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The Nature Conservancy: Assessing the Economic Benefits of Decarbonization in Florida

Decarbonization in Florida is not only achievable, but also has the potential to bring widespread economic benefits.

In this report for The Nature Conservancy, Cambridge Econometrics, in Partnership with AECOM, analyzed the investments needed to meet decarbonization targets and estimate the economic benefits that can be gained from these actions. Cambridge Econometrics modeled the effects of decarbonization on gross state product, employment, electricity costs, and other economic indicators using our in-house E3‑US model. Our analysis reveals that economy-wide decarbonization has the potential to increase the size of the Florida economy by 2% by 2050, relative to baseline trends.

Our analysis provides key insights into the economic impacts of two decarbonization scenarios (relative to a business-as-usual baseline), based on a 2022 report by the Florida Climate Institute (FCI):

  • 100% clean electric power by 2035
  • net zero emissions by 2050 using multi-sector GHG reduction actions.
Economic Benefits of Decarbonization in Florida
The Nature Conservancy
Assessing the Economic Benefits of Decarbonization in Florida
Read the Full Report

Decarbonization in Florida is achievable and has the potential to bring widespread economic benefits. This report helps shed light on the significant efforts already underway by the public and private sector towards achieving net zero, the investment needed to meet decarbonization, and the benefits that can be gained from such investment.

Key Findings

1

Decarbonizing the power system requires approximately $130 billion in additional investments by 2035, while decarbonizing the overall economy requires a further $65 billion in additional investments by 2050 (beyond those required to decarbonize electric power generation).

2

Decarbonization investments have a direct impact on the Florida economy, increasing employment and economic output associated with these activities. Indirect and induced economic impacts from changes in electricity prices, consumer spending, and other economic feedback effects lead to additional positive impacts to the Florida economy.

3

Decarbonizing the power system by 2035 is estimated to result in a state economy that is 1.5% larger in 2035, compared to baseline projections (as measured by GSP). This result is driven by both direct investment and reductions in the cost of electricity, lowering costs and allowing consumers to redirect spending to other areas of the economy.

4

Decarbonizing the wider economy by 2050 provides a larger, sustained effect on the economy, resulting in a state economy that is 2% larger by 2050 (as measured by GSP). In addition to the investments and effects on electricity costs from decarbonizing the power system, economy-wide decarbonization brings positive economic impacts from investments in other areas of the economy as well as redirected consumer spending from savings on vehicle purchases (as electric vehicles become less expensive than internal combustion vehicles over time).

Our approach consisted of two key steps:

Develop decarbonization investment scenarios: Cambridge Econometrics estimated the level of investment in six key sectors: electric power generation; transportation; building heating and cooling; industrial energy use; waste; and agriculture, forestry, and other land use. These estimates were made for three scenarios: a baseline, decarbonized electric power generation by 2035, and a decarbonized state economy by 2050. Our work built upon the emission reduction pathways laid out in the FCI report as well as independent research into the investment costs of implementing these initiatives.

Model economic impacts: Cambridge Econometrics used our E3‑US model to estimate the economic impacts of the two decarbonization scenarios. The changes in investment and consumer/business spending, compared to the baseline, estimated in the previous step were used as inputs to the E3­‑US model. E3‑US includes numerous relationships between the economy and energy use, including the effect of the generation technology mix on the levelized cost of electricity, and the effect of direct investments and changes in spending on employment, output, and other economic indicators.

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Brendan Cox

Head of US Environmental and Energy Policy

t: +1 413 206 4006

e:bc@camecon.com

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