Defining, Measuring, and Addressing Energy Poverty, with Tony Reames

Notable Quotes

• What is energy poverty?: “[Energy poverty] is separate from general poverty, because you can address it with some physical improvements. By improving the physical condition of a home, you can reduce the energy consumption and hopefully make energy more affordable. This concept of energy poverty really looks at how much of their income people spend on energy costs—some people say that anything below 6 percent is an affordable energy burden … But we know that many households in vulnerable communities are spending 10, 15, or 20 percent.” (3:45)
• Climate change will exacerbate energy disparities: “If we continue to have temperature extremes, that will require additional energy consumption—whether it’s more natural gas to heat or more electricity to cool. When it comes to affordability, that will impact those who are already suffering from energy poverty. So, if we can reduce temperature extremes—thus reducing our consumption while creating clean energy jobs and making sure we have an equity approach to making homes more efficient—we can address both of those problems at the same time.” (14:27)
• Lower-income areas often pay more for the same electric products: “We did a survey of about 130 stores in the Detroit metro [to make] an inventory of what light bulbs were available and how much they cost … An LED bulb was about $8 in the poorest neighborhoods compared to about $5 in the higher-income neighborhoods … I think [this price disparity] highlights why policy is so important, because there’s policies for utility companies to reduce the costs, but many utility companies partner with the typical players like Lowe’s and Home Depot, and they don’t partner with many of the smaller stores that are located in poor communities that don’t have big-box stores.” (23:51)

Top of the Stack

• “An incandescent truth: Disparities in energy-efficient lighting availability and prices in an urban U.S. county” by Tony G. Reames, Michael A. Reiner, and M. Ben Stacey
• “Three Scenarios for the Future of Climate Change” by Elizabeth Kolbert
• The Warmth of Other Suns by Isabel Wilkerson

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. This week, we talked with Dr. Tony Reames, assistant professor at the University of Michigan School for Environment and Sustainability. Tony is a leading scholar on the closely related topics of energy justice and energy poverty.

In today's episode, he'll help us understand what energy poverty is and how the federal government currently addresses it. He'll also share his thoughts on how better quantification of the problem can lead to better policy solutions. Stay with us. Tony Reames from the University of Michigan, my friend and colleague. Thank you so much for joining us today on Resources Radio.

Tony Reames: Thank you for having me, Daniel.

Daniel Raimi: Tony, we're going to talk today about your work on the topic of energy poverty and help our audience understand that issue, understand its policy significance, and how it connects to climate change, and a variety of other topics. But before we do that, we always ask our guests how they got interested in energy and environmental topics. So what's that story look like for you?

Tony Reames: Yeah, that's a really great question and I think about this a lot. When you think about your upbringing and how that impacts where you end up as an adult. I grew up in rural South Carolina, Lee County, South Carolina, and I like to say, it's the quintessential environmental justice community. Predominantly African-American, higher poverty rate than the state, and it hosts the state's largest landfill and the state's largest maximum-security prison. So when I think about the idea of environmental justice, and now as I'm into energy justice, I think about how political capital and demographics of communities lead them to having and hosting things that other communities don't want.

This idea of environmental justice has come up throughout my career, whether it was my first job out of undergrad—working for the Department of Health and Environmental Control in South Carolina—or doing underground storage tank cleanup management and most of the leaking tanks were in poor Black or brown communities in South Carolina. Working in Kansas City, looking at environmental justice issues around green infrastructure, and now doing energy justice work that looks at some of those same issues, particularly energy generation, energy, access, energy affordability, but still impacting those same Black and brown communities that I grew up in and that I've always worked in.

Daniel Raimi: That's so interesting and it reminded me that you're another Carolina boy, I'm from the Northside of the Carolinas, of course, but that's great.

Tony Reames: Well, I went to school in North Carolina.

Daniel Raimi: That's right. Remind me.

Tony Reames: I went to North Carolina A&T. Yeah.

Daniel Raimi: Excellent. So I won't ask you to opine on which state has better barbecue.

Tony Reames: Because we already know right?

Daniel Raimi: We all know the answer to that. It's North Carolina.

Tony Reames: Oh gosh.

