Energizing Michigan’s Economy
Creating Jobs and Reducing Pollution with Energy Efficiency and Renewable Electric Power

Executive Summary

Michigan does not need and should not pay for new coal-fired or nuclear power plants to meet our electricity needs. Instead, our state should pursue a New Energy Future based on energy efficiency and home-grown renewable energy resources.

Such a New Energy Future would create jobs, save consumers money, stabilize energy prices, make Michigan more energy independent, reduce long-term economic and environmental risk from global warming pollution and ensure that more of Michigan’s energy dollars stay in the local economy, as opposed to paying for coal, gas and uranium from out of state.

In this report, we use an economic and environmental model to compare the impacts of an innovative New Energy Future scenario (which eliminates growth in electricity demand through energy efficiency and generates 25 percent of electricity sales from renewable sources by 2025) with Governor Granholm’s 21st Century Energy Plan (which makes a smaller commitment to efficiency and renewables), and with a business-as-usual scenario (which includes no efficiency or new renewables).

The New Energy Future scenario provides the strongest benefits for Michigan’s economy and environment, and should form the central part of the state’s energy plan.

Clean energy creates good jobs.

  • The New Energy Future scenario would create 88,000 person-years of employment through 2020 (vs. business as usual), 60,000 more than the 21st Century Energy Plan. Moreover, the New Energy Future scenario would increase wages paid to Michigan workers by a cumulative total of $3.3 billion through 2020, $2.3 billion more than under the 21st Century Energy Plan. (All dollar figures are reported as undiscounted 2006 dollars.) While both plans would create more jobs and increase wages further than business as usual, the impact of the New Energy Future scenario would be about three times larger.
  • Michigan spends more than $18 billion per year on imports of fuel from out of state, a tremendous drain on the state economy. Clean energy creates jobs by replacing expenditures for fuel with expenditures for labor and materials produced at home.
  • Harnessing Michigan’s well-developed industrial base to manufacture renewable energy and energy efficiency technologies for use and export would provide additional significant economic advantages.

Clean energy saves consumers money on electricity and gas bills.

  • The New Energy Future scenario will save Michigan residents and businesses a total of more than $2.2 billion through 2020, while the 21st Century Energy Plan would yield $1.2 billion in savings (compared to business as usual). By enabling Michiganders to spend energy bill savings for needs other than energy, clean energy stimulates the local economy and creates jobs.
  • The New Energy Future scenario makes a substantial commitment to energy efficiency and renewable energy, requiring a large influx of capital that yields larger benefits over the long-term.

Clean energy prevents pollution.

  • During the year 2020, the New Energy Future scenario would reduce annual power plant air pollution by about 30 percent vs. business as usual.
  • Through 2020, the New Energy Future scenario would prevent the emission of a cumulative total of:
    • 170 million metric tons of carbon dioxide, the leading global warming pollutant;
    • 260,000 tons of soot-forming sulfur dioxide;
    • 90,000 tons of smog-forming nitrogen oxides; and
  • 1,000 pounds of mercury, a neurological toxicant.
  • These air pollution reductions are more than twice as much as the 21st Century Energy Plan would yield.

Clean energy shields Michigan from the economic and environmental risks of building new coal-fired power plants.

  • If Michigan chooses to build new coal-fired power plants, it will increase the state’s emissions of global warming pollution. Without a large reduction in emissions, global warming could dramatically impact the state over the next century—doubling or tripling the number of days in Detroit with highs of 90° F or warmer, reducing the volume of the Great Lakes, causing droughts, crop failures, extreme weather events, and more.
  • The growing urgency of addressing global warming makes limits on carbon dioxide pollution a virtual certainty for the future. As these limits are set, coal-fired power will become more expensive. Utility companies and their shareholders may be forced to pay significant costs for pollution credits or for carbon capture and storage—damaging the state economy.
  • Because energy efficiency and renewable energy emit no global warming pollution, they can help shield Michigan from these risks. And because renewable energy is not tied to finite fuel supplies, it can also shield Michigan from the economic risk of fuel price increases.

Michigan could eliminate the need to build any new coal-fired power plants by using energy more efficiently.

  • By investing $225 million per year in an effective energy efficiency program, Michigan could eliminate growth in electricity demand, greatly reducing pressure to build any new coal-fired power plants (or other new fossil-fuel or nuclear facilities).
  • In contrast, the 21st Century Energy Plan recommends an energy efficiency program funded at only $68 million per year. This program would allow Michigan’s electricity demand to continue to grow at about 0.9 percent per year—failing to alleviate the need to build one or two new coal-fired power plants.
  • Efficiency is the most cost-effective energy resource for Michigan. Efficiency programs save energy at half the cost of building, fueling and operating a new power plant. States with active energy efficiency programs typically achieve energy savings at an average cost of 3 cents per kWh or less, compared to a cost of energy of about 6 cents per kWh from a new power plant. The Energy Efficiency Resource Assessment in Michigan’s 21st Century Energy Plan estimates that a large block of savings can be achieved for even less—2.57 cents per kWh.

Using local resources, Michigan could dramatically increase generation of renewable electricity.

  • The technical potential for renewable energy generation in Michigan is large. On-shore wind energy, biomass and solar energy could together produce the equivalent of more than two-thirds as much electricity as Michigan currently uses per year.
  • The potential of off-shore wind energy alone far exceeds Michigan’s current electricity needs. Tapping into just a fraction of this potential, Michigan could launch a new industry and become a regional leader in renewable energy use and clean energy technology manufacturing.
  • Renewable energy sources currently cost the same or slightly more than conventional power generation, but have major advantages in avoiding future fuel price increases and future environmental costs such as carbon taxes. Plus, costs are projected to decrease as demand for renewable energy ramps up, and fossil fuel prices continue to climb.

POLICY RECOMMENDATIONS

Now is the time to move Michigan toward a clean energy future. Michigan has a once-in-a-generation chance to change course—from old and dirty fossil fuel-based energy to a more efficient economy powered by renewable energy. To make this future a reality, Michigan’s leaders should:

  • Restart energy efficiency programs. Michigan should aim, at minimum, to meet all future growth in demand for electricity with energy efficiency improvements. The state should require its utility companies to create and fund energy efficiency programs sufficient to reduce growth in electricity demand to zero. In addition, Michigan should update residential and commercial building codes, set stronger appliance efficiency standards, and implement a “Pay As You Save” (PAYS®) program to help extend the leverage of energy efficiency program funding and improve the penetration of energy efficient products into the marketplace.
  • Adopt a renewable energy standard of 25 percent by 2025. Michigan should require utility companies to generate a large and growing share of their electricity from in-state renewable sources of energy, reaching 25 percent of sales by 2025. The standard should focus on truly renewable resources like wind, solar and clean biomass—and exclude toxic sources of energy like trash incineration.
  • Reject new coal-fired or nuclear power proposals. By implementing strong energy efficiency and renewable energy programs, Michigan could eliminate the need for new coal-fired or nuclear power plants. State leaders should implement clean energy programs and priorities first, before considering irresponsible and expensive proposals for new generation.