The state’s landmark law to promote energy efficiency and renewable power sources such as wind and solar is projected to produce a modest economic benefit in coming years, including the creation of about 16,000 jobs, according to new report released Tuesday.
The report by Analysis Group, a Boston economic and financial consulting firm, is believed to be the first detailed look at the economic impact of the state’s Green Communities Act, passed in 2008 with the primary aim of promoting renewable energy and cutting greenhouse gas emissions blamed for accelerating climate change.
The study found that the programs put in place by the law, and financed with $2.7 billion in higher electric and natural gas rates, would create enough economic activity to cover those costs and yield a net benefit of $1.2 billion over about 15 years.
The lead author of the report acknowledged the projected economic benefits are relatively small in a state with a $400 billion economy and a workforce of about 3.3 million people. But Paul Hibbard, vice president at Analysis Group, said the study shows the Green Communities Act is not a drag on the state’s economy, as some critics have contended, and is even helping it a bit.
“In the big scheme of things, these numbers may not look large,” Hibbard said. “But they’re still positive numbers.”
The report, funded by the Barr Foundation, a charitable nonprofit that has made fighting climate change a priority, focused solely on the economic impact of the law and did not consider potential environmental and health benefits.
Alan Clayton-Matthews, an economist at Northeastern University, agreed that $1.2 billion in net economic activity and 16,000 jobs add up to “virtually no impact” on the broader economy. But, he said, the potential pluses of a cleaner environment and resulting health improvements are probably incalculable.
“The fact is, it appears to be not costing the state economic growth, and that’s sort of nice,” said Clayton-Matthews, who was not involved in the report.
Robert Rio, vice president at Associated Industries of Massachusetts, a business group that has been highly critical of Governor Deval Patrick’s environmental initiatives, said the report’s findings are “probably pretty close to the truth.”
“The economic benefits are quite modest – which is why I think the report is right,” said Rio.
But he warned that not all the requirements of the Green Communities Act have been implemented. Goals yet realized, such as increasing the use of expensive offshore wind power, could quickly offset the relatively small benefits, he said.
“What we fear moving forward is that the more costly items [in the act] still have to be implemented – and that could hurt,” Rio said.
The Analysis Group study looked only at the programs implemented since the law was passed six years ago.
The study uses economic models to estimate the economic pluses and minuses from 2010 through 2025.
Some of the report’s findings:
■ The energy-efficiency program and other components of the act are largely paid for by utilities, which in turn recover the costs by charging higher electric and natural gas rates.
■ Despite the upfront costs, the study said, efficiency programs will cut consumption by enough energy to power about 5 million homes for a year, thus providing a net savings for consumers.
■ The reduction in demand will eliminate the need to build power plants that burn natural gas and other fossil fuels.
■ The energy-efficiency programs have created jobs for workers who install insulation, lighting, heating systems, and other equipment to conserve energy.
These modest economic gains seem to fall short of boasts by the Patrick administration that the governor’s environmental polices have created hundreds of clean-energy firms and up to 80,000 new jobs.
But Richard K. Sullivan Jr., state secretary of Energy and Environmental Affairs, said the Green Communities Act is one of just many energy and environmental initiatives that are boosting the state’s economy.
They include the Clean Energy Jobs Act and the Global Warming Solutions Act, also passed in the early years of the Patrick administration.
Sullivan added that more benefits from the Green Communities Act will be realized as more programs, such as solar and wind projects, kick into gear.
Hibbard, the report’s lead author, was appointed by Patrick as chairman of Department of Public Utilities and served from 2007 through 2010, when the agency wrote rules to implement provisions of the Green Communities Act.
Hibbard said the report was a “rigorous, objective review” – and not biased.
“Virtually all of those [Green Communities Act] measures were installed, constructed, or approved after my departure from DPU,” he said.