What Will the Clean Power Plan Mean for Low-Income People in America?

October 22, 2015

Not long after I launched this blog, a very different House of Representatives passed an ambitious bill to cut greenhouse gas emissions — mainly carbon dioxide — that contribute to global warming, a.k.a. climate change.

The bill died in the Senate. And subsequent party power shifts meant that a new bill wouldn’t stand the chance of an iceberg in our warming Arctic seas.

So here we are six years later with a Clean Power Plan from the Environmental Protection Agency — a different approach to the same problem.

Basically, the rule sets state-level carbon emission reduction targets for power plants, but lets states figure out how to meet them — individually or by banding together in regional solutions.

Coal producers, some power companies and their associations saw the handwriting on the wall. So we’ve got a plethora of doomsday scenarios, predictably focused on harms to low and moderate-income Americans.

And we’ve got quite different scenarios from EPA, nonprofits engaged in environmental issues, health research professionals and other experts.

Truth of the matter is we don’t know how the initiatives to reduce carbon pollution will play out. And we won’t for some considerable time because states don’t have to begin meeting their goals until 2022.

We do, however, have a pretty clear view of the top-line issues in a debate that’s likely to continue as states go to the drafting board — or don’t, if they heed Senate Majority Leader Mitch McConnell’s advice.

Job Losses … or Gains

Opponents of the rule allege massive job losses. The far-right Heritage Foundation has predicted a peak loss of a million, leveling out to 300,000 a year by 2030.

The National Black Chamber of Commerce puts job losses for blacks and Hispanics alone at about 29 million. Significantly higher poverty rates for both, it says, implying that many won’t find other decent-paying work.

Well, the coal production industry has been shedding jobs for years, as electrical power companies switch to natural gas and other energy sources.

By 2013, more people worked for solar energy companies than there were coal miners — not an apples-to-apples comparison, but indicative of where things are heading.

And it confirms what common sense tells us. Conversion to cleaner energy sources creates jobs. EPA’s own analysis indicates more job gains than losses. Several more comprehensive (and equally opaque) studies find larger net gains. One predicts 273,000 more jobs by 2040.

Home Energy Costs

Opponents warn that home energy prices will rise. An analysis for the energy arm of the U.S. Chamber of Commerce concluded that consumers will pay $280 billion more for electricity by 2030.

A study of the plan’s impacts, commissioned by fossil fuel company associations, among others, predicts a 13-15% increase in the rates homeowners and renters will be charged — a total of at least $210 billion a year, on average, between the time the plan kicks in and 2032.

EPA also projects price increases, but only modest — in the mid-2% range — and only until 2020. Prices will then begin to drop, such that, by 2030, the average American family will save $7 a month on electricity. This, the White House says, translates into total consumer savings of $155 billion over 10 years.

These estimates assume both less energy waste and greater efficiency. The former could presumably include further funding for “weatherization” programs, i.e., no-cost or low-cost home audits and upgrades like new furnaces and better insulation.

State and local governments have other waste-reducing options. For example, the National Association of State Energy Officials recommends revised building energy codes — and adoption of such codes in states that don’t have them.

The Environmental Defense Fund looks to smart technologies that turn appliances off when energy use rises and to rates that vary according to how much electricity a utility company’s customers use — or are expected to. Both already exist, but the Clean Power Plan increases incentives.

For greater efficiency, we can look, of course, to manufacturers of appliances and other electronics — and to consumers who do (or don’t) factor efficiency into their choices.

It nevertheless seems true that households will generally face higher electricity bills for awhile. These, in fact, are an undocumented feature of sorts, since they give people an incentive to curb their electricity use — in part, by simply changing everyday practices.

The cost increases could still disproportionately affect low-income households, since they spend a considerably larger share of their income for home energy. But the hit to their budgets isn’t inevitable.

I’ve already mentioned weatherization. There are also other strategies. Legislators and regulators may establish rate structures that protect low-income households from price increases. Governments at all levels can fund programs that deliver energy-saving tips and advice to these households.

And futile as it seems to mention it, Congress could significantly increase funding for the Low Income Home Energy Assistance Program — a dwindling source of help with utility bills.

Health and Safety

The Institute for Energy Research, which seems to have some remarkably creative staffers, contends that the Clean Power Plan will cause 14,000 more premature deaths by 2030 because low-income families will have to forgo necessities, e.g., food, medical care, to pay their energy bills.

As I’ve already said, the cost increases may be temporary and mitigated in various ways. More importantly, we’ve every reason to believe that reducing carbon pollution will save lives — especially those of low-income people.

A recently-published study by independent experts suggests that the Plan could prevent as many as 3,500 premature deaths a year — mainly from respiratory diseases caused or aggravated by emissions from coal-burning power plants.

