California has long been recognized as a leader in energy efficiency—from adopting the first-in-the-nation appliance efficiency standards (Title 20) in the 1970s to the first standards on battery chargers in 2012. Moreover, while energy efficiency has long been prioritized in the state, as California looks to scale back the use of petroleum by 91 percent by 2045169 and transition toward more clean electricity generation, there is also accelerating momentum to electrify buildings, homes, and transportation.
At the federal level, the Biden administration has turned its attention to the decarbonization of the building sector, acknowledging that along with electrifying the transportation sector, building decarbonization will be vital in addressing the impacts of climate change.170 Efficient use of electricity, in particular, will become increasingly important as California looks to meet climate and clean energy goals. California has become the first state in the country to require solar power and battery storage on all future commercial structures and multifamily homes, according to the newly updated building energy codes.171 As a sizeable majority of households in California currently use natural gas for heating (57.7%), the new performance standards are expected to eliminate such demand from new residential buildings in the upcoming years. Further reducing demand for natural gas, the California Air Resources Board (CARB) also voted on September 22, 2022 to ban the sale of commercial and residential natural gas heaters in the state by 2030.172
In 2020, energy consumption in California had declined notably by a record 16.2 percent relative to 2017. By far, the biggest decline came from the transportation sector—with a 23 percent drop in energy usage. This decrease was primarily driven by a decrease in fossil fuel non-electricity demand of 16.6 percent compared to 2019, which itself was influenced by reduced travel behavior during the pandemic. Although the drop outpaced that of the total U.S. (-7%) in 2020,173 the residential sector in California saw an increase of 3.5 percent in energy consumption, while the rest of the nation experienced a 1 percent decline.
In 2020, California generated $4.34 of GDP (inflation-adjusted) for every 10,000 British Thermal Units (BTU) of energy consumed—roughly double the national average of $2.08/10,000 BTU of energy consumed.
California has continuously outperformed the rest of the U.S. in terms of energy efficiency gains as a share of GDP produced, averaging a 3.8 percent compounded average growth rate (CAGR) from 2010 to 2020—two times greater than the 1.9 percent CAGR recorded for the rest of the nation.
In 2020, energy intensity (energy input relative to GDP output) decreased by 8.6 percent compared to 2019, nearly double the previous year’s decrease of 4.4 percent. The transportation sector led with a 20.8 percent drop, followed by a 4.8 percent decrease in the commercial sector.
Of all the economic sectors, only residential saw a year-over-year increase (6.5%) for the first time since the Great Recession—rising 4.3-times faster between 2019 and 2020 than the 1.5 percent increase between 2008 and 2009.
California’s total statewide energy consumption and energy consumption per capita in 2020 were substantially lower than in 1990, reduced by 6.9 percent and 29.4 percent, respectively, indicating more efficient use of the energy the state does consume.
Energy consumption has been decreasing faster in California than in the rest of the U.S. over the past two years as California’s population has been growing at a slower pace. From 2015 to 2020, total energy consumption was reduced by 8 percent in California and 4.4 percent in the rest of the nation.
Renewable energy is the fastest-growing fuel source for both electricity and non-electricity consumption in California, growing 47 percent and 125 percent, respectively, from 2008 to 2020.
Total natural gas consumption was 11 percent lower in 2020 than in 2000, while total electricity consumption increased by 1.5 percent during the same period.
Although total natural gas consumption has gradually increased in recent years (+0.13% from 2015 to 2020), this increase slowed in 2020 (-6.5% compared to 2019) across all end-use sectors. Electricity consumption has increased by 11 percent from 2019 to 2020, indicating that electrification has been effective in California, especially in the residential sector.
By sector, residential ( +15.8% since 2015) sustained increases in natural gas consumption, while industrial (-4% since 2015), commercial (-2.1%, since 2015), and “other” (-16.7% since 2015) decreased consumption in 2020.
