Protecting the Most Vulnerable: A Financial Analysis of Cap-and-Trade’s Impact on Households in Disadvantaged Communities Across California

UCLA Luskin Center / by Julien Gattaciecca, et al.
http://bit.ly/1V4SdyZ

[NRDC Experts Blog by Alex Jackson]… “Protecting the Most Vulnerable: A Financial Analysis of Cap-and-Trade’s Impact on Households in Disadvantaged Communities Across California,” released today by the UCLA Luskin Center, [analyzes] the impact of California’s greenhouse gas cap-and-trade program on low-income households’ energy bills. The cap-and-trade program is designed to put a price on carbon throughout the economy to incentivize lower emissions choices, not just by the state’s biggest polluters, but also in the prices consumers see to encourage cost-effective energy efficiency and conservation. But like in the transportation context, focusing on just commodity costs misses the bigger picture.

Under California’s program, the revenue raised from having utility rates reflect the carbon emissions costs of the power mix is returned to households twice annually in the form of a line item bill credit, called a Climate Credit. For electric customers of Sothern California Edison, for example, every household will receive a $38 bill credit in April and October in 2016 – regardless of how much electricity they consume (which, on average, benefits lower-income households who tend to consume less).

As a result, the analysis finds that representative low-income households will benefit financially from the cap-and-trade program, to the tune of an estimated $200 to $250 cumulatively by 2020. The same applies on the natural gas side, where low-income households are projected to net between $44 and $83 cumulatively by 2020. And the results hold irrespective of allowance prices and in the absence of low-income rate assistance programs…

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