A key part of President Biden’s agenda will be an attempt to reshape American energy policy. While Biden’s grand ambitions to tackle climate issues include lofty concepts such as “environmental justice” — a term that supposedly indicates equitable benefits for underserved communities — it is clear that some portions of his plan will do just the opposite: hurt average working families through more regulations and higher energy costs.
A prime example is legislation in Congress, the Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act, which would require states to “consider authorizing measures encouraging deployment of electric vehicle charging stations [and] allowing utilities to recover from ratepayers investments that further deployment of electric vehicle charging networks.”
Proponents claim the proposal is about protecting the interests of historically overburdened communities on the front line. But the reality will be passing along the cost of electric vehicle (EV) charging stations to utility customers in these communities. Those costs would be a regressive tax that disproportionately burdens working-class Americans — and benefits those who have the means to purchase electric cars.
Whether or not electric vehicles fulfill a need or are a key component of transportation infrastructure is beside the point. In legislation such as the CLEAN Future Act, the concept of “environmental justice” has been hijacked to help those who need it least. It will force poor people in underserved communities to pay for the EV infrastructure that wealthier Americans want for themselves.
This is hardly an exaggeration. Studies underscore the extent to which high-end electric vehicles are found in the garages of the wealthiest among us. The Congressional Research Service found that “[electric vehicle] tax credits are disproportionately claimed by higher-income taxpayers. Most of the tax credits (78 percent) are claimed by filers with adjusted gross income (AGI) of $100,000 or more, and those filers receive an even higher proportion (83 percent) of the amount of credits claimed.”
Similarly, in 2015, the Energy Institute at Haas concluded that “the top income quintile has received about 90 percent of all credits.” And more recently, Pacific Research Institute analysis showed that “79 percent of electric vehicle plug-in tax credits were claimed by households with adjusted gross incomes of greater than $100,000 per year.”
In contrast, average Americans foot the bill for electric vehicles through taxpayer subsidies, contributing $7,500 for every EV sold until each manufacturer hits a 200,000-unit threshold. The bipartisan Joint Committee on Taxation estimates that the credit in its current form will cost taxpayers $7.5 billion just between fiscal years 2018 and 2022.
The American Energy Alliance walks through how the regulations under this legislation would hurt consumers: “If passed, the CLEAN Future Act would allow utilities to rate-base the construction of electric vehicle charging stations, meaning that the cost of these charging stations will be passed on to utility customers as a whole.”
The people most directly harmed by the higher utility rates created by the CLEAN Future Act won’t be found driving Teslas — instead they will be wondering how to keep their lights on in the aftermath of one of the worst economic crises in living memory. Lower income consumers, of course, are disproportionately affected by increases in energy prices.
As lawmakers consider the electric vehicle charging infrastructure provision, they should consider its costly consequences for their lower-income and middle-class constituents. If codified into law, the CLEAN Future Act’s transfer of wealth from poorer ratepayers to wealthier electric vehicle owners would amount to a “reverse Robin Hood” effect.
Wherever one stands on how to handle climate, infrastructure issues, or electric vehicles themselves, it should be common sense that hard-working Americans whose economic prospects have been hurt by the depths of the coronavirus pandemic should not be made to pay higher utility bills so that richer Americans can recharge their luxury electric cars in a more convenient location.
Mario H. Lopez is the president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans. Follow him on Twitter @MarioHLopez.