subtitle: digging into more specific concerns.
i'm going to look at a few specific documents in this post. one is "recommendations for designing a greenhouse gas cap-and-trade system for california" authored by the market advisory committee (MAC) and presented to the california air resources board (i'll call it the MAC report). it's somewhat important to note that the MAC wasn't created specifically by AB32, but came afterwards as a result of a schwarzenegger executive order. this reflects the kind of schizophrenia going on at the state level—carb historically does command and control regulations, but now they've been saddled with implementing AB32 where market measures are the favored policy instrument. this confusion comes through in the recent talks that i've seen by carb members/employees. at any rate, the cover of the MAC report shows a pre-teen girl on a (presumably) california beach looking out into the ocean. the implication is obviously that if we don't do something, these beaches will be gone, and oh here's this thing called cap-and-trade. we love it.
in general i think that cap-and-trade is a good policy instrument. i also think that there are genuine concerns. i'm specifically going to address those concerns related to environmental justice (EJ) and issues that are tangential to it. i'm not going to offer too much more in the way of commentary here—it'll mostly be summary, to help with a short piece i'm writing on these issues.
in reading and writing, i want to try to address some of the following questions/concerns and/or elaborate on comments (in no particular order):
- it may not make sense to oppose carbon trading on traditional EJ grounds. global justice (global north/south) concerns appear to be the more appropriate frame through which to address disproportionate impacts vis-à-vis climate change.
- it is not clear if carbon trading causes hotspots or if it simply doesn't mitigate them.
- offsets can be a problem, but citing obviously flawed policies (rule 1610) to discredit a carbon cap-and-trade scheme makes no sense. We should evaluate the carbon proposals based on their own merits and through comparisons with similar programs (EU-ETS, acid rain, lead phaseout, RECLAIM). Through these comparisons, we can achieve arrive at a better understanding of the policy and its limitations. This will increase the likelihood of success.
- appeals to the morality/ethics of trading in general are bizarre, and should be backed up with some kind of appropriate grounding (philosophical?) if they're wanted to be taken seriously. I don't believe we can have these debates without implicating our own consumerism (which i'm fine with, it just seems that no one has done that up to now). case in point: language such as, "since pollution trading enables polluters to avoid emission reductions, or even increase emissions, at one location by purchasing credits earned elsewhere" portrays climate change "pollution"
- greenhouse gases (GHGs) are not pollution in the traditional sense (no, i do not agree with wingnuts who do not want to regulate carbon dioxide because it's "in the air we breathe") and referring to them as such generates serious issues with respect to dissonant mental models (someone is going to take issue with me using these terms in this manner).
- we should, to the extent possible, disseminate information that does not perpetuate this confusion. this would foster improved understanding of these issues among as many people as possible (more specifically, those people that can stop watching loops of rev. wright for five seconds, that is).
- number six would be assisted by discontinuing the practice of jumbling all market mechanisms together, and confusing emissions trading, cap-and-trade, cap-and-auction, offsets, etc.
- i think that one issue that has not been covered in-depth, but that probably deserves more treatment is that cap-and-trade is an idea that has emerged from existing power structures and is unlikely to subvert them. therefore, to the extent that climate change represents an opportunity to reorganize our lives around a more "sustainable" ideal, cap-and-trade is unlikely to bring that about.
the MAC dedicates several pages to the consideration of EJ concerns, but i feel it doesn't do so in a comprehensive manner. it seems to me that they do not fully understand the gravity of the movement, nor do they understand that environmental justice concerns cannot be allayed by simply stating their concerns and then stating why they're not actually concerns. this is exemplified in an op-ed piece by the chair of the MAC, larry goulder which, using very dismissive language, itemizes EJ concerns and then squashes them. i do not think that these are the reasons that california EJ groups should toss away their opposition to cap-and-trade. but i do think that such reasons exist. i won't go into them here to prevent sooping.
