Are California’s Poor Losing Out In State’s Drive For Clean Energy Future?

California policymakers have been on overdrive in recent years pursuing a clean energy future for the Golden State.

State policymakers have enacted scores of government mandates and programs to push employers and individuals to reduce emissions, including unrealistic renewable energy mandates, cap-and-trade, and its embrace of high-speed rail.

Many of these initiatives have been advanced by California’s political elite and appear to benefit only upper-income households.  Meanwhile, poor, and working-class Californians are the big losers from these well-meaning policies.

Take the Obama-era Clean Power Plan. A report I released in 2016 found that, if implemented, the big government policies in that plan would have increased energy poverty in California, and nationwide. Not satisfied because the EPA has repealed the CPP, California is now suing to have it reinstated.

The latest example is the push by Gov. Jerry Brown and some California lawmakers to move state drivers into more expensive electric cars, or zero emission vehicles.

One lawmaker, San Francisco Democrat Phil Ting, has proposed legislation this year to outlaw the sale of traditional, gas powered cars in California by 2040. This would be a big lift, as electric cars are just 0.5 percent of America’s car market today.

Such a plan would hurt the poorest Californians, as the average price of the 10 electric cars with the longest range is nearly $42,000 – significantly higher than the average price of a traditional car at $34,000, or a compact car at $20,000.

California and many states also offer government-funded subsidies to encourage motorists to replace their gas guzzlers with electric cars.  Another $140 million was appropriated as part of the 2017-18 budget for state subsidies.

When you combine federal, state, and local subsidies, electric car buyers could be subsidized by as much as $15,000 when they buy a new Tesla or Nissan Leaf.

But are these generous subsidies – paid for by all taxpayers – helping the poorest Californians who can least afford to buy a costly electric car?

The answer is no.  In fact, taxpayer-funded electric car subsidies have become another giveaway to the wealthy.

In my new Pacific Research Institute study, “Costly Subsidies for the Rich,” I found that 79 percent of tax credits for electric car subsidies were claimed by households with incomes greater than $100,000 per year.  Add in households making more than $50,000 per year and the figure jumps to 99 percent.

With such startling figures, taxpayers should be asking elected officials what benefit is the average Californian getting from electric car subsidies?

Make no mistake – there’s nothing wrong with electric cars – they may well be the technology of the future.  Tesla, Nissan, Chevrolet, and many other car manufacturers are producing some cool and well-built cars.

But government playing car salesman hurts the poor and undermines other potential low-emission technologies.

If Gov. Brown and lawmakers really want to plan for a future with lower-emission cars, they should embrace the power of the free-market and remove the government-imposed barriers that make it so costly to build cars in California and drive up sticker prices.

There is an opportunity cost when government spends significant sums on things like electric car subsidies.  California officials would be wise to move to a future where electric cars can be made cheaply and efficiently in the Golden State – and government lets Californians keep more of what they earned to spend as they wish.

Only then – with more money in their pockets and more affordable electric cars in showrooms – will poor and working-class Californians consider buying one the next time they are in the market for a car.

Read more . . .

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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