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In America, Black families pay more for energy than white families, says study

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Essential Energy Insights - February 2021

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


In America, Black families pay more for energy than white families, says study

Black households in the U.S., particularly those considered to be "low-income," pay "significantly" more to satisfy their energy needs than white households, according to a new working paper released by the University of California, Berkeley, Energy Institute at Haas.

The "disproportionate costs," the June 21 paper posited, result in a Black household energy burden that perpetuates wealth and housing disparities.

Residential electricity, natural gas and other home-heating fuel expenditures were found to be "statistically and economically significantly higher for Black households than for white households." Examining American Community Survey data from 2010 to 2017, study author Eva Lyubich found that Black renters pay $273 more each year than their white peers, after controlling for certain factors such as income and household size.

Similarly, Black homeowners annually pay $408 more for energy than white homeowners, according to the study, which also noted that "the gap is largest for low-income households."

The degree to which housing is energy-efficient may explain some of the disparity. "Conditional on income, Black households are more likely to report that their home is drafty," the paper said, citing data from the 2015 Residential Energy Consumption Survey. "They also report fewer Energy Star qualified appliances and home features, and are less likely to have received a rebate or tax credit for having upgraded an appliance."

The findings of the study, which has not been peer-reviewed, are in line with recent calls from the Natural Resources Defense Council to combat what it called racial inequities in the efficiency sector.

"Energy efficiency programs — such as installing insulation or efficient appliances — can ... help alleviate some of the pervasive challenges faced by low-income people and communities of color" by saving their households money, cutting down on pollution, improving health and fighting the "climate crisis," Natural Resources Defense Council Energy Efficiency Director Lara Ettenson wrote in a June 24 blog post.

Lyubich, a UC Berkeley Ph.D. candidate in economics, tweeted that while her study is a "work in progress" and she hopes "to get better data and say more soon," the issue is something that economists "need to be talking about."

"Differential energy burden is one of many reasons Green New Deal proposals are centered on economic, environmental, and racial justice," she explained. "Our energy system does not exist in isolation from systemic racism or other inequalities ... and if we’re going to address the climate crisis, we cannot rely on policies that pretend that it does."

Lyubich acknowledged that her results are limited, as "energy expenditures are self-reported on an annual basis," and should be taken as "suggestive ... not causal." However, she said, the paper "contributes to a broad set of evidence that Black Americans bear a disproportionate burden of the current energy system, both through disproportionate pollution and ... through disproportionate costs, likely at least in part as a result of persistent disparities in wealth and housing."

The Energy Institute at Haas focuses on "a more economically and environmentally sustainable energy future" and lists an array of funders that includes a number of investor-owned and municipal utilities, such as the Los Angeles Department of Water and Power and Southern California Edison Co., as well as the California Public Utilities Commission, California ISO, Google LLC and foreign governmental entities.