Jun 23, 2020 - Energy & Environment

The persistent racial disparities in U.S. energy expenses

Data: Energy Institute at HAAS; Chart: Danielle Alberti/Axios
Data: Energy Institute at HAAS; Chart: Danielle Alberti/Axios

Black renters and homeowners face substantially higher residential energy costs than white residents, and these persistent differences are present almost throughout the income scale, a working paper from the Energy Institute at the Haas Business School shows.

Why it matters: The research "contributes to a broad set of evidence that black Americans bear a disproportionate burden of the current energy system" evident in both pollution exposure and cost, writes Eva Lyubich, a UC Berkeley doctoral candidate in economics.

How it works: The analysis compares residential energy costs by using Census Bureau data and then running an analysis that controls for household size, income and location.

  • It looked at expenses for electricity, natural gas and other home heating fuels.
  • The result? A clear racial gap present in homeowners' and renters' costs, albeit one that has narrowed to some extent.
  • The gap is "fairly stable" across income levels, though it closes at the very top of the income ladder.

By the numbers: "Energy expenditures for both groups are decreasing between 2010–2017, and the conditional gap in annual expenditures decreases by about $150 for the average household but continues to be economically significant at about $200 for renters and $310 for homeowners in 2017," the paper finds.

Between the lines: Learning precisely why the disparities exist and persist is tricky. Controlling for the type and age of homes does not significantly change the gap, the paper finds. But the paper zeroes in on energy efficiency disparities as a factor in the gap.

  • "Conditional on income, Black households are more likely to report that their home is drafty," the paper notes.
  • "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 big picture: The new findings arrive amid a wider national reckoning about systemic racism and racial disparities in the wake of the police killing of George Floyd in Minneapolis.

Of note: The paper acknowledges its limitations, pointing out that it relies on self-reported census data on energy expenses. Lyubich writes that she's planning a follow-up analysis using residential billing data in California.

What they're saying: UC Berkeley economics professor Maximilian Auffhammer writes in a blog post about the findings:

"What we learned from Eva here is that so long as this energy cost inequity persists, any future carbon/energy tax, or other policy that raises energy costs, is likely to increase energy expenditures more for Black households — especially poor ones — than for white households in the same income bin. And that’s just wrong."

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