The future of energy consumption, prices, and intensity remains uncertain, but this analysis suggests that greater energy efficiency has had, and may continue to have, a positive effect on the Massachusetts economy. Together, targeted energy-efficiency programs in commercial, industrial, and residential sectors have the potential to continue to provide benefits to Massachusetts, and they remain a cost-effective option for meeting the state's increasing energy demand. The authors show that savings from commercial and industrial energy-efficiency programs have provided a positive return on utility investment, and they demonstrate benefits of energy efficiency for Massachusetts households, particularly for low-income households.

RAND, a nonprofit and nonpartisan research organization, has prepared this report with funding from the Energy Foundation, a partnership of major foundations interested in sustainable energy. In this study, we estimate energy efficiency from measures of energy intensity (the energy consumed per unit of output) that have been controlled for sectoral composition, energy prices, and other factors. In this report we address the public benefits of our estimate of energy efficiency to Massachusetts and find that improvements in energy efficiency in the commercial, industrial, and residential sectors are associated with: (1) A benefit to the state economy since 1977 that ranges from $1,664 per capita to $2,562 per capita in 1998 dollars. (2) Approximately 11 percent lower air emissions from Massachusetts's share of stationary sources in the Northeast Power Coordinating Council. (3) A reduced energy burden on low-income households. This study measures the benefit to the state economy of improvements in energy efficiency in the industrial and commercial sectors from 1977 to 1997. It also predicts the potential future impacts of continued improvements in energy efficiency. This report addresses four key issues and assumptions: (1) This analysis shows that declines in energy intensity are associated with increases in gross state product (GSP), holding sectoral composition, energy prices, and other factors constant. (2) When these other factors are held constant, changes in energy intensity can be an approximation of changes in energy efficiency. Thus, the conclusion is that improvements in energy efficiency are associated with improvements in gross state product.

This report assesses the benefits of energy efficiency to the Minnesota state economy, its environment, and its citizens. Energy efficiency and its effects are difficult to measure directly. This analysis estimates energy efficiency through its effects on energy consumption and economic productivity (i.e., a form of energy intensity-the energy consumed per unit of output) while controlling for price, sectoral composition, and other factors. Furthermore, this study is limited to improvements in the use of energy in the industrial, commercial, and residential sectors and does not include, for example, the transportation sector. Conceivably, improvements in energy usage in the industrial, commercial, and residential sectors could yield a number of benefits, including economic gains, improved productivity, improved quality of service, higher reliability, reduced pollution, and lower costs to consumers. This report addresses three of these benefits: Effects on the gross state product of energy efficiency improvements in the commercial and industrial sectors; Effects on air emissions of the improved utilization of energy in the commercial and industrial sectors; Effects on households, particularly low-income households, of improvements in residential energy efficiency.

This report assesses the benefits of energy efficiency to the Minnesota state economy, its environment, and its citizens. Energy efficiency and its effects are difficult to measure directly. This analysis estimates energy efficiency through its effects on energy consumption and economic productivity (i.e., a form of energy intensity-the energy consumed per unit of output) while controlling for price, sectoral composition, and other factors. Furthermore, this study is limited to improvements in the use of energy in the industrial, commercial, and residential sectors and does not include, for example, the transportation sector. Conceivably, improvements in energy usage in the industrial, commercial, and residential sectors could yield a number of benefits, including economic gains, improved productivity, improved quality of service, higher reliability, reduced pollution, and lower costs to consumers. This report addresses three of these benefits: Effects on the gross state product of energy efficiency improvements in the commercial and industrial sectors; Effects on air emissions of the improved utilization of energy in the commercial and industrial sectors; Effects on households, particularly low-income households, of improvements in residential energy efficiency.