In less than six months, California’s cap-and-trade program will expand to include suppliers of natural gas and motor fuels, requiring the producers of these greenhouse gas-emitting fuels to pay for the privilege of polluting our atmosphere. This will likely result in a modest uptick in gasoline prices across the state, which has major oil companies (and some lawmakers) crying foul about the equity implications of higher costs that will be passed on to consumers. But is there any merit to the argument that cap-and-trade is bad for low-income drivers?
A group of sixteen lawmakers is asking the state to delay the inclusion of motor fuels in California’s cap-and-trade program. They are hoping to postpone the expansion of the trading system that would require suppliers of motor fuels to obtain greenhouse gas emission credits starting in January 2015. The costs of complying with the regulations will be passed on to consumers, and lawmakers are concerned that low-income drivers will be unfairly burdened by the price hike at the pump. Rising fuel costs as a result of government regulations is never popular, and oil companies have seized on the argument that policies that burden low-income residents who have few transportation options [PDF] are inherently unfair.
But the argument begins to fall apart as you look at the cumulative effects of the cap-and-trade regulations. Thirty-two lawmakers, in opposition to the legislators calling for the delay, noted that it is California’s low-income communities that are the most likely to be helped by the state’s environmental legislation. Low-income communities suffer disproportionately from the negative effects of air pollution and are more likely to suffer negative health effects from “high levels of emissions from stationary and mobile sources of pollution” [PDF]. So, while a reduction in pollutants from cars and trucks benefits us all, it is California’s low-income communities that stand to gain the most.
Still, issues of equity remain. In particular, one of the positive outcomes touted by cap-and-trade supporters is the fact that incorporating fuels into the credit trading program will encourage more drivers to switch to hybrid and electric vehicles (EVs). But the raft of state and federal incentives to expand electric vehicle ownership largely accrue to higher-income individuals. In one example, a 2009 study conducted by UCLA found that EV ownership was higher in affluent areas such as Santa Monica, Malibu, and Manhattan Beach, with lower-income communities like Cudahy, Maywood, and Lynwood reporting lower rates of EV ownership. Another study found that for California’s communities of color (60 percent of the state’s populace) may receive “relatively little benefit from EVs, which are often seen as expensive and unattainable” [PDF].
In response, a campaign by state lawmakers and environmental advocates are incorporating income restrictions to ensure that moderate- and low-income households can benefit from the state’s push to get one million more EVs on the road. The Governor proposed to dedicate $200 million from the cap-and-trade proceeds to support EV programs. In May, the Senate passed the Charge Ahead California Initiative (SB 1275), with the goal of offering incentives to speed the adoption of EV vehicles in communities throughout California. However, in an effort to make sure that benefits do not accrue to higher-income households, the bill explicitly links eligibility for rebates to buyers’ incomes. The bill also proposes establishing car-sharing programs in low-income communities, providing access to alternative financing options, and offering incentives to replace gas guzzlers with new or used EVs.
While the demand for EVs is growing, the overall socioeconomic profile of the average electric vehicle owner skews to the more affluent side – as evidenced by this graphic [PDF] from the California Center for Sustainable Energy. As we continue to address issues of climate change, environmental justice, and social equity, it’s important to look at who benefits from statewide regulation and who doesn’t. Including motor fuels in the cap-and-trade system helps reign in the state’s largest source of carbon dioxide, which is a win for the public and for low-income communities in particular. Right now, incentives to encourage consumers to buy EVs has largely benefited more well-off communities, but under the Charge Ahead California Initiative that’s beginning to change.