What is Green Energy Poverty?
Higher prices caused by shifting from affordable energy to more expensive yet politically preferred forms of renewables or “green” energy has a disproportionate and devastating impact on the poor, functioning much like a regressive tax. Because of such misdirected policies, “green energy poverty” needlessly results: a condition in which a much higher level of a household income is spent on energy costs. The term can also extend to environmental policies which artificially inflate the costs the economically disadvantaged pay for gasoline and other transportation.
High Cost of Renewable Energy
- Over the past 20 years, the component parts for wind and solar energy production have become dramatically less expensive. For example:
- Nevertheless, residential electricity prices per kilowatt hour in the United States as a whole increased by more than 12% between 2009 and 2017, and there’s reason to believe that renewables are the leading cause.
- Residential natural gas prices decreased by more than 10% between 2009 and 2017.
- An analysis of U.S. Energy Information Agency data by Environmental Progress found that regions that made substantial deployments of wind and solar experienced dramatic increases in retail electric utility rates between 2009 and 2017. For example:
- North Dakota: Electricity prices increased 40%; electricity from solar and wind grew from 9 to 27%.
- South Dakota: Electricity prices increased 34%; electricity from solar and wind grew from 5 to 30%.
- Kansas: Electricity prices increased 33%; electricity from solar and wind grew from 6 to 36%.
- Iowa: Electricity prices increased 21%; electricity from solar and wind grew from 14 to 37%.
- Oklahoma: Electricity prices increased 18%; electricity from solar and wind grew from 4 to 32%.
- Hawaii: Electricity prices increased 23%; electricity from solar and wind grew from 3 to 18%.
- California: Electricity prices increased 22%; electricity from solar and wind grew from 3 to 23%.
- Texas: Electricity prices fell 14%; electricity from solar and wind grew from 5 to 15%.
- In Texas, a major center of shale gas production, wholesale natural gas prices fell 21% during the same time span.
- Policies that mandate installing new wind or solar, replacing the existing fleet of electricity generation sources ahead of their scheduled retirement cycle, imposes significant extra costs, according to a 2016 study by the Institute for Energy Research.
- New solar generation is estimated to be five times more expensive than existing fossil fuel-powered electricity.
- New wind power is 3.5 times pricier than existing fossil fuel-powered electricity.
Green Energy Poverty in the United States
- Expensive energy costs disproportionately impact lower-income familiesbecause their lack of discretionary income forces them to spend a higher proportion of their incomes on household necessities including power (electricity and natural gas), and any increase in energy costs would likewise impose a heavier financial burden.
- A 2016 report from the American Council for an Energy-Efficient Economy (ACEEE) and the Energy Efficiency for All (EEFA) coalition found that low-income households devote up to three times as much income to energy costs as do other, higher-income households.
- Low-income households pay 7.2% of household income on utilities on average – more than three times the amount that higher-income households pay (2.3%).
- Green energy poverty is causing a major struggle for lower-income American households. According to a 2018 U.S. Energy Information Agency report:
- Nearly a third of U.S. households (31%) have trouble paying energy bills or sustaining adequate heating and cooling in their homes.
- Approximately one in five households reported reducing or forgoing necessities such as food and medicine to pay an energy bill
- 14% reported receiving a disconnection notice for energy service.
- 11% of households surveyed reported keeping their home at an unhealthy or unsafe temperature.
- Almost 50% of those reporting difficulty in paying energy bills were African American while more than 40% were Latino.
- Every 10% increase in household energy costs leads 840,000 Americans to be pushed into poverty, a 2014 Senate Committee on Energy and Natural Resources report
Green Energy Poverty in Transportation
- Environmental policies that increase gasoline prices produce a higher level of hardship for the economically challenged and minorities.
- Contrary to assumptions that the poor are largely limited to mass transit, as of 2016, approximately 80% of Americans living below the poverty line own or have access to cars.
- Taxes on gasoline act as a regressive tax, forcing low-income minorities to make cuts in the basic necessities of life.
- Policies that subsidize electric vehicles benefit the rich at the expense of the poor.
- The wealthiest 20% of Americans received 90% of federal subsidies for the purchase of electric vehicles, according to a 2015 analysis by University of California, Berkeley professors.
- More than 83% of almost 10,000 rebates under California’s Clean Vehicle Rebate Project benefitted purchasers with yearly incomes of more than $100,000, Berkeley researchers found in a 2016 study.
