Energy Efficiency Best in an Economic Downturn

The past few months have seen new federal rules passed on air quality regulations which place a renewed focus on fuel cells and solar panels in military installations. At the same time, the State of California has proposed a number of new bills aimed at reducing energy usage in buildings.

Should California and the rest of the nation really be creating stronger requirements for energy efficiency and carbon reductions as we attempt to turn around the economy and bring back employment to millions of Americans? At least a few economists say yes.

Josh Bivens, acting research and policy director at the Economic Policy Institute, a non-partisan think tank based in Washington DC, highlights this perspective in an article in New Scientist. With limited good options for investment in the current economy, capital is largely left to sit in low yield bonds and other non-job creating accounts. With money available for investment and good returns projected over the long term, the timing is ideal for putting that capital to good use in energy efficiency. Investing now in energy efficiency takes advantage situation by providing an investment tool that stimulates the economy, buffers against potential future rises in energy costs, and reduces homeowner and business costs in the future, allowing for more capital on hand when times improve.
While not necessarily intuitive, Mr. Bivens concludes that "from the perspective of job creation, the best time to enact regulations that may require costly investments is precisely when the economy is depressed." The next few years may show if this theory holds true.