Daniel Raimi: All right. Let's talk about your work, even though we probably could argue about barbecue for the next 25 minutes. A lot of your work revolves around the concept that you already mentioned of energy justice. Also, there's a lot of focus on the issue of energy poverty. These are of course related notions, but can you just get us started by helping us understand what you think about when you think about that term energy poverty and how it fits into your work?

Tony Reames: Yeah. I hone in on this idea of energy poverty is because it's so multifaceted and related to other things. It's separate from general poverty because you can actually address it with some physical improvements. By improving the physical condition of a home, you can reduce the energy consumption and hopefully make energy more affordable. This idea or concept of energy poverty really looks at how much of their income people spend on energy costs. Some people say that anything below 6 percent is an affordable energy burden, and I’m again referring to the proportion of your income on energy costs.

But we know that many households in vulnerable communities are spending 10, 15, 20 percent. Some in urban Detroit are spending 30 percent of their income on energy costs and so you can relate that to the efficiency of the home, the participation in some of the clean energy programs, or adopting clean energy technology. Although we might not be able to change people's actual bottom line incomes you can improve the materiality of the house that can reduce the money that they have to spend on energy. That's why I spend a lot of time focusing on energy poverty.

Daniel Raimi: Great. You've alluded to this a little bit already, and we've also covered it in previous podcast episodes, but can you remind us how energy poverty might differ across demographic groups in the US?

Tony Reames: Yeah. Even when you control for things like income, age of housing, you see racial and some other socio-demographic characteristics that are significant in people having higher energy burdens or less participation in energy efficiency programs, or less access to clean energy technology. If you look at just general consumption—energy consumption at the household level—what you end up seeing is that, on average, white households consume more energy and other demographic groups consume less energy.

When we think about this from an equity perspective, we like to normalize by the size of the home—so square foot—which gives you energy use intensity. When you look at those numbers, you see a stark difference in who's using more energy per square foot, which is a proxy for energy efficiency. A higher energy use intensity means the home is on average less efficient and you see Black, Hispanic/Latinx households, and indigenous households are using a lot more energy to either heat or cool their homes per square foot than white households. Those are some of the racial and demographic differences that we look at to try to understand. If we're focused on energy efficiency it might not be always going after the highest energy consumers we might need to go after the least efficient or energy-efficient houses.

Daniel Raimi: Right. That makes sense. When we think about the types of policies that governments have been implementing to address this issue, whether it goes directly to efficiency or whether it's more explicitly targeted at alleviating energy poverty, can you give us a little bit of the lay of the land in which ways the governments tried to achieve some of those goals, whether it's at the federal or state or local level through different policies?

Tony Reames: One of the challenges in the United States is that we don't necessarily have a national strategy to attack this. What you see is some siloed processes and policies that address this issue. Now I will say, as a federal government, the United States has recognized energy poverty since the 1970s. So we have nearly five decades of experience in funding programs that address energy poverty. Two large programs at the federal level are the Weatherization Assistance Program, which provides low-to-no-cost energy efficiency for low-income households, and the Low-Income Home Energy Assistance Program also known as LIHEAP, which primarily funds energy bill assistance. And so a lot of that money just helps people catch up on past due bills. We spend about seven times the amount of money on the bill assistance program than we do on the energy efficiency program, which is a more long-term solution.

Although we have five decades of experience or funding in this realm, you do still see many people that are in energy poverty. At the state level, public service commissions or public utility commissions do have policies in place or regulation in place that mandate utilities focus some of their energy efficiency efforts on low-income households. So the income-based approach has been the primary approach to this, and so in my work, I argue for thinking about other things like age. Do we have senior based programs? Race because of residential segregation—knowing that people are still living segregated by race—you can have some race-targeted programs. I think that should be okay and we should be okay with that if we're actually focused on equity.

Daniel Raimi: That makes sense. One of the things that your work points out across the many excellent papers that you've published is that despite the programs that you just described, the problem of energy poverty is still a significant problem in the United States. Can you give us a little bit of a high-level understanding for why these programs are falling short? Is it simply a matter of not funding them sufficiently or are there other structural problems that are at play?