- Electric vehicles do little to limit greenhouse gas emissions. “Even if there were 300 million [electric cars] with the current power generation system, the impact in terms of CO2 emissions is less than 1% – nothing,” stated International Energy Agency executive director Fatih Birol in January 2019.
Germany Leads the Way to Renewables … and Green Energy Poverty
Germany led the world with its Renewable Sources Act of 2000, a major commitment to wind and solar energy, following up in 2010 with its Energiewende, or “energy transformation” program in 2010, which targets 80-95% greenhouse gas emission reductions (from 1990 levels) with 60% of its electricity generated by renewables by 2050. Today, wind and solar accounts for as much as 40% of Germany’s electricity production. Germany currently subsidizes its renewable sector to the tune of EUR 25 billion (U.S. $28.4 billion). In 2018, the government of Chancellor Angela Merkel committed to increase renewables to 65% of the energy mix by 2030. But with the public acclaim for the Energiewende has come the quieter, darker side of green energy poverty – a cautionary tale about following too closely in Germany’s footsteps.
- At the rate of $0.36 per kilowatt hour, German consumers pay the highest electricity bills in the world, averaging $400 each month and prompting German news magazine Der Spiegel to refer to electricity as “a luxury good.”
- This kilowatt hour rate compares with Spain at $0.24, the UK at $0.22; and the U.S. at $0.13.
- By 2017, electricity rates for the average four-person household in Germany doubled from what they had been in 2000, when a levy was tacked onto utility bills to subsidize wind turbine and solar panel owners.
- The share of German households spending in excess of 10% of their incomes on energy tripled from 5% in 1998 to 22% by 2013, according to a 2017 study by energy economist Dragana Nikodinoska at Christian Albrechts University in Kiel, Germany.
- In 2016, 330,000 households in Germany had their power cut off because their bills had not been paid.
- A staggering 40,000 people died in Europe due to winter weather, in part because millions of people were no longer able to pay their electricity bill, according to a 2016 account in the German news magazine Focus.
- Despite subjecting many of its residents to green energy poverty in its headlong rush toward renewable energy sources (approximately 35% of the power grid, including hydropower in 2017), Germany has failed to significantly reduce its carbon emissions and has admitted that it will fail to meet its 2020 obligations under the Paris climate agreement to slash carbon emissions to just 60% of what they were in 1990.
- That failure hasn’t stopped the Merkel government in 2018 from boosting the portion of renewables to 65% of its energy mix by 2030.
- Upgrading the grid will cost approximately EUR 52 billion (U.S. $59 billion), 53% more than originally budgeted in 2014 and will be added to consumers’ utility bills.
- Dirty and inefficient lignite (“brown coal”) plants provided about 38% of all power in Germany in 2018.
- Germany’s lignite stations constitute 6 out of 10 of Europe’s worst polluters.
Green Energy Poverty in California
- In 2018, then-Governor Jerry Brown of California signed a bill mandating 50% of the state’s electricity to be powered by renewable sources by 2025 and 60% by 2030.
- The 2018 law established the goal of 100% of its electricity to be generated from zero-emission energy sources by 2045.
- The intermittent nature of wind and solar energy (which only work when the wind blows or the sun shines) requires backup power from traditional energy sources (natural gas, coal or nuclear, for example) or storage capabilities that do not currently exist to remain fully operational, rendering 100% zero-emission energy an objective unlikely achievable.
- The measure replaces a 2015 law that had mandated 50% renewable electricity by 2030.
- California Gov. Gavin Newsome, then lieutenant governor, later said of the less aggressive 2015 measure, “There is a regressive nature to some of these things,” adding, “We have to be sensitive to issues relating to energy costs.”
- Californians pay the most expensive electric bills in the lower 48 states, according to a 2018 Pacific Research Institute study.
- The study also found that monthly electricity bills in inland California – which features higher unemployment rates – are 57% more expensive on average during the summer months than in relatively more affluent coastal communities.
- California’s legislators have imposed the nation’s second-highest gasoline taxes on its drivers and California’s motorists pay the second-highest pump prices in America today.
- In one million California homes, 10% or more of the household income must be devoted to meeting household utility bills, according to a Manhattan Institute analysis.
- Most states don’t share California’s mild weather, which means that mandates similar to those of California would impose even greater hardships and negative health consequences for low-income residents.