EPA estimates somewhere between 2,700 and 5,660 premature deaths averted. It also cites 140,000-150,000 fewer asthma attacks among children.

Now, none of these estimates singles out low-income people. But we can readily draw some connections.

Where, for example, are those smoke-spewing power plants located? And who’s most likely to live next to a highway or bus depot that exposes them to air-polluting auto emissions — a well-documented trigger for lung and heart diseases?

Finally, we shouldn’t forget warnings of what will happen if global warming continues unchecked — more “extreme precipitation and flooding,” in EPA’s words. We can look to Hurricane Katrina to predict who would suffer most.

Folks who could get out of the storm’s path did. Folks without cars and the wherewithal to pay for gas and a hotel room often didn’t. Even if authorities have more effective evacuation plans, folks short on resources — especially the elderly, it seems — are likely to die from the stress.

All the hard numbers I’ve cited — and others I haven’t — are obviously iffy. Much depends on what states will do. What individuals and families do also. This isn’t a reason, I think, to question the value of a plan that will cut carbon pollution, assuming the next President doesn’t kill it.


Funds For Low-Income Home Energy Assistance Fall Short Of Need

January 7, 2010

Winter has hardly begun, and we’ve already had well-below-freezing temperatures–even here in Washington, D.C. I’m sitting in my warm study, thinking about the low-income households who are struggling to pay their home energy bills–or to get along without heat because their service has been cut off.

The federal Low-Income Home Energy Assistance Program (LIHEAP), is intended to help these households meet their immediate energy needs–both heat in the winter and cooling in the summer.

The program has helped save millions of poor seniors, people with disabilities, other adults and their children from the impacts of unaffordable energy bills–hypothermia and heat prostration, hunger, homelessness, unmet medical needs and deaths and injuries caused by fallbacks like space heaters and stoves. But as with the rest of our safety net, millions fall through.

LIHEAP provides block grants to states, which they channel to local government agencies or nonprofits. It also includes an emergency contingency fund that the Secretary of Health and Human Services can tap to provide extra assistance, e.g., in cases of extreme weather, spikes in energy prices or unemployment.

Households qualify for a one-time payment of their past-due utility bills if their incomes are below a threshold defined by their state–generally either 150% of the federal poverty line or 60% of the state median income. But qualifying doesn’t mean getting because LIHEAP has never been adequately funded.

For Fiscal Year 2009, Congress appropriated a total of $5.1 million for LIHEAP–slightly more than $4.9 billion for basic grants and $590.3 million for the contingency fund. This was nearly double the funding for Fiscal Year 2008.

Yet the National Energy Assistance Directors Association reports that only 18.7% of eligible households received assistance. About 4.3 million households had their power shut off for non-payment.

For Fiscal Year 2010, President Obama proposed only $3.2 billion for LIHEAP, plus a trigger for additional funding if energy prices spiked again. Congress instead voted to fund the program at its Fiscal Year 2009 level. Surely a better choice because home heating costs are still much higher than in the recent past and, more importantly, because far more people need help.

NEADA projects a 20% increase in the number of households that will apply for assistance this fiscal year. Nothing like this number can be served with the level-funded block grants. States will need swift infusions from the contingency fund.

But they won’t be enough. NEADA estimates that the block grant appropriation could provide 7.8 million households with grants–nearly 1.8 million fewer than the projected number of applicants. If grants average $523, as NEADA expects, the contingency fund could cover only about 1.2 million.

A New York Times editorial recommends a supplemental appropriation when Congress returns. As it says, $2.5 million would cover the applicants who will otherwise be left in the cold.

That would be chump change in a budget that’s well over $3.5 trillion. But it could be a tough sell anyway. The White House and the Congress will be focused on job creation. And we’re hearing alarms about the deficit–from Democrats as well as Republicans.

I just wish our leaders could hear, as I do, the sirens screaming down the street to the low-income housing complex a couple of blocks away. Every winter, they’re a sad reminder of how we won’t put our bucks behind our best intentions.

Will Low-Income People Gain From Climate Change Legislation?

June 14, 2009

Last week, I wrote about how the Markey-Waxman climate change bill would cushion the cost impacts on low-income households. There’s a flip side: What might low-income people gain from a shift to a “green economy?”

First off, an effective climate change law would avert the impacts of unchecked global warming. We’re talking here about increasing risks of floods and droughts, loss of coastal and agricultural lands, more powerful hurricanes and a host of other harmful environmental changes.

As the Climate Equity Alliance says, these will hit low and moderate-income people first and worst. We need only look the immediate and long-term impacts of Hurricane Katrina to know this is true.

