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Efficiency, Politics, Policy, and Economy

Recently, the American Council for an Energy Efficient Economy (ACEEE) released its annual state rankings for energy efficiency.  We noticed Wisconsin slipped a few pegs to 16 while Iowa remains near the top at 11.  The top states for EE programs include the usual suspects: California, Massachusetts, Vermont, and New York.

As we discussed the rankings in house, my comment was, you probably don’t want to be in the top 10 on this list because those states are on the business-unfriendly end of the spectrum.  They have big EE spending congruent with heavy regulation.

So you guessed it; this rant analyzes economic performance, politics, and business friendliness along with the ACEEE rankings.

I did some digging to see what sort of correlations there were between state energy policy, political leanings, and economic growth.  One can make all sorts of arguments; my favorite including “if it weren’t for xyz, it would be much worse.”  But I never buy that bologna.  Likewise, I don’t buy excuses for why savings aren’t being accrued as estimated, unless something radical has changed – like half the occupants left the building and turned out the lights.  This is why we look at savings on energy bills and don’t bother with weather normalization or other excuses.  Nobody can argue with meter reads from billing data.

I used growth in gross state product for the past 10 years as a metric for economic vibrancy.  I used the average percentage of votes for Democratic candidates for president over the past four elections as a measure of state political leanings and simply ranked those from low to high.  Finally, ranks states for business friendliness with a survey of about 550 CEOs.  The CEO rankings include considerations of tax and regulation, workforce quality, and living environment.

The rankings for all categories are shown in the data at the bottom of this blog so you can peel it off and do whatever you want with it.  FYI – I left out District of Columbia because that is a whacked out, in more than one way, “state”.  Therefore, you will see some 51s in the scatter plots.

Plots are worth a thousand words so I plotted ACEEE ranking against political leanings and ACEEE ranking against economic vibrancy.  There is a strong correlation between energy efficiency policy and the states politics.  Liberal states dominate the high end of the ACEEE rankings as shown in the chart below.  Bear in mind that low numbers are high rankings.  For example, see the first dot in the lower left corner of the plot.  That represents Massachusetts, which was ranked number one by ACEEE and the state has the most liberal record in presidential elections.

It is interesting to point out the outliers.  The most conservative state is Utah and they have an ACEEE ranking of 17.  Idaho, the third most conservative state is ranked in the middle at 26 by ACEEE.  On the other end is Delaware, the 10th most liberal state with an ACEEE ranking of 31.  Delaware, however is the size of my back yard and has almost no Interstate highway so anything is possible there.

To my surprise, there is a very weak correlation between energy efficiency and economic growth.  It’s actually better than I thought because big states like California and Michigan have good EE rankings and horrible economies.  Generally speaking however, higher EE rankings have less economic growth.  This is what I was referring to regarding not making excuses.  But..but…but…  I don’t care.  It is what it is and you can send your excuses to your senator where it can be ignored with the rest of the correspondence he/she gets.

See the first point on the left in the chart below?  That’s Massachusetts, which had the third worst economic growth over the 2000-2010 period.  Yeow!  That crappy growth was a bit of a surprise to me.  California was 34th in economic growth – actually considerably better than I would have guessed.  Subtract Apple from the state’s GSP and it would probably be 45th place.  Subtract the rest of Silicon Valley and it would be 50th I would bet.

Washington (the state) has the best combination of energy efficiency and economy.  Missouri appears to be a convincing dead last in this combination.

Actually, when I said the second quintile is probably where you want to be from an EE perspective, I was correct, somewhat.  The second quintile of states for high EE ranking have the second worst economies, but better than the first quintile, bogged down by rust belt states of Michigan, Wisconsin, Illinois, and New Jersey.  Actually, the states with the worst EE rankings have the best economies, so I was right in that sense, unfortunately.

Finally, I roll it all together: energy efficiency, CEO business friendliness, economic growth, and political leanings.  Once again, I remind you that large numbers are low rankings.

First a few comments on business friendliness.  Texas is top ranked by CEOs as the best place to do business.  California is dead last.  In a post a few months ago, I pointed out the hilarious fact that Gavin Newsom, California’s Lieutenant Governor, with several legislators in tow visited Texas to see why Texas was sucking jobs out of California like a Hoover vacuum cleaner.  What a dope.  Maybe he should discover this thing called the internet.

When considering workforce quality and living environment have to be sky high for California, you know their tax and regulatory climate is hell on earth.  Steve Jobs apparently alluded to this in his recent biography by Walter Isaacson, saying “it is almost impossible to do so [build a factory] these days in America, largely because of regulations and unnecessary costs.”  For examples, Google “delta smelt” to see how “saving” this minnow ruined farmers in California, or check out this recent article to “save” a sucker (a fish that is) in Southern California.  There are a plethora of states that would be happy to export some Asian carp to replace this bottom feeder if that’s what they want.

But on with the comprehensive results shown in the chart below – Based on trailing economic performance and current energy efficiency and CEO rankings representing future potential, it appears that the fourth quintile of states ranked by ACEEE is the optimal place to be.  These states include Indiana, Texas, Virginia, Montana, Georgia, Kentucky, Alaska, Arkansas, Louisiana, and Nebraska.  These states are ramping up EE programs.  The average CEO rank for future business development of top EE states is almost 40.  That is terrible!  These states include Massachusetts, California, New York, Oregon, Rhode Island, Vermont, Washington, Connecticut, Minnesota, and Maryland.

But…but…but – I don’t care.  As my basketball coach used to say, “If ifs and buts were candy and nuts what a wonderful world it would be.”

State by state data are provided below.

GSP Rank = ranking in growth of gross state product from 2000 to 2010, constant dollars.

CEO Rank = survey results of 550 chief executives for business friendly states considering taxes, regulation, workforce, and livability.

Democrat Rank = Ranking of states by percent of votes for the democratic candidates in general presidential elections for the trailing four cycles.

Obviously, many states have tied scores for ACEEE.  However, I have no idea how they have four tied for 17th place, a 19th and a 21st.  You can probably find out in the full report.


Hey, if you are a highly ranked energy efficiency individual, and if you still take showers, you might consider one of these LED shower-powered lights for your shower.  Does two things: saves lighting energy and water flow.  Good luck!  I came across this on the Sylvania website where I was visiting to vociferously complain about the expensive headlights on my car that simultaneously burned out after a measly 8 months surrounding summer use (very little).  This was the second pair (the other a different brand) of high output headlights that failed early.  Avoid them, especially if changing the head lamp is like threading a needle in a soda can – sharp edges and all.

Jeff Ihnen

Author Jeff Ihnen

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