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OPINION: U.S. budget bill should give poor families access to clean energy

by Mustafa Santiago Ali, Brent Newman and Ed Murray | National Wildlife Federation
Friday, 1 October 2021 14:32 GMT

Multiple homes with solar panels are shown in Scripps Ranch, San Diego, California, U.S. October 5, 2016. Picture taken October 5, 2016. REUTERS/Mike Blake

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Low-income and minority households continue to face high energy burdens, with Black households spending 43% more of their income on energy costs

By Mustafa Santiago Ali, Vice President of Environmental Justice, Climate, and Community Revitalization for the National Wildlife Federation; Brent Newman, Senior Policy Director for Audubon Delta - National Audubon Society; and Ed Murray, President of the California Solar & Storage Association.

A clean energy revolution driven through increased household access to solar panels could be just around the corner. The $3.5 trillion budget reconciliation bill making its way through Congress is a natural starting point for bringing renewable energy to all zip codes in the United States and fostering a healthier and more resilient planet.

All it takes is a simple provision that lawmakers would insert into the bill to build on the federal solar Investment Tax Credit (ITC), one of the most effective tools we have for helping households pay for upgrades to their homes that allow them to go solar.

Currently, many households are unable to access this tax incentive simply because they do not have sufficient income. For many working-class families with little to no tax liability, it takes more than seven years on average to harness the credit in its entirety. This has created an uneven playing field where only wealthier households are able to fully realize the economic benefits of renewable energy.

But if this credit was made refundable, or “direct pay,” in the reconciliation spending package, as many as 26 million additional households — including 3.2 million Black households and 3 million Hispanic households — would find it easier to make the switch to solar energy. In addition to the obvious environmental benefits, this shift would have significant economic, and community impacts as well.

Low-income and minority households continue to face high energy burdens, with Black households spending 43% more of their income on energy costs compared to their non-Hispanic, white counterparts. By taking advantage of the benefits of solar, these same households would see more dollars back in their wallets after paying their monthly utility bills. 

But we need smart policies that can help them to unlock these benefits. For instance, a recent working paper from the non-profit research organization, RAND Institute, found that homeowners in disadvantaged or vulnerable communities could receive an ITC credit of approximately $4,600 for residential rooftop solar systems if it was made fully refundable under Section 25D of the tax code. 

There’s no time to waste in expanding access for residential renewables to these families in disadvantaged communities, as many of these same households are also being hit hardest by climate change from coast to coast. 

Lower-income communities are experiencing the worst effects of our changing planet, living in areas more susceptible to flooding as was the case during Hurricane Ida, where those most heavily affected by the brunt of the storm’s damage were from communities of color. Or the wildfires torching the California, which studies have found that low-income residents have suffered a disproportionate share of the fires’ impacts. 

Greater access to solar energy is the remedy to these longstanding issues. We can reduce emissions and ensure a cleaner and more resilient planet if all households — and not just a few at the very top — were able to invest in solar power. 

Congress has the chance to address systemic disparities to clean energy adoption and save our planet in the process. Fortunately, it’s an easy fix: creating a direct pay option for solar. From Louisiana to California and across the nation that have seen lives shattered by natural disasters, this is so much more than politics. It’s about helping those communities that have been touched by the climate crisis.

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