in my brief review of the literature related to climate change/emissions trading/environmental justice, one document is cited over and over and appears to be very important in this area. it's called "pollution trading and environmental injustice: los angeles' failed experiment in air quality policy" by drury, belliveau, kuhn, and bansal. it appeared in the duke environmental law & policy forum in 1999. all of the authors are or were on staff with communities for a better environment, which google tells me is a "california based environmental health and justice organization which promotes clean air and water and advocates for toxic free communities." the paper is good at identifying problems with two programs: rule 1610, and RECLAIM. unfortunately, the conclusions that it draws do not follow. pointing out legitimate issues with the policies does not condemn all policies of that type to a similar fate. this is always an issue. always, always. some taxes are regressive, does that mean all taxes are bad? ethanol subsidies are probably very very bad for lots of reasons. does that mean all subsidies are bad? can you write a paper about why ethanol subsidies are bad and then say that "therefore, all subsidies are bad." no. of course not. similarly, this paper should not be able to conclude that emissions trading is always bad and that it always leads to environmental justice concerns. one curious aspect that that, after three sections of bashing trading, the fourth suggests design recommendations. these are good recommendations: don't trade toxics, don't trade across pollutants, don't over-allocate, among others. so why the conclusion? i don't know. further, other groups have picked up on this paper and used it to condemn carbon trading, which really sidesteps a lot of the issues associated with trading criteria pollution. it seems to me that both sides (pro- and anti-trading) aren't communicating very well on these issues. the anti-trading papers cite examples of trading gone bad, while the pro-trading papers cite two examples where it worked (acid rain, lead phaseout) without acknowledging that there are sometimes problems. getting these two sides to enter into a genuine, EJ-style dialogue about these issues would be great. but unfortunately that doesn't appear to currently be possible.
a more even-handed approach to domestic climate policy in general is espoused by alice kaswan, a law professor at the university of san francisco. she recently published an article in the environmental law reporter, news & analysis entitled "environmental justice and domestic climate change policy." she acknowledges the subtle, but extremely important, distinctions that i've mentioned in this post. it is a substantial piece of writing, comprising five sections, of which the first three are the most relevant to the present discussion. the opening quotation she uses is exceptional, and comes from dan skopec, apparently an undersecretary at CalEPA. he says that we shouldn't use the umbrella of climate change to advance other policy agendas, but that mitigation, and only mitigation should be our primary concern. kaswan rightly reaches the opposite conclusion, noting that the fundamental changes required when dealing with climate change prohibit us from designing policy in a vacuum, but bringing a multiplicity of factors under consideration to ensure that the outcome is just.
concerns 3, 5, 6, and 7 above all relate, in one way or another, to problems associated with jumbling issues together. right off the bat, kaswan makes it clear that the focus of her article is greenhouse gas cap and trade policies. not offsets, not some generic "trading." no. cap and trade. greenhouse gases. amazing. when bringing up issues important to the EJ community, she is careful to disambiguate, clearly identifying which aspects of a particular issue does or does not apply to a GHG cap and trade scheme. as i sit down to write, i realize that i'm very into this article (and it will therefore comprise the focus of this post) which could lead to effusive, but vapid, praise for nearly all of the things she says. i'll try not to let this happen.
the version of the article that i'm looking at comes from the social science research network and is dated january, not the actual publication which is itself only freshly off the press and which the university of my state does not seem to subscribe to. this leads to an interesting omission, namely that the california EJ community's declaration is not mentioned whereas the previously released domestic stance is. the latter is much more open about a cap and trade scheme than the former, so it's likely that in its final form, kaswan's article incorporated some of those concerns. specifically, she holds up california as a model for other states to follow ("at least on paper") when attempting to incorporate EJ into climate policy. their rejection of california's approach would possibly trigger a re-think of that position.
the manner in which the concept of a cap and trade program is explained occurs alongside the identification of the relevant "design principles." this means that these are elements of the policy that are not set in stone, but those which may change depending upon policy preferences. these include: allocation, sectoral/geographic/temporal scope, and offsets. to this i would add "cap stringency" as a separate issue. these all have EJ implications although the arguments for/against allocation options seem to stray most often into the moral/ethical realm (creating "rights" to pollute, from an "ethical wrong" … often without a discussion of individual consumption).
the main benefit we've got in terms of EJ is the ability to demand greater emissions reductions than would be required under a command and control by virtue of the reduced compliance costs. to the extent that traditional EJ communities are at an increased risk of climate change impacts, the more stringent reductions possible under cap and trade directly benefit them in the form of a reduced requirement for long-term adaptation. the setting of the cap to avoid these risks is one of the design principles. if left to their own devices, business will lobby to have the cap set as high as possible. this is not only an issue for the EJ community, but anyone else who is concerned with the actual level of emissions reductions achieved. this includes the group known only as "Environmentalists"—you know, those folks that hate litter, love priuses, install solar panels on their garages, go hiking in the summer. i think this group exists mainly so that the press can cite them: "Some environmentalists noted that the law gives that authority to the Air Resources Board." as if "environmentalists" were the only ones capable of nothing this. presumably they are interested in reducing GHGs as well (but not necessarily reducing their GHGs…a topic for another post). this is the beauty of cap and trade. since we know more about the level of GHGs that are bad (bad means that a given atmospheric concentration leads to a relatively known amount of sea level rise, polar ice melt, or another generic climate change impact) we can set a cap to achieve that level or lower. this is not possible under other mitigation strategies (a tax for example) since emissions are allowed to grow under a tax provided the extra cost is paid. emissions of GHGs would drop under a tax, but given the unknowns in the equations (namely, elasticities for every product/service whose price would change under a tax) the actual level could not be legislated in advance.
