Clean Energy Brings Health, Savings and Jobs to Low-Income Michigan Communities

Full report | Executive Summary

On June 2, 2014, the U.S. Environmental Protection Agency proposed the Clean Power Plan, the first-ever limits on carbon pollution from existing power plants. Entrenched coal interests immediately seized on the proposal as one that would dramatically cut coal use, force the implementation of new and expensive technologies, and harm people with low incomes. These claims are disingenuous. In fact, the standards gradually will transform our electric system over the next 15 years. Each state will have a tailored carbon pollution reduction target and can decide how to best reach this goal through upgrades to power plants, renewable energy, and energy efficiency. This will save consumers money while providing reliable and cleaner electricity to meet our nation’s needs.

It is critical that low-income Michigan households share in these benefits. These households spend a higher percentage of their income on energy costs, which becomes more challenging when energy bills rise.1 Also, low-income communities are more likely to be near power plants, dramatically increasing the risk of more direct health impacts from the resulting pollution. Energy efficiency and renewable energy have the potential to help address these challenges.

The Real Reason Coal is Shrinking

Coal plants are being retired as cheaper power becomes available from natural gas, wind and solar resources, and as households and businesses increasingly save energy and money through investments in efficiency.

Since the mid-2000s, plans for 183 coal-fired power plants have been canceled and dozens of coal-fired power plants have been retired.2 Coal is becoming more expensive to produce, in part because it is harder to mine the remaining coal in many parts of the country, which makes the process more expensive. Moreover, because it is costly, dirty, and inconvenient, there is lowerthan-historic demand in the United States and in Europe, and an uptick in coal exports from other countries is crowding out U.S. coal.3

Michigan is currently home to five coal plants that received a failing Environmental Justice Performance grade, based on how they affect low-income communities and communities of color.4 The 75 coal plants nationwide that received a failing grade (including Michigan’s five coal plants) produce only 8% of the country’s total energy. However, those same 75 plants are responsible for 14% of sulfur dioxide and 13% of nitrogen oxide emissions. These coal plant emissions have a disproportionate effect on the surrounding communities.

Health Impacts

In the United States, approximately 6 million Americans live within three miles of a coal plant, and according to the NAACP, people of color and low-income households are more likely to live near these plants, with coal plants in urban areas overwhelmingly located in communities of color.5 The average per capita income in neighborhoods with coal plants is below the poverty threshold at $18,400, which is nearly 15% lower than the U.S. average income of $21,587. Furthermore, 39% of the people living in these neighborhoods are people of color, a higher percentage than the total percentage of people of color in the United States (36%).6 For example, 56% of white Americans live within 30 miles of a power plant compared to 68% of African Americans. Likely not coincidentally, African Americans frequent the emergency room for asthma attacks three times as often as white Americans,7 and roughly 30% of childhood asthma is due to environmental exposures, with average costs of $4,900 per patient—certainly a burden for any low-income household.8

The following examples speak volumes to the disproportionate effect carbon pollution has on low-income neighborhoods and communities of color.

The Michigan Department of Community Health has deemed the City of Detroit and its nearby downriver neighborhoods the “Epicenter of Asthma Burden.”9 According to a report released by the Sierra Club, Detroit ZIP codes in particular are three to six times more likely to have asthma-related hospital admissions than the rest of the state as a whole.10 In addition, in 2014 the American Lung Association ranked Wayne County—the home of the coal-burning River Rouge Plant—as the region with the highest number of pediatric asthma cases in Michigan. Wayne County also is home to more poor residents than any county in Michigan, with 465,744 of 1,792,365 residents (or 25% of the county population) below the poverty line.11

Wayne County’s River Rouge Plant is one of the dirtiest coal plants in the nation and sits in the middle of the River Rouge community, where people of color make up 65% of the population—this led to the seventh lowest EJP rank in the nation.12 “Coal Blooded: Putting Profits Before People,” a report from the NAACP, quotes River Rouge resident Yvonne White:

The plant is located right in the middle of the community. About a block and a half down [from the plant], you can see actual homes where there’s a full community of people living in this environment. This is a park that we’re standing in. In the park you’ll see children playing and there’s actually the Rouge River, which comes through here and we have a number of people who are fishing in this area. This is a mixed community but mostly minorities; you’ll find a lot of Latinos, a lot of African Americans in this area. And I believe less than a block or so away is an elementary school. And so, this area is very critical when it comes to environmental issues.13

Benefits of Energy Efficiency

Medical costs in these communities tell only part of the story. Compounding health issues are the high costs of living in a home that is not energy efficient. A 2015 study by the Natural Resources Defense Council found that energy efficiency, achieved through improvements such as better insulation, lighting, and appliances, can significantly cut the amount of energy used and lower bills for homeowners.14 Because the Clean Power Plan allows states to be credited for energy efficiency improvements in all sectors of the economy, the EPA predicts that electricity bills will drop by 8% for an annual savings of about $100 for the average consumer.15

Housing can be expensive, especially for households living on a low or fixed income. Programs such as low-income weatherization are helping to reduce costs of housing nationwide. Offered and implemented across the country, these programs specifically for low-income homeowners help buildings become more resilient and energy efficient in a variety of ways, including protecting against damage caused by precipitation and wind, sealing leaks, and optimizing and reducing energy use. These programs can help reduce the costs associated with owning a home, and are especially helpful in low-income areas. Multifamily housing accounts for 26% of all housing units in the United States and 17% in Michigan, and almost half of all very low-income renters live in these spaces.16 By increasing weatherization funds, energy efficiency improvements could save building owners and their tenants up to $3.4 billion every year nationwide.17

Energy Efficiency in Michigan

In Michigan, the first three years of energy efficiency programs cut energy use by more than 7.7 million megawatt-hours (MWh)—enough to power 900,000 Michigan homes for a year—and produced more than $800 million in net benefits for customers.18 In addition, the efficiency measures installed through the Energy Efficiency Resource Standard are expected to reduce annual carbon emissions by approximately 6.8 million tons in 2015 and up to 11.4 million tons in 2025.19 Furthermore, the state’s Renewable Portfolio Standard has spurred more than $2.3 billion in new investments and created new clean energy jobs in areas of efficiency and renewables since its enactment.20

In Michigan, the Weatherization Assistance Program is funded with federal dollars from the U.S. Department of Energy, with occasional supplements of Low Income Housing Energy Assistance Program dollars from the U.S. Department of Health and Human Services. While LIHEAP funds are not always allocated to weatherization, as they also fund the Michigan Energy Assistance Program and the State Emergency Relief program, there currently is funding available for 2015 and 2016 for the state.21 The Michigan Department of Human Services receives the federal funds and allocates the grant money to Community Action Agencies throughout the state and one limited-purpose agency to administer the program. These agencies let communities know about weatherization opportunities through news releases, web posts, and working with other community partners to spread information. The average family saves $300 alone by reducing heating costs 20-25%.22 While some of the funds are used for weatherization efforts, more is needed for low-income housing weatherization to protect the most vulnerable citizens from dangers of exposure to inclement weather, pollution from power plants, and high energy bills.

Benefits of Renewable Energy

Renewable energy provides another opportunity to cut energy costs. Renewable technology can be created on rooftops or in fields of corn. It uses no water and has little to no environmental side effects. For coal- and gas-burning plants, fuel may account for up to 90% of the wholesale price of electricity, but wind and solar energies have no associated fuel costs.23 However, equal access and benefits will not be automatic as costs decline; states and utilities must push to proactively address this issue so that as renewable energy comes online, low-income households accrue their share of the environmental, health, and economic benefits.

