In 2002, California set a goal of 33 percent renewable energy by 2020, and in 2015, the state added a new target of 50 percent by 2030. Those are certainly ambitious aims, but according to a recent report, California’s investor-owned utilities look like they’re going to hit the target — a whole decade ahead of schedule.
Another report from nonprofit group Next 10 and research firm Beacon Economics ranked the Golden State the top state in the country for developing a clean and efficient energy economy and supporting green technology. If California counted as a country, it’d rank in the top five for electricity from renewables, carbon intensity reductions and energy productivity.
And it did all that while maintaining its economic strength.
Given all that renewable energy success, it seems the rest of the country might be able to learn something from the state. So, how does California do it?
Starting With Efficiency
California also places a lot of emphasis on energy efficiency. In fact, efficiency was one of the first things the state focused on. Using what you have more efficiently is often a much more cost-efficient approach than building new energy resources.
One of the dominant concerns when it comes to encouraging efficiency is that if electric companies sell less electricity, they make less money. They have an incentive to sell more and not to cut back. California’s solution to this is a policy known as decoupling, which effectively separates consumption from profit.
Here’s how it works. Regulators set a price for energy sales that would allow utilities to make a pre-approved amount of profit. If a company sells more than that amount, the difference goes to the utility’s customers. If it sells less, rates increased until the company reaches its target. Because of this policy, utilities have no incentive to sell more electricity.
Setting Ambitious Targets for Renewables
California’s success may have a lot to do with its Renewable Portfolio Standard (RPS) — the rule that created requirements for reaching that 50 percent by 2030 requirement. California certainly isn’t the only state to have created an RPS, but it did put forth one of the most ambitious ones.
One reason the standard may have been so successful? It created a market. Every utility in the state knew it needed renewable energy, and other energy companies, tech companies, and investors knew it too. The assurance the RPS provided gave all those parties the confidence to make bigger investments.
The state also encourages small-scale investments through initiatives such as tax credits that help people install rooftop solar systems or start a community solar program.
Letting the Market Work
California has also instituted a cap-and-trade program, which essentially employs the market to help find ways to curb greenhouse gas emissions. The system is projected to lead to a 16 percent decrease in greenhouse gas emissions between 2013 and 2020 and another 40 percent by 2030.
In a cap-and-trade system, businesses have a limit on how much of a certain substance, such as greenhouse gases, they can emit. If they exceed that cap, there is a penalty. If they emit less than that limit, they can sell to other businesses an “allowance” equal to the difference between the limit and their emissions. This system gives companies more leeway in meeting restrictions and creates an economic incentive to reduce emissions.
Encouraging Investments in Clean Tech
California is known for its technology hubs with startups in a wide array of markets. One area of tech where the Golden State excels is so-called “clean tech,” which includes renewable energy, electric motors, sustainable waste disposal and other innovations that help protect the environment.
The state is so ahead of the game when it comes to clean tech that it earned the top spot for cleantech technology six years in a row in Clean Edge’s U.S. Clean Tech Leadership Index. California’s policies, its innovation-friendly culture, and its solar energy-friendly climate have propelled it to become a clean technology leader.
Through a combination of regulations and rules that encourage the market to find solutions, California has become a leader in the field of renewable energy. We still don’t have all the answers, but California serves as a prime example of what a clean energy economy can look like.
Guest Post provided by one of our more talented contributors, Megan Ray Nicols, a STEM Writer and Blogger managing Schooled By Science