Tony Reames: I think it's all of that right. One thing is that I don't know if we've officially recognized energy poverty, or other people use the term energy security, as a distinct problem. Again, we have five decades of at least federal experience in trying to attack this issue, but it is like a status quo thing. Each year Congress appropriates X million or billion dollars to these low-income energy assistance programs. Primarily focusing on bill assistance, which is a band-aid. I think that is one of the challenges. If we don't have a long-term strategy to address this, then we continue to do some of these just repetitive processes or programs that help somebody in the short-term, but not like a long-term strategy. Recognizing energy poverty and saying, “this is a real problem in the United States that we need to solve, that we need to reduce,” and then being strategic in how we fund programs that address it would be more long-term.

Daniel Raimi: I want to ask your thoughts on how we can specifically do that, how we might be strategic in our thinking to address this problem. Before I ask about that, there's another question that comes to mind, that you often hear when you talk to people about energy poverty, particularly in the context of climate change and in business climate change policies. I've certainly heard the argument many times that ambitious climate change policies, which deeply reduce emissions, have the potential to exacerbate energy poverty potentially here in the United States and also internationally. When you think about these two interrelated challenges, do you see them as in tension or do you see them as potentially benefiting from complementarities or how do you think about the interplay of those two topics?

Tony Reames: That's a really interesting interplay between two topics, and you've seen that argument carried out before. At some point in my life I read proceedings from public service commission meetings and reading utilities using the equity argument to fight against energy efficiency programs, saying that if we do these energy efficiency programs, only rich people will be able to afford them. So low-income customers will bear the brunt of basically subsidizing higher-income people to be able to make their homes more efficient, and that's a really true argument. The equity or inequity argument is actually there, but to make that argument and not say, “thus or therefore we need to do something about that energy poverty” is where I find the real tension in making that argument.

To think that there is no role for government regulation in our push toward decarbonization or adoption of clean energy, leads us to this point where we’re worse in the energy poverty and energy injustice, and environmental justice issues by not doing anything. So instead of them being in tension, there's some complementary elements to this idea of pushing forward, but ensuring that policies are in place that are focused on equity. Are there carve-outs to make sure that underserved communities are able to participate, whether it's making their homes more efficient, putting solar on their rooftops, or providing jobs in the clean energy industry?

Daniel Raimi: When you think about the complementarity, one of the issues that comes to mind for me is when we think about hotter summers and higher cooling bills that people are going to face, clearly the complementarity there is if you reduce the peak of summer heat by addressing the challenge of climate change, then you reduce the need for additional cooling. We're addressing the energy poverty issue. Am I thinking along the right lines there?

Tony Reames: Yeah. Because if we continue to have temperature extremes that's going to require additional energy consumption, whether it's more natural gas to heat or more electricity to cool. Who's that going to impact when it comes to affordability will be those who are already suffering from energy poverty. So if we can reduce temperature extremes, thus reducing our consumption while creating clean energy jobs and making sure we have an equity approach to making homes more efficient, we address both of those problems at the same time.

Daniel Raimi: Along those same lines, there was a paper that you published recently in the journal Nature Energy with your colleague, Dominic Bednar. In that paper, you look at the way that the government in the United Kingdom gathers information about energy poverty, and how that information will help inform government policy, addressing the dual challenges of climate change and energy poverty. Can you talk a little bit about that particular approach that you described in the United Kingdom, and how it is helpful in this context?

Tony Reames: I think the trajectory of the United States and the United Kingdom on this topic is so interesting, and I’ll give a shout out to Dominic because this was the first paper out of his dissertation.

So a lot of these low-income energy assistance programs or schemes as they call them in the United Kingdom, started around the same time coming out of the oil crisis of the 1970s. Both countries recognize that low-income households were being disproportionately impacted by the embargo, the rising cost which took a larger share of low-income households’ budgets. So they both created federal programs to either help with assistance, to pay bills as well as improve the efficiency of the homes and energy education on consumer behavior. But what you saw in the UK was not just creating programs, but actually saying “we're going to have a national fuel poverty strategy,” which is what they called it.

They created metrics to measure who's in fuel poverty. If you spend more than 10 percent of your income, you're in fuel poverty. And that metric has evolved overtime to make sure they're including the right people, not over counting, but also tracking whether they're reducing fuel poverty. Here we just continue to focus on appropriating funds to this problem, but not really tracking whether we're reducing it. There's no real annual mechanism for us to say, who's in energy poverty? Who's in fuel poverty? How many people are we taking out of energy poverty? So, like I say, following the track of the two countries has just been really fascinating to look at how you start at the same point from the same crisis, but the way you address it is totally different.

