What would it take for climate policy to reduce inequality in Massachusetts?
“We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there is such a thing as being too late.” –Dr. Martin Luther King
This post launches a new project: Equitable Energy for Massachusetts. Throughout this year, I will be researching how climate policy can create opportunities for marginalized communities and reduce inequality in Massachusetts. I’m grateful for the support of E2 for this work.
I was inspired to pursue this project while reading Imagine Boston 2030, the master plan released by the City of Boston last year. Two particular goals from the plan caught my attention: achieving carbon neutrality and reducing the racial wealth gap. Both of these tasks are daunting. Carbon neutrality means reducing emissions to zero within the span of a few decades. Reducing the racial wealth gap means bridging a net wealth difference of nearly $250,000. But when I juxtaposed the images that accompanied the two goals, a new question emerged: Could climate policy be used to reduce inequality?
The idea of linking the separate goals of addressing climate change and reducing inequality is simple: driving down carbon emissions requires large investments in clean energy, and these investments can create jobs and wealth. How can these investments be made in a way that reduces inequality across socioeconomic divides within Boston and Massachusetts? My hypothesis is that certain public policies can steer both public and private funding towards investments that will benefit low-income households and marginalized communities throughout the commonwealth. With this research project, I will attempt to quantify the potential impact of such investments and understand the barriers to creating equitable climate policies.
The climate challenge: reduce greenhouse gas emissions by at least 80% by 2050
While Massachusetts has made some progress through its existing climate policies, much more work is required over the next few decades. The Global Warming Solutions Act created a legal obligation for the commonwealth to reduce greenhouse gas emissions by 80% by 2050. In absolute numbers, that translates to a reduction from 70.8 million metric tons (MMT) in 2020 to just 18.9 million metric tons in 2050. Reducing greenhouse gas emissions by 52 MMT is roughly equal to closing nine large coal power plants, a massive power plant fleet that could power roughly 13 million homes.¹
One challenge for Massachusetts is that its electricity is already relatively clean. The last coal power plant in the commonwealth, Brayton Point in Somerset, closed in 2017. The majority of greenhouse gas emissions for Massachusetts now come from oil used in the transportation sector and the natural gas and fuel oil used directly for heating buildings. The pie chart below shows Massachusetts’ greenhouse gas emissions broken down by sector. The purple slice shows that transportation accounts for 45% of Massachusetts emissions, while the commercial (blue) and residential (yellow) slices show that buildings account for 32.5% of emissions.
The Massachusetts Executive Office of Energy and Environmental Affairs modeled a potential pathway to achieve 80% greenhouse gas reductions as part of its 2015 Clean Energy and Climate Plan update. Emissions from both the transportation section (light blue) and the buildings sector (light green) must drop to roughly 1/5 of their current levels by 2050 to reach this goal.
While mid-century might seem distant, vehicles and buildings have long life cycles. Many of the new vehicles purchased in the 2020s will still be used in 2050, which means Massachusetts needs to quickly increase the percentage of low-carbon cars used by residents of the Commonwealth. Buildings are perhaps even more difficult to transform; many buildings in Massachusetts were built more than two centuries ago, and the majority of buildings that exist today will still be here in 2050. This means that Massachusetts needs find a way to retrofit almost all of its buildings to be much more efficient and to utilize cleaner heating and cooling. The commonwealth also needs to require new buildings to be extremely efficient, ideally at net-zero standards.
The best way to dramatically reduce emissions from transportation and buildings is likely to “electrify everything,” in which policy is used to promote electric vehicles and electric heat pumps.² According to analysis from the Acadia Center, the Northeast region would reduce its emissions by 50% if it switched all gasoline vehicles and buildings heated by fossil fuels to electric systems powered by today’s grid generation mix. By electrifying vehicles and buildings and obtaining 75% of electricity from renewable resources, the region could achieve its shared goal of cutting total emissions by 80%.
Some groups like Mass Power Forward want to go even further and transition Massachusetts to 100% renewable energy. Boston has already committed to become a carbon neutral city by 2050. These goals are laudable, but they may be difficult to achieve. I will examine the costs and investment requirements of various decarbonization options throughout this research project. Regardless of the final 2050 goal, all Massachusetts needs to take dramatic steps over the next decade to continue reducing emissions.
The equity challenge: reduce economic and racial inequality as quickly as possible
Massachusetts also faces a challenge of increasing income inequality. The Commonwealth has the sixth highest rate of inequality in the country, with the top 1% of families taking home 23% of all income. The situation in Boston is even worse: according to a report from the Brookings Institution, as of 2014 Boston had the worst income inequality of any city in the country. This high inequality is likely driven by the transition to a “knowledge economy” over the last few decades. As show in the graph below, the divide between wages for the 90th percentile and median for workers in Massachusetts grew faster than the divide for the country as a whole. Earners in the 90th percentile and above are likely to work in the high-paying technology sectors that make up the booming innovation economy of Boston.
