Fellow Story

Callahan co-author on study showing low-income Californians benefit from cap-and-trade

Fellow(s): Colleen Callahan
Cap-and-trade forces the biggest producers of greenhouse gas — including electricity utilities, natural gas utilities and fuel distributors — to pay to pollute.

Low-income Californians feel the pinch when gasoline, electricity and natural gas prices increase. And it’s logical to think that the state’s cap-and-trade program might add to those expenses. But this program is generating billions of dollars to provide an array of benefits to Californians, especially those living in disadvantaged communities.

Now, a first-of-its-kind study by the UCLA Luskin Center for Innovation has found that cap-and-trade has produced another very positive result. The study, “Protecting the Most Vulnerable: A Financial Analysis of Cap-and-Trade’s Impact on Households in Disadvantaged Communities across California,” revealed that the state has very effectively put in place measures to mitigate any disproportionate impact that might fall on low-income households.

According to the researchers, protective measures implemented by the state could more than offset cap-and-trade compliance costs that are passed on to electricity, natural gas and gasoline consumers.

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“We actually see that, once you factor in those direct and indirect measures, low-income Californians receive a small but still measureable potential benefit,” said Colleen Callahan, deputy director of the Luskin Center and co-author of the report. “We found that electric utility customers could actually gain $200-250 during our study period, which is the length of the cap- and-trade program, through 2020.”

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