Daniel Raimi: I mean, just that point that you make about having data to characterize the problem as being a necessary first step to further action, that seems like a pretty substantial gap. In the same paper, you conclude by making some recommendations for how your analysis can inform US policy. We've probably touched on some of this already, but can you summarize those recommendations that you make in the paper and how you think they might look going forward?

Tony Reames: I was very honored that I was able to provide testimony to Congress, to the Energy and Commerce Committee’s Subcommittee on Energy, focused on this idea of generating equity as we focus on clean energy. Having written this paper, I was able to say, “what would it look like if the US government had a national energy poverty and justice strategy if we're fortunate enough to have another stimulus in 2021 that focuses on reducing carbon emissions and greening our energy system?” The first thing is to recognize energy poverty as a distinct issue within either our energy planning or within the realm of general poverty, create a measurement or metric for what that is. Again, we have no codified definition of energy poverty.

There are various people that think about it in different ways. Some people use energy burden. Some people use a multifaceted approach of whether you've had a shut-off, a disconnection notice, or if you’re keeping your home at an unhealthy temperature, whether too hot or too cold. Really trying to figure out what is our real definition. Set a reduction goal and then there's an opportunity to re-imagine our low-income energy assistance programs at the federal level, some at the state level for a more holistic policy that may provide bill assistance in the intermediate term, but in the long term actually makes the house more efficient or puts the house on renewable energy and then reassess and reevaluate that. Because it’s better to focus on keeping up with the times to make sure we're implementing the best, most efficient, and effective program.

Daniel Raimi: That's great. I wonder, Tony, if you might be able to put a little bit more meat on those bones when you talk about a more holistic approach to addressing this issue. You described the Low-Income Home Energy Assistance Program earlier as a bit of a band-aid. What does that more holistic package of assistance look like to you?

Tony Reames: When I've been thinking about this, I'm a civil engineer by training, and I've worked in public works departments. You think about your transportation, your road system, your water, and sewer system, and cities have capital improvement plans. You know the age of all your infrastructure, you create a five-year plan that's updated each year for the next five years. You know what streets you're going to replace, what pipes you're going to replace, and I think we should start to consider housing as infrastructure. Something I've been thinking about a lot now and Congresswoman Maxine Waters and Senator Kamala Harris have both introduced housing as infrastructure bills in Congress and really thinking about the impacts, if we know that in a community, all the houses were built in, say, 1920. We have a lot of older housing here in Michigan.

We know what the building codes were at that time. If people are low income in the community or if the community has suffered from white flight, it's highly likely that the homes have not been improved to today's standards. Can we take a targeted place-based, community-based approach to weatherizing homes? You go into a neighborhood and weatherize three or four blocks, and all of those homes are now weatherized. Hopefully, the people living in those houses are using less energy and are able to afford their energy. There's also programs that are looking at aging in place. How do you make homes more efficient? Focus on health and safety so elderly households don't have to move out. Those types of approaches where you have a long-term strategy that can be combined with a city doing some other infrastructure improvement in an area. So now you're starting to revitalize communities and they're set for 20, 30 years.

Daniel Raimi: That's really interesting. Yeah. So that focus on energy efficiency makes a lot of sense. It reminds me of a great paper that you published, gosh, maybe two years ago or so, that was focused on access to energy-efficient technologies in particular LED light bulbs. Can you talk a little bit about that work?

Tony Reames: I think that study, although the findings are very depressing, was one of my favorite studies because it came out of an idea listening to NPR, hearing that CVS was charging different prices for the same prescription drugs across different zip codes. They were charging more in poor zip codes than in higher-income zip codes.

I was thinking about access to electric vehicles and participation in energy efficiency programs. I wanted to look at entry-level energy-efficient technology, like LED bulbs. Everybody's saying let's transition from incandescent to LED bulbs. Is access and affordability of those bulbs equitable across communities? So we did a survey of about 130 stores in the Detroit metro going in and doing an inventory of what bulbs were available, how much they cost, and we divided the area up into four groups.

Zip codes that were greater than 40 percent poverty on one end and zip codes, 10 percent or less poverty on the other end. What we found was LED access and affordability was not equitable across even just one metro.

