Emissions trading, or cap and trade, is a permit-based approach to controlling pollution that offers companies economic incentives for reducing emissions. The permitting process limits the amount of total allowable emissions while enabling companies to purchase additional permits from those producing fewer emissions.
California’s cap and trade program—the fourth largest in the world according to Yale Environment 360—raises billions of dollars for the state each year. A portion of that revenue is being allocated to supply disadvantaged communities with renewable power and energy efficiency upgrades that save them money over time.
Energy insecurity is often connected to complex social issues within disadvantaged communities such as low homeownership rates, limited disposable income, and sub-standard housing conditions. For the economically disadvantaged, choosing to heat homes or eat is a reality.
Furthermore, the American Council for an Energy-Efficient Economy found in a 2016 study that low-income households pay more for utilities per square foot than the average household—in some cases triple the rate—an inequity that can perpetuate economic hardship.
Today, California state law directs that 35% of greenhouse gas auction proceeds benefit low-income neighborhoods and disadvantaged communities. The goal of initiatives such as the Low-Income Weatherization Program (LIWP) is to democratize climate policies and benefits. The State estimates that, by putting its cap and trade dollars to work, LIWP has reduced program participants’ energy use by an average of 44%, also reducing their out-of-pocket expenses.
An increasing number of other state governments have implemented similar programs. Auction proceeds from the Regional Greenhouse Gas Initiative, a coalition of nine Eastern states, also support programs that help low-income residents with their energy bills.
What are your thoughts? Can energy efficiency initiatives offer long-term benefits for disadvantaged communities? What programs do you think best address the issues surrounding energy security?