Renewable Energy in Michigan

In 2008, Michigan lawmakers passed the Clean, Renewable and Efficient Energy Act calling for renewable energy, such as wind and solar, to make up 10% of our state’s energy mix by 2015. Michigan is on track to reach this threshold by the end of the year. The Renewable Energy Standard created by this legislation is proving to be cost effective: a report by PJM Interconnection LLC, the largest grid operator in the nation, found that generating 30% of the electricity in its region with renewable energy would save consumers up to 30% on electric bills, even after factoring in the cost of additional transmission lines.24 Moreover, according to the DOE, costs for wind and solar energy are at an all-time low. This means that because renewable energy technologies are already competitive with conventional generation methods, and the prices are continuing to fall, transitioning away from some of the state’s failing coal plants to renewable energy sources makes sense. More recently, Michigan’s governor addressed the state in a special energy message, stating that by 2025 we should meet 30-40% of our energy needs through renewable energy and energy efficiency. Specifically, Gov. Snyder called for a 15% reduction in energy waste and 19-24% of the state’s energy coming from renewables.

Reliability

The coal industry often voices concern for the reliability of our electric grid, but these concerns are overstated. The Clean Power Plan would require only a modest shift in resources. Many plants currently slated to close ran only 38% of the time last year.25 U.S. electric grid operators have confirmed that nearly all the planned closures can occur without affecting electricity service reliability.

The reliability of fossil fuels has been exaggerated. In reality, the highly volatile nature of natural gas prices has contributed to volatile electricity rates—a major risk for low-income households. Figure 2 shows just how directly one region’s electricity prices depend on the price of natural gas. By diversifying our energy sources, we can reduce much of this risk.

Renewable energy’s intermittency has been exaggerated, too. Grid operators already have integrated more than 75,000 MW of wind and solar power into the grid and approved the retirement of tens of thousands of megawatts of old, expensive coal plants, all while preserving grid reliability.26 The output from renewable energy sources is increasingly predictable. And, through regional interconnections, wind from Arkansas can help power homes on a still night in Michigan.

Jobs

It is clear that switching from dependence on coal plants to renewable sources can cut energy bills, and can help boost the state’s economy with additional job creation. According to Environmental Entrepreneurs, a national community of business leaders who promote sound environmental policy that builds economic prosperity, more than 18,000 new jobs were announced in the clean energy field in the third quarter of 2014 alone.27 The NRDC found that if the nation shifted to clean energy under a scenario similar to the EPA’s Clean Power Plan, $37.4 billion would be saved in electric bills in 2020 across the United States, and more than 274,000 efficiency-related jobs would be created across the country.28 That could mean up to 6,900 efficiency-related jobs in Michigan in 2020.29 Not only does the creation of new jobs in renewable and energy efficiency mean a boost for the overall state’s economy, but the average wage for someone employed in the clean energy industry is $44,000.30 This is higher than the average wage in the United States. More money in people’s pockets means more money available to spend within the local economy, giving the state an overall boost.

Conclusion

Carbon pollution is a dirty problem for the United States, with Michigan ranking as one of the top offenders.31 Home to five of the nation’s most offensive coal power plants, Michigan clearly contributes significantly to the country’s carbon pollution. These coal plants are driving up energy costs for some of our most vulnerable populations, and disproportionately contribute to negative health effects for low-income neighborhoods and communities of color. On an economic front, Michigan is importing 100% of its coal from other states to meet its energy needs. With the dependency on other states’ coal, almost half of our energy is produced with these imports. Of the more than 20 coal plants active in Michigan, with a total of 40 operating coal generators, nine are ripe for retirement.32 This means that due to outdated pollution controls, among other things, they have reached the end of their useful life and make no economic sense to keep running.

We know that the only way to completely stop the harmful effects of a coal plant is to close it, and fortunately with the innovative progress being made in renewable energy sources, we have an alternative. If Michigan can increase the state’s Renewable Energy Standard past the 10% goal mandated through the Clean, Renewable and Efficient Energy Act, as well as increase incentives for multi-housing unit and low-income housing weatherization, families could benefit with cost savings on energy bills as well as healthcare. It is important to preserve and strengthen the EPA regulations, such as the Clean Power Plan, to maintain the cornerstone of our state’s measures and regulate the pollution affecting the health and well-being of residents.

