Written by Derek Cameron
Edited by Gabe Agüero
On September 3, 2019, Governor Ned Lamont signed an Executive Order mandating state regulators to devise a plan in which Connecticut exclusively relies on zero-carbon sources for its energy supply by 2040, binding the state to a gradual transition to alternative energy sources. This deadline expedites the 2018 Act Concerning Climate Change Planning and Resiliency's goal of reducing statewide greenhouse gas emissions to 85% below 1990 levels by 2050. The previously-established 45% benchmark reduction to be achieved by 2030 was preserved. Various measures have been proposed or enacted to achieve these goals over the previous several years. These measures include:
1) proposal procurements for various Class I renewable energy sources, including offshore wind power
2) a doubling of the state's Renewable Portfolio Standard to 40 percent by 2030
3) establishing a declining cap on gasoline- and diesel-derived carbon dioxide emissions
4) requiring fossil fuel producers to purchase allowances auctioned by the state government to compensate for their fuels' carbon dioxide emissions
5) pursuing such improvements to the state's transportation infrastructure as improving mass transit systems, electrification of current mass transit, and developing transit-oriented communities near rail and bus stations.
The economic implications of Connecticut's greenhouse gas emissions ambitions are predicted to be net-positive. Examined here is the impact of reducing Connecticut's greenhouse gas emissions by 45% relative to 2001 levels by 2030 as the uncertainty associated with all subsequent predictions exceeds that necessary for a reliable forecast. If this goal is achieved, net job creation in Connecticut (which is currently rather anemic) is predicted to average 22,000 greater annually between 2020 and 2030, while net new state GDP averages $2.34 billion greater annually.
It is worth noting, however, that these employment gains are likely to be concentrated in the construction, wholesale trade, waste and remediation services, and professional and technical services sector. The retail sector is also forecasted to incur employment losses as a result of this transition. In addition, the resultant increase in state tax revenues ($136 million annually) exceeds that in state expenditures ($128 million annually). Despite this, the increase in state expenditures is predicted to exceed the increase in revenues during Fiscal Year 2026, resulting in a net-surplus in revenues before 2026 and a subsequent net-deficit. However, this assumes that all of the necessary investments to achieve the aforestated reductions materialize, which will likely not occur without significant economic incentives implemented by the state government.
Beyond Connecticut, transitioning to alternative energy acquires several notable positive implications. Renewable energy deployment is producing increased private sector investment, which is driving GDP growth. The increased investment also benefits construction, engineering, and manufacturing. These benefits yield benefits for the economic sectors supplying raw minerals to the aforestated sectors, proving that the benefits of transitioning to alternative energy to sheer economic production far transcend the energy sector.
Finally, this process increases tax revenues and disposable income, increasing the capacity of both the private and public sectors to invest in education and healthcare. Secondly, this implementation would yield long-term positive economic, social, and public health implications. The emissions reductions resulting from a transition to alternative energy will also serve to mitigate economic losses incurred through natural disasters caused by climate change and political conflicts over access to scarce natural resources. Transitioning to alternative energy also spurs job creation both within the renewable energy sector, with the sectors directly involved in the acquisition and manufacturing of intermediate goods for the alternative energy sector, and those involved in the construction of renewable energy generating sources being the predominant remaining beneficiaries.
Works Cited
"Affordable and Reliable Energy Procurement." Department of Energy and Environmental Protection, State of Connecticut, https://portal.ct.gov/DEEP/Energy/Affordable-and-Reliable-Electricity-Procurement.
Arconti, David, et al. "An Act Concerning the Procurement of Energy Derived from Offshore Wind." General Assembly, State of Connecticut, January 2019, https://www.cga.ct.gov/2019/amd/H/pdf/2019HB-07156-R00HA-AMD.pdf.
"Comprehensive Energy Strategy." Department of Energy and Environmental Protection, State of Connecticut, 08 February 2018, https://portal.ct.gov/-/media/DEEP/energy/CES/2018ComprehensiveEnergyStrategypdf.pdf.
El-Katiri, Laura, et al. "Renewable Energy Benefits: Measuring the Economics." International Renewable Energy Agency, 2016, https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2016/IRENA_Measuring-the-Economics_2016.pdf.
Lamont, Edward M. "Executive Order No. 3." Office of the Secretary of State, State of Connecticut, 03 September 2019, https://portal.ct.gov/-/media/Office-of-the-Governor/Executive-Orders/Lamont-Executive-Orders/Executive-Order-No-3.pdf.
McMillen, Stanley. "The Economic and Fiscal Impacts of Connecticut's Greenhouse Gas Reduction Strategies." Department of Energy and Environmental Protection, State of Connecticut, https://portal.ct.gov/-/media/DEEP/climatechange/REMIpdf.pdf.
"Statewide Shared Clean Energy Facility (SCEF) Program." Department of Energy and Environmental Protection, State of Connecticut, https://portal.ct.gov/DEEP/Energy/Shared-Clean-Energy-Facilities/Shared-Clean-Energy-Facilities.
"The Transportation and Climate Initiative Program." Department of Energy and Environmental Protection, State of Connecticut, https://portal.ct.gov/DEEP/Climate-Change/Transportation-Climate-Initiative.