Energy & Environment

Pollution Prejudice Against the Poor

Some critics charge that cap-and-trade plans discriminate against the poor.
by | April 2011

Are cap-and-trade programs biased against low-income communities? That’s the allegation of some environmental groups, and it was a strong enough concern to cause one California judge to tentatively delay the state’s plans to implement a cap-and-trade system.

In January, less than two months after the California Air Resources Board (CARB) endorsed a cap-and-trade emissions reduction plan, a San Francisco judge issued a ruling that the agency had violated the California Environmental Quality Act by failing to sufficiently consider alternatives to the plan. The lawsuit had been filed by environmental justice groups, and the judge’s ruling spotlights the challenges facing the cap-and-trade program, one of the key strategies designed to meet the goals of the state’s landmark climate change law.

“Cap and trade is a big one in the math, and it’s the most controversial politically,” says David Cooke, a San Francisco attorney with the law firm Allen Matkins, who advises clients on the regulatory impacts of the new law.

Under California’s Global Warming Solutions Act, the state must reduce emissions 15 percent by 2020—about 174 million metric tons of CO2. Roughly 34 million tons of that reduction is supposed to come from the emissions trading program, scheduled to begin in 2013. The program will require companies in targeted sectors to buy “emissions allowances” covering their annual CO2 output. Every year, the total number of allowances issued will drop, meaning businesses will either have to invest in pollution controls or buy additional credits from companies that don’t need them.

It’s the latter option that concerns the Center on Race, Poverty and the Environment (CRPE), one of the groups involved in the lawsuit. Since polluters can buy allowances instead of reducing their own emissions, the program will provide few health benefits to low-income residents who live close to industrial emitters such as oil refineries, says Brent Newell, CRPE’s general counsel.

The group also objects to a provision that allows companies to meet 8 percent of their compliance obligation by purchasing “offset” credits from projects that reduce emissions elsewhere, even outside California.

“The problem with cap and trade is that it uses the poor people of California as sacrificial lambs,” Newell says, adding that CRPE instead favors a direct carbon fee or regulations that would simply force polluters to reduce emissions on site. No parties are arguing that carbon dioxide itself is a hazardous threat to local communities, but regulations for CO2 often influence standards for other, more immediately dangerous pollutants.

Even if this tentative ruling has little long-term impact, the debate over emissions trading—and the details of its execution -- will continue. For example, CARB has been criticized for giving the allowances away for free during the program’s first year. Also controversial is the question of how to establish the initial baseline under which industries will be required to reduce emissions. And although various measures have been implemented to help control the market price of carbon and prevent hoarding of allowances, it’s not clear how effective those strategies will be, says Cooke.

The emissions trading plan “is an opportunity for California to lead the way for environmental regulation in the U.S.,” he says. But make no mistake, “It is being put to the test.”


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