 Endnotes

  1. For the purposes of this fact sheet, “low income” refers generally to households that fall at or below about 200% of federal poverty guidelines. According to the U.S. Department of Health and Human Services, in 2014 a family of four living on $23,850 was considered poor, so a family of four living on $47,700 would be considered low-income. U.S. Department of Health and Human Services, “2014 Poverty Guidelines,” January 24, 2013, aspe.hhs.gov/poverty/14poverty.cfm.
  2. Sierra Club, “Proposed Coal Plant Tracker,” content.sierraclub.org/coal/environmentallaw/plant-tracker (accessed December 1, 2014).
  3. Energy Information Administration, “U.S. Coal Exports Fall on Lower European Demand, Increased Global Supply,” October 3, 2014, www.eia.gov/todayinenergy/detail.cfm?id=18251.
  4. Adrian Wilson, “Coal Blooded: Putting Profits Before People,” National Association for the Advancement of Colored People (NAACP), Indigenous Environmental Network, and Little Village Environmental Justice Organization, 2011, naacp.3cdn.net/afe739fe212e246f76_i8m6yek0x.pdf.
  5. Ibid.
  6. Ibid.
  7. Martha Keating and Felicia Davis, “Air of Injustice,” Clear the Air and the Georgia Coalition for the Peoples’ Agenda, October 2002, www.energyjustice.net/files/coal/Air_of_Injustice.pdf.
  8. Miriam Cisternas et al., “A Comprehensive Study of the Direct and Indirect Costs of Adult Asthma,” Journal of Allergy and Clinical Immunology 111, no. 6 (2003): 1212, www.jacionline.org/article/S0091-6749(03)01071-6/pdf.
  9. Michigan Department of Community Health, “Chapter 12: Detroit – The Epicenter of Asthma Burden,” Epidemiology of Asthma in Michigan, 2010, michigan.gov/documents/mdch/14_Ch12_Detroit_Epicenter_of_Asthma_276687_7.pdf (Accessed March 23, 2015).
  10. Sierra Club, “Wayne County’s Mounting Pollution Problem: Michigan Must Act on Federal Mandate to Reduce Harmful Sulfur Dioxide Emissions, Report, https://content.sierraclub.org/coal/sites/content.sierraclub.org.coal/files/docs/0778%20SO2%20Michigan%20Fact%20Sheet%2003_x1a%20%282%29.pdf
  11. American Lung Association, State of the Air 2014, Report, www.stateoftheair.org/2014/assets/ALA-SOTA-2014-Full.pdf.
  12. Wilson, “Coal Blooded”
  13. Ibid.
  14. Natural Resources Defense Council (hereinafter NRDC), “Michigan’s Clean Energy Future,” Issue Brief, March 2015, www.nrdc.org/globalwarming/files/clean-power-plan-state-options-MI.pdf.
  15. U.S. Environmental Protection Agency, “By the Numbers: Cutting Carbon Pollution from Power Plants,” June 2014, www2.epa.gov/sites/production/files/2014-06/documents/20140602fs-important-numbers-clean-power-plan.pdf.
  16. The federal government defines “very low income” as households that earn less than half the national median income. U.S. Census Bureau, “Population and Housing Narrative Profile: 2011,” factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_11_1YR_NP01&prodType=narrative_profile (accessed March 23, 2015). Gary Pivo, “Energy Efficiency and Its Relationship to Household Income in Multifamily Rental Housing,” Fannie Mae, September 12, 2012, www.fanniemae.com/content/fact_sheet/energy-efficiency-rental-housing.pdf. Michigan numbers: The American Community Survey 5 year estimates, 2009-2013
  17. Anne McKibben et al., “Engaging as Partners in Energy Efficiency: Multifamily Housing and Utilities,” American Council for an Energy Efficient Economy (ACEEE) and CNT Energy (now Elevate Energy), January 2012, www.elevateenergy.org/wp-content/uploads/2014/01/Engaging_as_Partners_in_Energy_Efficiency_Multifamily_Housing_and_Utilities.pdf.