there do exist conflicts between the goals of environmental justice (distributive equity and community participation) and markets (distribution neutral, community participation is not possible after the policy is designed). however, it appears that GHGs (particularly carbon dioxide) are uniquely poised to take advantage of the benefits, while sidestepping many of the problems associated with market-based environmental regulations. kaswan goes into great detail about what she considers the most prominent EJ issue with respect to cap and trade, namely that of co-pollutants, or those hazardous, local air pollutants that are emitted along with CO2. if more heavily (co-)polluting facilities are located in environmental justice communities, and if they have higher costs of mitigation, it's more likely that they'll purchase credits than reduce emissions. however, this does not mean that emissions of co-pollutants will increase because of cap and trade. of course, the hazardous pollution is already controlled by air quality legislation. this legislation typically only says what control technology (governing pollution intensity rather than absolute quantity). this set up allows pollution to increase depending on output, until a certain level is met, which would trigger a review. the conclusion is that a GHG cap and trade system would not help to mitigate hot spot risks, since facilities could purchase credits and then increase production. this is not a problem that directly stems from cap and trade. further, even though we want to try to maximize co-benefits (as stated in AB32) we do not need to try to maximize ALL co-benefits. some may not make sense to address with cap and trade. (a problem here is that AB32 itself includes language that refers to co-pollutants and trying to maximize simultaneous ambient air quality benefits and air toxics reductions. had i been involved in the legislation, i probably would have advised against this.) maybe a sensible policy approach is to change the NSR rules to trigger a review if pollution increases at all, as opposed to just in response to a major facility change. if this is the best argument for the hot spot risk, i think it can safely be dismissed. this has not prevented the EJ community from continuing to grasp this (irrelevant) issue. kaswan notes this, "[t]he risk…exists with or without a carbon trading system." issues of fuel or facility shifting can also be explained away with existing legislation. inter-pollutant trading is also a bad idea, to the extent that it contributes to increased concentrations of toxics, e.g.
finally, the issue of the distribution of the benefits are raised alongside participation. the idea in the first case is that if benefits (mostly co-pollutant reductions alongside GHG reductions) are expected to flow from cap and trade, they should be distributed equally. participation is raised in this case to question the participation in the trades themselves. the efficiency of a market, as previously mentioned, conflicts with traditional EJ goals in this case. however, if we rethink for a minute what participation could mean in this case (most importantly, participation in the rules and design of a trading scheme) then we realize that AB32 affords a unique opportunity for EJ groups to engage which they have seemingly squandered. i suggest that this is not wise. participation in the design is the critical idea in cap and trade, NOT in scrutinizing each individual trade. further, to the extent that we auction emissions allowances, the actual volume of trading is reduced. since this is the preferred long-term strategy, we need not worry about this issue too much. kaswan notes that "pre-empting or short-circuiting california's environmental justice goals would … cut short california's chance to act as a 'laboratory of invention' for the nation." i obviously agree, but it seems that what has happened is that the EJ community has short-circuited itself, which is something that probably no one expected.
the prescriptions given by the author to deal with EJ concerns specifically are good. i want to address two: restricting the geographic scope in advance, and revenue recycling to reduce co-pollutant burdens in low-income communities of color. the first recommendation would look at the existing distribution of pollution in disadvantaged areas. policy-makers could the place restrictions on trades that could occur to those area. in theory, this could occur without vastly increasing transactions costs, especially if done in a straightforward manner and if the conditions were known in advance. using auction revenues to finance any kind of low-income community improvements is also a no-brainer that could be easily implemented.
the considerations already discussed deal primarily with the environmental implications of capping and trading GHGs. issues specific to economic justice also arise: any kind of energy price increases are regressive and land use changes could lead to gentrification or pricing low-income individuals out of the neighborhoods which they currently occupy. on the plus side, kaswan mentions the possibility of new, green collar jobs, and again lower societal costs, and the possibility for using auction revenues. another idea relates to a domestic CDM, which has been discussed elsewhere by burkett. this no doubt requires further study, but on its face appears to be plausible and desirable.
in closing, the author notes that the climate challenge presents an opportunity to transform from a previous era of injustice to one of safety and equity. i think this is felt in a lot of climate activist and even academic circles: that climate change presents an opportunity to fundamentally alter our way of life in a manner that is far more equitable and sustainable than it has been in the past. in light of this it is an error for the CalEJ community to leave the table. further: given the potential benefits to historical EJ communities flowing from the implementation of a cap and trade scheme, the california EJ community's opposition to the policy instrument is unfounded.