Monday, March 9, 2009

AB 32 Hits Poor Hardest

AB 32 will have a serious and disproportional impact on low-income and fixed-income citizens.  Those who advocate for Environmental Justice (EJ) have some valid points in their comments to the Air Resources Board, but have overlooked a few critical issues.

The EJ commenters on the Scoping Plan did not favor cap-and-trade, because that system allows a local emitter to continue placing regulated compounds into the environment, while the reductions occur elsewhere.  This does little good to the local residents who suffer the health consequences, such as breathing difficulties, or premature deaths.   As the discussions to date have shown, California will have a cap-and-trade program for greenhouse gases.  The poor, who live rather close to many industrial sites, will continue to be exposed to higher levels of various regulated substances.   

Where additional disproportionate impacts will occur is with higher fuel prices and higher electricity prices, and the commensurate higher prices of all goods and services.  These issues have received little discussion. (but see this recent article). 

AB 32’s Scoping Plan states that prices for new cars will increase $300 per vehicle, but the increased gas mileage will more than offset the increased car price plus the increased cost of fuel.  The poor generally do not purchase new cars, so this will not help them.

AB 32 requires bio-fuels or hydrogen or electric cars to reduce carbon emissions from transportation.  The bio-fuels will increase the price of gasoline.  Bio-fuels in gasoline also decrease the miles per gallon achieved by a car.   AB 32's Scoping Plan states that hybrid vehicles will help to reduce the overall gasoline and diesel use, but again, this does not help the poor who seldom can afford a new car, especially not a high-priced hybrid. Thus, the poor will be paying the higher price of gasoline.  The poor generally purchase used cars, so they must wait until the high mpg or hybrid vehicles are available as a used car and at a price they can afford.  That may be a wait of several years.  All that time, they are paying higher prices for gasoline, and being hit hardest once again.

Similarly for diesel trucks, the fuel price will increase with bio-fuel addition, yet the delivery truck fleet will not convert overnight to hybrid trucks.  The additional cost of delivering goods will be passed on as higher prices for goods on the shelves.  The poor will have no choice but to pay the higher prices.   All consumers will pay higher prices, but the poor will be hit hardest.

Electric power prices will also increase as the RPS, Renewable Portfolio Standard, is implemented.  Increasing the renewable portion of power production from the current 12 percent to 20 percent by 2012, and by 33 percent by 2020, will increase the cost of electric power.   Furthermore, the imported power from coal-fired plants must be phased out, and likely will be replaced with renewable power.  The Scoping Plan uses 12 percent as the power price increase, yet it will likely be much more.  The high cost of electricity will impact the poor, especially those who rent rather than own their homes, or live in rented apartments.  Renters have little choice in replacing appliances, which is what AB 32 relies on to counter the increased cost of electricity. 

Similarly for businesses who rent office or manufacturing space, the increased cost of electricity will be passed on to customers as higher prices for goods and services.   It may be possible for business who lease commercial space to persuade building owners to install more efficient heating and air conditioning, and lighting, but that will likely increase the lease payment.  The business owner would pass along the higher costs.  Again, the poor will be hit the hardest by having no choice but to pay the higher price. 

Thanks to AB 32, the poor, who live with no excess income, will find that increases in prices of energy, food, necessities, and medical products will hit hard.    Where is the Environmental Justice in that?

Roger E. Sowell, Esq.  

Contact Mr. Sowell at his website.

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