  18. NRDC with Energy Futures Group, Building on Michigan’s Energy Efficiency Accomplishments, April 25, 2013, http://switchboard.nrdc.org/blogs/rstanfield/NRDC,%20Building%20on%20Michigan’s%20Energy%20Efficiency%20Accomplishments.pdf.
  19. Jim Grevatt and Chris Neme, Projections for Power Sector Carbon Emissions Reductions: Illinois, Michigan, Iowa, Wisconsin, and Minnesota, Energy Futures Group, memo, April 17, 2014.
  20. American Wind Energy Association, Michigan Wind Energy, August 2014, http://awea.files.cms-plus.com/FileDownloads/pdfs/Michigan.pdf.
  21. U.S. Department of Energy grant dollars for Michigan have been pretty consistent with only small differences in increases or decreases over the years.
  22. Benefits.gov, “Michigan Weatherization Assistance Program,” www.benefits.gov/benefits/benefit-details/1861 (Accessed March 23, 2015).
  23. Mark Bolinger and Ryan Wiser, “The Value of Renewable Energy as a Hedge Against Fuel Price Risk: Analytic Contributions from Economic and Finance Theory,” LBNL, August 17, 2009, escholarship.org/uc/item/65g8f2t4.
  24. General Electric International, Inc., “PJM Renewable Integration Study,” prepared for PJM Interconnection LLC, March 31, 2014, /www.pjm.com/~/media/committees-groups/committees/mic/20140303/20140303-pris-executive-summary.ashx.
  25. Moore, J., “Environmental Standards Will Help Reduce Consumer Electricity Bills,” NRDC Switchboard, November 4, 2014, switchboard.nrdc.org/blogs/jmoore/environmental_standards_will_h.html.
  26. There were 61,327 MW of wind installed capacity and 15,900 MW of solar by mid-2014. American Wind Energy Association, “Wind Energy Facts at a Glance,” www.awea.org/Resources/Content.aspx?ItemNumber=5059&navItemNumber=742 (accessed November 25, 2014). SEIA, “Solar Energy Facts: Q3 2014,” September 22, 2014, www.seia.org/sites/default/files/Q3%202014%20SMI%20Fact%20Sheet.pdf (accessed November 25, 2014).
  27. Environmental Entrepreneurs, “Q3 2014 Jobs Report,” November 2014, cleanenergyworksforus.org/wp-content/uploads/2014/11/2014_Q3_Report_final.pdf.
  28. NRDC, “America Can Create 274,000 Efficiency-Related Jobs, Cut Electric Bills by Billions, and Curb Carbon Pollution,” May 2014, www.nrdc.org/air/pollution-standards/files/national-cps-bills-jobs-FS.pdf.
  29. NRDC, “Michigan Can Create 6,900 Efficiency-Related Jobs, Cut Electricity Bills, and Curb Carbon Pollution,” Fact Sheet, May 2014, http://www.nrdc.org/air/pollution-standards/files/cps-state-benefits-mi.pdf.
  30. Mark Muro, Jonathan Rothwell, and Devashree Saha, “Sizing the Clean Economy: A National and Regional Green Jobs Assessment,” Brookings Institution and Battelle Technology Partnership Practice, 2011, www.brookings.edu/~/media/series/resources/0713_clean_economy.pdf.
  31. Union of Concerned Scientists, “Michigan’s Dependence on Imported Coal,” Burning Coal, Burning Cash: 2014 Update, www.ucsusa.org/sites/default/files/legacy/assets/documents/clean_energy/Michigan-Coal-Imports-BCBC-Update-2014.pdf.
  32. Union of Concerned Scientists, “Ripe for Retirement: The Case for Closing Michigan’s Costliest Coal Plants,” November 2012 http://www.ucsusa.org/sites/default/files/legacy/assets/documents/clean_energy/Ripe-for-Retirement-Michigan-Report.pdf