A transition to a green economy will also create new jobs. We’re hearing a lot about these–how they’re going to spur economic recovery, how they’ll offset the accelerating loss of traditional manufacturing jobs, etc.

My question is, Who’s going to get these jobs?

Everyone seems to agree that workers will need training to qualify. Community colleges have already launched new programs. And the White House blog proclaims that “for green jobs, training is the first step.” But the training it’s talking about is to expand opportunities for the middle class–people who already have relevant skills or, at the very least, a good basic education.

What about unskilled workers and people who lack the skills and/or experience to get any job at all?

The U.S. Department of Labor recently announced that it would fund $500 million in grants to prepare workers for jobs that will be created by investments in renewable energy infrastructure, home energy retrofits and activities related to the development and production of cleaner fuels and cleaner modes of transportation.

Some unspecified portion of the grants will potentially go to nonprofits, schools, businesses and labor organizations to provide “pathways out of poverty” for “low-income and under-skilled workers, unemployed adults and youth, high school dropouts or other underserved populations.”

This is a good thing, so far as it goes. But my sense is that we’ll need to do considerably more to make the greening of the economy an opportunity for people who’ve grown up poor to work their way into the middle class.

What do you think?

Clean Energy Bill Addresses Costs for Low-Income Households

June 7, 2009

As has been widely reported, the House Energy and Commerce Committee has taken the first step toward one of President Obama’s top priorities–saving the planet from “the ravages of climate change.”

On May 21, it passed a massive bill–commonly known, after its cosponsors, as Markey-Waxman–that aims to reduce our nation’s greenhouse gas emissions through a combination of carrots and sticks. The carrots here are incentives to reduce energy consumption and/or switch from uses of fossil fuels to cleaner energy sources. The sticks are the costs of not doing that.

Both are embedded in a cap-and-trade scheme. Basically, the federal government will issue permits to emit a fixed amount of greenhouse gases, based on total caps that will be reduced over time. Companies that produce less than their share can sell their excess permits. Companies that produce more will have to buy them.

As this scheme kicks in, our home energy costs will go up. This is our incentive to use less–by switching to fluorescent lights, buying more energy efficient appliances, etc.

Costs of gasoline and other consumer products will go up too because they’ll cost more to produce and more to distribute. Last year’s spike in oil prices has already given us a taste of this.

Much of the recent debate has centered on the cap-and-trade concept–and on which interests should be fostered and which protected. We haven’t heard much about how the legislation may affect low-income households. But that doesn’t mean that no one’s been paying attention.

The Center on Budget and Policy Priorities has been working on the issue for some time. As its reports and testimony say, higher energy prices will have the greatest impact on low-income households because they spend a larger portion of their budgets on basic necessities. They are also less able to afford investments that will reduce their energy costs.

According to CBPP, the poorest fifth of households would see their costs go up by an average of $750 a year if greenhouse gas emissions were reduced by 15%. Their average annual income is just over $13,000, and the 2020 reduction target set in the Energy and Commerce bill is 17% below the 2005 emissions level.

So, sometime in the next 10 years, these households could face additional costs equivalent to 5.7% of their total income. These costs would rise as the emissions cap was lowered.

The House Energy and Commerce bill addresses rising energy-related costs in two ways. First, it gives free emissions permits to local utility companies, with the understanding that they’ll pass the savings on to their customers. This provision provides relief for all consumers, regardless of income.

Second, the bill adopts a version of CBPP’s recommendations for assisting low-income households. Basically, it commits revenues from the sale of emission permits to refunds based on how much the purchasing power of low-income households is reduced by higher energy prices.

Families that pay income taxes would receive a tax credit along the lines of the Earned Income Tax Credit. Other low-income households would receive their refunds through one of several mechanisms. For example, those who receive food stamps and/or certain other benefits would get theirs via their electronic benefits transfer cards.

That’s the good news. The not-so-good news is that the bill doesn’t address the above average cost increases that some low-income families will face–for example, because their apartments are drafty or their appliances old and inefficient. CBPP recommends more generous refunds and additional funding for the Low Income Home Energy Assistance Program.

I wonder what the prospects for these recommendations will be. The bill that Energy and Commerce passed gives away 85% of the emissions permits the government will issue. This leaves far less in revenues than would have been the case if proponents had been able to gain support for auctioning off all the permits, as President Obama wanted.

Competition for the limited revenues will be fierce. And there may be further needs to placate legislators who don’t much like the cap-and-trade scheme or want more benefits for certain industries.

In any event, the legislation has a long way to go. Eight other House committees have a piece of the action. And then there’s the Senate. Four committees have jurisdiction there, and they’ll need to produce something that can secure 60 votes.

So if ever there was a stay tuned, this is it.


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