An LED bulb was about $8 in the poorest neighborhoods compared to about $5 in the higher-income neighborhoods, and there was a huge gap between the transition. Incandescent bulbs actually went down in price as neighborhoods got poor as LED bulbs went up. You had this increase to switch from an incandescent to an LED bulb in poor neighborhoods but not in higher-income neighborhoods. Again, just thinking about an entry-level technology like LED bulbs, either not being available in stores in people’s local communities or being twice the price as an incandescent bulb, I think it highlights why policy is so important because there’s policies for utility companies to reduce the costs, but many utility companies partner with the typical players like Lowe’s and Home Depot and not many of the smaller stores that are located in poor communities that don't have big-box stores.

Daniel Raimi: I wanted to follow up on that to see if you had a clear hypothesis for why the bulbs would be more expensive in low-income areas. Is it that you have those sort of smaller stores that don't have the same benefits of scale that the big boss stores do or might there be other factors?

Tony Reames: Yeah, it was those two things playing together. You have smaller stores that aren't buying in bulk to have that reduction in price, but also that partnership with the utility company who offers the instant rebates. What we noticed in Lowe’s and Home Depot, Best Buy, you could get an instant rebate on the bulb in those stores, but that wasn't advertised in the smaller stores in the poor communities, just because the utility companies didn't really think about people, either not being able to travel to the suburbs to big box stores or that would be the place where people purchase light bulbs.

Daniel Raimi: That makes sense and so interesting. There's so many interesting angles of your work, Tony, and I hope that we'll be able to explore them more in the future. But with that, I think we're going to close out our conversations and move on to our last question, which we call Top of the Stack. So I’ll ask you to recommend something that you've read or watched or heard that's related to the environment or energy, or really anything that you find interesting that you would recommend to our listeners.

I'll just start with a brief recommendation from the New Yorker magazine, a recent piece from Elizabeth Kolbert who’s just a fantastic science writer. She has a piece called “Three Scenarios for the Future of Climate Change.” For me as someone who's used to reading pretty dry academic reports on the topic of climate, it's always great to see the issue treated by a great writer like Kolbert and just recommend people check it out. It's a really interesting, really well-written piece. How about you, Tony? What's on the top of your literal or metaphorical reading stack?

Tony Reames: Yeah, it does have a connection to energy because it's really about housing consumption. So it's a book called The Warmth of Other Suns by Isabel Wilkerson, and it’s really fascinated with the Great Migration and how that has impacted particularly some of the Rust Belt cities, Great Lake cities. Reading about people moving from the South during that period, and I've been tracing my ancestry and just moving into housing that was abandoned during white flight and those types of things, I think really ties into this idea of what housing is people consuming and what happens when jobs shift and transition. So I think it provides a good historical context to where people live and how people live, which can impact all types of things related to environmental justice, energy justice, climate change.

Daniel Raimi: Yeah. Absolutely. My aunt actually just recommended to me that I read that book. So between her and your recommendations, that's a no brainer for me.

Tony Reames: All right.

Daniel Raimi: It'll go right on the top of my stack.

Tony Reames: There are no coincidences, Daniel.

Daniel Raimi: You've been scheming with my aunt to recommend books to me.

Tony Reames: Exactly.

Daniel Raimi: I knew it. Dastardly, Tony Reames.

Tony Reames: That's funny.

Daniel Raimi: Well between that and the barbecue. I think we might have a hard time getting along, but we'll do our best. All right. Great. Well, Tony Reames again from the University of Michigan, thank you so much for coming on today onto Resources Radio and helping us understand your work about energy justice and energy poverty. We really appreciate it.

Tony Reames: All right. Thank you for inviting me.

Daniel Raimi: You've been listening to Resources Radio, learn how to support resources for the future at rff.org/support. If you have a minute, we'd really appreciate you leaving us a rating or comment on your podcast platform of choice. Also, feel free to send us your suggestions for future episodes. Resources Radio is a podcast from Resources for the Future. RFF is an independent nonprofit research institution in Washington, DC. Our mission is to improve environmental energy and natural resource decisions through impartial economic research and policy engagement. The views expressed on this podcast are solely those of the podcast guests and may differ from those of RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.

Resources Radio is produced by Elizabeth Wason with music by me, Daniel Raimi, join us next week for another episode.