The inequality gap is even wider when we consider race. Last December, the Boston Globe ran a remarkable spotlight series on racism in the Boston metro area. There was a jarring statistic in the first part of the series: the median net worth of a black household in Greater Boston is just $8. Half of black households in Boston have essentially no savings after tallying their assets and debts. Meanwhile, the median white household has a net worth of $247,500.
This shocking statistic comes from a 2015 Federal Reserve Bank of Boston study called The Color of Wealth in Boston. The study utilized data from the National Asset Scorecard for Communities of Color (NASCC), a meticulous survey of financial assets and debts of various racial groups within Greater Boston. The Color of Wealth authors then calculated the net worth of every household surveyed by subtracting their debts from their assets. Median values for each racial subgroup are shown below.
To its credit, the City of Boston has pledged to address this racial wealth gap. In its recently released comprehensive master plan called Imagine Boston 2030, the city has set a goal to “reduce the wealth gap between white households and households of color.” Boston also created an Office of Resilience and Racial Equity in 2014 to foster dialogue around Boston’s segregated past and work toward a more equitable future. Boston wants to increase the rate of black home-ownership and help households of color build credit and accrue other valuable assets. But, because wealth accumulates slowly and tends to be transferred between generations, the racial wealth gap will require many years of focused policy to be addressed effectively.³
Massachusetts does not have readily accessible data on household wealth by race. However, the American Community Survey does provide estimates of income based on race. In 2016, the median white household in Massachusetts made $33,000 more than the median black household. As shown in the graph below, the gap was even larger for Native American and Hispanic households.
Combining the challenges: Can climate policies be used to reduce inequality in Massachusetts?
The challenges of decarbonizing Massachusetts and reducing economic and racial inequality are daunting. Both tasks will require large amounts of capital and decades of work. But maybe, the two challenges can be tackled simultaneously. What would climate policy look like that maximized social equity? Or conversely: what would policies to address inequality look like if they were designed to also decarbonize the energy system by 2050?
Conceptually, I see three ways that climate policies designed to accelerate the transition to clean energy can also work to reduce inequality:
1) Energy savings created by efficiency improvements or distributed generation can provide economic value to households, which could be particularly helpful for low-income families.
2) Green jobs created through deploying clean energy can advance equity if the jobs are high paying and employ members of a disadvantaged group.
3) Clean energy assets such as solar panels or shares of a clean energy company can advance equity if they are owned by low-income households or build wealth for marginalized communities.
Many climate policies exist that advance equity through energy savings, such as subsidized installation of energy efficiency measures for low-income households. Some green jobs programs also exist, although they often focus on job training results rather than evaluating the proportion of actual employees who are racial minorities or who come from poor family. I will investigate the potential for energy savings and green jobs in future posts.
Owning clean energy assets as a means of advancing equity is the most difficult of the three strategies, as marginalized communities often lack capital to invest or the technical expertise to create and manage clean energy businesses. Yet ownership of clean energy assets will yield the greatest overall economic benefits of the three strategies. If policies could help marginalized communities to invest in new infrastructure or to develop clean energy businesses, the strategy of clean energy assets could do a great deal to advance equity. I will evaluate the options for such policies in later posts.
Finally, equitable climate policy also requires more than simply creating benefits for disadvantaged households. Real equity requires an inclusive and empowering process. That means ensuring representation and decision-making authority for marginalized communities. Creating a more inclusive process can be difficult, and will likely require policymakers to build new relationships across racial and class divides. But the end result of an inclusive process is community empowerment and more effective policy. I plan to consider ways that equitable processes can be built into policy design.
One thing is certain: the work of addressing climate change and reducing inequality won’t be easy. Transitioning from fossil fuels to clean energy will require a transformation of the entire built environment. Reducing inequality and the racial wealth gap will require fundamental shifts in the economy. While these are monumental challenges, they also provide an opportunity to create a better world. I hope that Massachusetts uses this opportunity to enact policies that advance a more equitable clean energy future.
Endnotes:
1. In this calculation, the 1.5 MW Brayton Point coal power plant is used as a proxy for a “large” power plant. Brayton Point emitted 5.9 MMT of CO2 each year and generated enough power for 1.5 million homes. 5.9 x 9 = 53.1 MMT, close to the 52 MMT required for Massachusetts greenhouse gas reductions. 1.5 million x 9 = 13.5 million homes powered by those 9 coal power plants.
2. There are some alternative strategies to electrification for decarbonizing transportation and buildings. Future vehicles could use a carbon-neutral liquid biofuel, and some buildings could use biomass-powered district energy. But carbon accounting for biomass is controversial.
3. As noted in The Ever Growing Gap report from the Institute for Policy Studies, the racial wealth gap is likely to increase even more without deliberate intervention. Over the past thirty years, the average white household in the U.S. increased its wealth by $18,368 per year. In contrast, the average Latino household and average black household had yearly wealth increases of $2,254 and $765, respectively.
