
  in fossil fuel generation.
• In 2016, 21.6 percent of California’s energy jobs were in solar and
  wind generation, surpassed only by Nevada (29.1 percent) and Hawaii
  (22.8 percent).
• California is the top state for employment in energy storage,
  comprising 28 percent of the national workforce in 2016.

Clean technology innovation

• Across the nation, investment in clean technology companies continued
  to shrink in 2016. Total US investment in clean tech companies was
  $2.5 billion, down 7.4 percent from 2015.
• In California, total investment in clean technology grew by 12 percent
  compared to 2015, totaling $1.7 billion, representing more than
  two-thirds of total U.S. investment in clean tech.
• California continues to lead the U.S. in clean technology patent
  registrations. California registered 5,119 clean technology patents in
  2016—more than 20 percent of total U.S. patent registrations, which
  totaled 23,958 across all states.
• California earned top rankings in every clean tech patent category in
  2016, with 1,060 patents for green materials (just less than the next
  three states combined), 645 related to efficiency (more than the next
  five states combined), 616 in the transportation sector (more than the
  next two states combined), and 493 for solar energy (more than the top
  10 states combined).

International comparisons

• China remained the largest greenhouse gas emitter in 2014, followed by
  the U.S. and the European Union.
• When treated as a country, California moved up two places in
  comparison to the 49 nations with greatest greenhouse gas emissions,
  surpassing France and Italy to become the 18^th largest
  emitter.
• California maintained top rankings as one of the least
  carbon-intensive emitters (2^nd to France) and one of the
  highest shares of electricity from renewable energy sources (6^th
  highest).
• The Golden State moved up three spots to the number one ranking as the
  most energy productive economy in 2014.

About Next 10

Next
10 is an independent, nonpartisan, nonprofit organization
that educates, engages and empowers Californians to improve the state’s
future. With a focus on the intersection of the economy, the
environment, and quality of life, Next 10 employs research from leading
experts on complex state issues and creates a portfolio of nonpartisan
educational materials to foster a deeper understanding of the critical
issues affecting our state.

About Beacon Economics

Beacon
Economics is one of California’s leading economic
research and consulting firms, specializing in economic and revenue
forecasting, economic impact analysis, economic policy analysis, and
regional economic analysis. Known for delivering independent and
rigorous research, the firm provides its clients with economic trend and
data analysis that strengthens strategic decision-making about
investment, revenue, and policy.

Contacts

Cater Communications
Sage Welch, 415-453-0430