In 2020, California (6.33 megawatt-hours per person) had the second-lowest per capita electricity consumption among the 50 states, just behind Hawaii (6.05 MWh/person).
Within the most recent five years, California’s per capita electricity consumption decreased by 6.5 percent from 2015 to 2020, while its per capita energy consumption also declined 9.4 percent during the same period.
California’s electricity bill as a percentage of GDP was 1.5 percent in 2020, up from 1.42 percent in 2019. On the other hand, California’s energy expenditure as a percent of GDP was 3.7 percent in 2020, down from 4.5 percent in 2019.
Although California has some of the highest electricity costs per kilowatt-hour (kWh) in the U.S., California had the fifth-lowest electricity bill as percentage of GDP (1.5%) in 2020—behind New York (1.2%), Washington (1.2%), Illinois (1.5%) and Utah (1.3%)—driven by low electricity consumption as a result of the state’s extensive energy efficiency programs and policies that have decreased per capita growth in electricity demand. Among other large states, California is ahead of Pennsylvania (1.76%), Texas (2%), and Florida (2.2%).
In 2020, California’s average monthly commercial electricity bill was 10.1 percent higher than in the rest of the nation. Furthermore, California’s edge over the U.S. in having a lower average residential sector electricity bill has diminished notably—from being 25 percent lower in 2010 to 0.45 percent lower in the same year.
From 2008 to 2021, homes that use electricity or solar energy as the primary heating fuel were the fastest-rising fuel group among both renter-occupied households (+39.3%) and owner-occupied households (+38.8%) compared to all other fuel types.
Renter-occupied units (40.9%) are about twice as likely to be powered by electricity or solar energy than owner-occupied units (21.4%).
169 State of California “Climate Change Scoping Plan,” April 2021. Available at: https://ww2.arb.ca.gov/our-work/programs/ab-32-climate-change-scoping-plan
170 The Department of Energy has recently released A National Roadmap for Grid-Interactive Efficient Buildings, a roadmap on advancing modern buildings as a grid resource and driver of the clean economy.
171 The California Energy Commission. 2022 Building Energy Efficiency Standards. August 11, 2021. Retrieved from: https://www.energy.ca.gov/programs-and-topics/programs/building-energy-efficiency-standards/2022-building-energy-efficiency
172 Echeverria, Danielle. “California will ban the sale of natural-gas heaters by 2030. This technology could replace them.” San Francisco Chronicle. September 22, 2022. Available at: https://www.sfchronicle.com/bayarea/article/California-will-ban-the-sale-of-natural-gas-17460877.php
173 Francis, M. U.S. energy consumption fell by a record 7% in 2020. Today in Energy. Energy Information Administration. April 5, 2021. Retrieved from: https://www.eia.gov/todayinenergy/detail.php?id=47397
174 U.S. Senator Alex Padilla. “Highlights on how the Inflation Reduction Act will deliver for California.” Available at: https://www.padilla.senate.gov/wp-content/uploads/California-IRA-One-Pager.pdf
175 “Inflation Reduction Act (IRA) Summary: Energy and Climate Provisions.” Bipartisan Policy Center. August 4, 2022. Available at: https://bipartisanpolicy.org/blog/inflation-reduction-act-summary-energy-climate-provisions/
176 “5 Major Benefits of the Inflation Reduction Act’s Climate Investments.” Center for American Progress. August 4, 2022. Available at: https://www.americanprogress.org/article/5-major-benefits-of-the-inflation-reduction-acts-climate-investments/
177 “Inflation Reduction Act (IRA) Summary: Energy and Climate Provisions.” Bipartisan Policy Center. August 4, 2022. Available at: https://bipartisanpolicy.org/blog/inflation-reduction-act-summary-energy-climate-provisions/
178 Berndt, Carolyn. “Historic Climate, Clean Energy Bill Passes Senate.” National League of Cities. August 8, 2022. Available at: https://www.nlc.org/article/2022/08/08/historic-climate-clean-energy-bill-passes-senate/
