A game plan for bridging the coming energy divide
Without serious intervention, those most in the need of help will fall further behind
WHENEVER THERE IS a major transition, there is often a divide between the haves and the have-nots. Consider the digital divide. To this day, some communities still don’t have broadband internet access. We are about to see a similar divide with respect to energy and the environment. According to a report published by McKinsey & Company, it will take $265 trillion in capital to decarbonize buildings, transportation, power generation, and agriculture. These investments and the disruptive efforts they fund will have a huge impact, not only by reducing greenhouse gases and forestalling the effects of climate change, but by creating wealth for some (mostly White) people and destroying it for other (mostly Black and Brown) people. Like the internet revolution, the effects will likely be vastly different for some communities than for others.
Without significant intervention, affluent communities will run on clean, green energy and benefit from environmental improvements, while poorer neighborhoods will be left behind in the legacy brown economy, which is based on fossil fuel systems. These areas already have worse indoor and outdoor air quality and suffer more from the effects of residual pollutants such as lead and asbestos. Plagued by brownfields, methane gas leaks, and inadequate storm water management, these environmental justice communities also tend to be heat islands, with significantly less green space and tree cover than wealthier areas.
We already know that those living in environmental justice communities tend to have fewer economic resources, poorer health, and relatively less public safety. Ironically, these communities also often have a higher energy burden (energy cost as a percentage of disposable income) because of the way utility rates are set. Rates are based on the utility company’s cost plus a markup. As fewer people rely on old infrastructure, the shared cost of maintaining that infrastructure rises per person. Thus, those who can least afford it end up paying higher energy rates despite being historically underserved by the energy system.
Communities with the means to transition to the green economy will benefit from lower energy costs, with their residents enjoying tax breaks for making the transition as they buy everything from new appliances to electric vehicles to solar and geothermal systems. Not only is it less expensive to drive an electric vehicle than a gas-powered one, but EVs are emissions-free, thus minimizing pollution in their owners’ neighborhoods. Areas without green infrastructure — known as brown zones — will become less desirable, depressing housing prices, reducing community wealth, and exacerbating the wealth gap.
Just as our government and society took intentional steps that resulted in brown zones, as we stand on the brink of energy transformation, we can intentionally create green zones.
Cities account for 80 percent of greenhouse gas emissions and 75 percent of energy consumption. Like a growing number of cities, Boston is now majority minority. Therefore, efforts to reduce climate change must engage stakeholders of color. The challenge is, in the short-term, that African Americans might believe there are more pressing issues.
That’s why we must focus on opportunities for environmental hazard mitigation and environmental sustainability. Black people can make the connection between living in a heat island and having higher electric bills for cooling. They understand the relationship between vehicle exhaust fumes and their children’s asthma. But Blacks have questioned spending billions of dollars to prevent our planet from warming by 1 degree Celsius over the next 50 years while we are not addressing existing environmental hazards such as brownfields and air pollution, which they live with every day. In one poll of African American priorities, tackling climate change ranked 16th out of 17 choices.
We must also link energy and the environment. Black people can understand that the environment in which they live directly affects their health, because they experience the effects of extreme heat and air pollution right now. The reasons for caring about the source of our energy are a little more abstract. By linking the two, we create a bridge that expands the community of concern.
The federal government has made money available through the Bipartisan Infrastructure Law and the Inflation Reduction Act to help areas designated as environmental justice communities. We now need a plan and a process to help those communities make the transition to clean energy and a better environmental future. For this, we can look to the Green Zone planning framework, which is a companion to the Commonwealth Green Zones Act, legislation that I co-wrote and which has been filed in the Massachusetts House and Senate.
Although hundreds of billions — maybe even trillions — of dollars will likely be spent on energy transition and environmental efforts in the coming years, Morgan Stanley pinpoints opportunity for investors in just five areas: renewables, electric vehicles, carbon capture and storage, hydrogen, and biofuels.
Jeff Bussgang, a partner at Flybridge Capital Partners and a senior lecturer at Harvard Business School, sees battery technology as one of the top five sectors for investors. This means that although the public and private sectors will each invest billions, there is not yet a private market, because entrepreneurs have not yet discovered a way to make money by helping environmental justice communities transition to greener, healthier states. That’s a problem.
But currently, there is no market for environmental justice. Otherwise, we would see companies entering the space. One problem is that the communities with the greatest need to transition have the least financial ability to do so. Helping them not only means building public infrastructure but subsidizing individuals to make the transition. Imagine legislation that calls for giving Black and Brown homeowners up to $100,000 each to help decarbonize their homes or transition to clean energy. That’s a difficult political challenge.
Consider that the transition often requires purchasing new equipment, such as solar panels or heat pumps. Switching to clean energy might result in a 3 percent to 5 percent increase in energy costs. Higher income communities might easily accept the increased cost as necessary for fighting climate change. Communities with less disposable income and a higher energy burden might be forced to reject any solution that results in higher energy costs, no matter how good it is for the environment. Such market friction is not as easy to address as building a new piece of infrastructure.
Given the amount of money required to make the transition to a clean environment and green energy economy, there will be economic implications, which could include opportunities for Black businesses and green economy jobs for those in the transitioning neighborhoods. However, there is a great deal of skepticism about whether those benefits will be realized. The federal government has a poor record of meeting its procurement targets from diverse business enterprises. The same has been true for many workforce development efforts, where the only people to benefit were the trainers.
One concern related to identifying Green Zones and making improvements in those places is that the process will contribute to gentrification and displacement. As the sea level rises, 300,000 people in Boston will need to seek higher ground. Grove Hall, which sits 100 to 200 feet above sea level, is one place that will attract climate change refugees, causing climate change-driven gentrification. Property located the furthest above and away from the water will increase in value, and those living in places such as Grove Hall will be displaced. The goal of the Green Zones legislation is to improve life for residents of brown zones, not make their neighborhoods so attractive that they end up getting pushed out.To ensure a just transition to a green environmental and energy future, we must acknowledge that there is a green versus brown divide, that the divide was intentionally created, and that racism played a role in its creation. Without serious intervention, history will repeat itself, and those most in need of the help to make the transition won’t get it. Instead, the billions or trillions of dollars being invested to address climate change will further increase the wealth gap between the environmental haves and have-nots. Knowing this in advance gives us an opportunity to do something different and create a better future for ourselves. Creating Green Zones and using the Green Zone planning process is one way to ensure that those who most need the help will receive it. Green Zones are a tool for achieving a just energy and environmental transition.
Ed Gaskin is executive director of Grove Hall Main Streets.