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The Clean Power Plan and Inequality

Research & Commentary
September 27, 2016

by Sarah Anderson Janet Redman

An appeals court will rule on the legality of Obama’s plan, which could narrow economic gaps by lowering energy costs and creating jobs.

Lawyers for a coalition of states and businesses reliant on fossil fuels made their case September 27 to a federal appeals court that President Barack Obama’s plan to curtail climate-warming greenhouse gases is an unlawful power grab.11830516643_561ab36dd5_m-2

The Clean Power Plan is by no means perfect, but it has the potential to benefit American families, especially low-income people and people of color. These households are disproportionately affected by fossil fuel-fired power plants and the effects of climate change.

By reducing greenhouse gas pollution, the plan is helping avert harmful impacts of climate change like heat waves, fires, flooding, and superstorms that cost money and lives. According to the Obama administration, the climate benefits over the life of the plan will reach $20 billion.

The rule would de facto cut harmful co-pollutants from smokestacks, resulting in 90,000 fewer asthma attacks, 300,000 fewer missed work and school days, 3,600 premature deaths avoided and $14-34 billion in savings.  Health benefits are particularly important for correcting existing environmental racial and wealth inequities.

The shift to clean sources of energy is expected to spur innovation and create a net increase of 360,000 jobs by 2020.

The EPA estimates that the average American household will save $80 on their electric bill every year as a result.  For low-income families, who on average spend 15 percent of their income on energy bills (high-income families spend only 2 percent), this can make a difference at the end of the month.

[pullquote]On average, low-income families spend 15 percent of their income on energy bills, while high-income families spend only 2 percent.[/pullquote]

The Clean Power Plan aims to ensure that a portion of those savings is channeled to the low-income families that need them most. The plan allows states to meet pollution-cutting requirements by putting in place measures like renewable energy standards and programs to improve residential energy efficiency. States that take early action to put in place energy efficiency projects in low-income communities get a double incentive toward meeting their requirements through a Clean Energy Incentive Program (CEIP) under the EPA’s rule.

The EPA has gone out of its way to be flexible in designing the CPP, including allowing every state to draw up its own unique plan to reach compliance (within federal guidelines). This means, however, that the EPA can’t mandate that statehouses build social equity into their plans. The new incentive program is one way to encourage them to take often sidelined communities into account.

Energy efficiency upgrades and retrofits in low-income housing in particular have added health benefits to residents, like reduced rates of asthma, and create jobs that can be targeted to a local workforce. For every dollar invested, as much as $2 goes back into the community economy.

To strengthen race and income equity provisions in their incentive program, the EPA is considering including solar generation in low-income communities in the double-your-money deal under CEIP. Adding rooftop renewables would provide another pathway for families to generate wealth.

Also yet to be decided is the definition of “low-income communities.” States want the flexibility to choose, but the EPA should pick a standard definition that maximizes the number of households that benefit from clean energy and energy efficiency incentives.

The U.S. Court of Appeals for the District of Columbia Circuit is expected to issue their ruling on the CPP sometime after the November election. But no matter the outcome of this round, the fight over the CPP from both sides will continue. Opponents say will take this case to the Supreme Court. Meanwhile, environmental justice activists will continue to work to make the most of the CPP’s potential for reducing inequality.

Sarah Anderson directs the Global Economy Project and Janet Redman is an Associate Fellow of the Institute for Policy Studies. This commentary is adapted from their recent report, “Utilities Pay Up: How Ending Tax Dodging by America’s Electric Utilities Can Help Fund a Job-Creating, Clean Energy Transition.”

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