Regional economic impacts of the Los Angeles 100% renewable energy transition

To help mitigate greenhouse gas (GHGs) generation from burning fossil fuels, many state and local governments are requiring utilities to dramatically increase the share of electricity generated from renewable sources. The City of Los Angeles has set a target of 100% renewable energy by 2045 and has formulated a plan that considers nine potential alternative scenarios that differ by technology, location, and timing. Each scenario has a unique set of local investments, operating and maintenance (O&M) costs, and concomitant rate structures. In this study we develop and apply a computable general equilibrium (CGE) model built specifically for LA to estimate and compare the economic impacts for each of the scenarios over time relative to a reference case. We find differences in economic impacts across scenarios, depending on the level and timing of investment and O&M expenditures, as well as differences in the relative rate changes across scenarios. Results show that employment and economic output are positively correlated with greater capital and O&M spending, while higher electricity rates can dampen economic activity. Several scenarios generate positive economic impacts relative to the reference case, showing that the transition need not have harmful economic impacts, and all scenarios generate a number of other positive co-benefits, such as reduced damage to health from the reduction of ordinary air pollutants. The net employment impacts from 2026 to 2045 across the scenarios range from a low of 3,600 job-year losses annually to 4,700 job-year gains, both around only 0.1% of the baseline average annual employment in the city over that period. The analysis also indicates that lower-income households are relatively more affected than others by the scenarios. Overall, even in the most negatively impactful case, the economic output and employment effects are quite small when taken in the context of the overall size of the regional economy and the large reduction in GHGs. The City of Los Angeles can confidently move forward with its transition to 100% renewable electricity without concern of significant negative aggregate economic impacts.Job impacts across all scenarios can be enhanced by attracting renewable equipment manufacturing and support industries to the City.Even the minimal adverse distributional impacts can be reduced by policies such as subsidies for home energy efficiency improvement, modifications to electricity rate structures or rebates.Both aggregate and distributional impacts can be further addressed by providing training for skilled and semi-skilled labour creating employment opportunities for City residents.

Automated summary

To mitigate greenhouse gas generation, the City of Los Angeles has developed a plan with nine potential renewable energy scenarios. The study finds that economic impacts vary across scenarios depending on investment and maintenance expenditures. Results show that higher capital and maintenance spending positively correlate with employment and economic output, while increased electricity rates can hinder economic activity. Overall, the transition to renewable energy in Los Angeles does not result in significant negative aggregate economic impacts and provides positive co-benefits.