California’s cap-and-trade program has been key to the state’s strategy for achieving reductions in greenhouse gas emissions, a good and noble undertaking. But it may be falling short on helping poor people who live in areas where factories spew pollutants.
Under the program, refineries, cement plants and electricity generators, among others, are required to have an allowance for every ton of greenhouse gas they emit.
These allowances are bought and sold on the carbon market, which means that companies can meet their emissions reduction targets by paying for others to cut back on pollution.
The rationale for cap and trade has been that this is a more economically efficient way to achieve greenhouse gas reductions. Environmental justice advocates agree that a reduction in greenhouse gas anywhere is positive for the planet.
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However, they have raised concerns that such a system – by allowing facilities to pay for emissions reductions elsewhere, including outside California – will forgo local reductions in co-pollutants, such as particulates and other toxics that more directly impact disadvantaged communities.
A careful appraisal of the first few years of the cap-and-trade program suggests that such worries may be well-founded.
We recently found that regulated facilities tended to be in neighborhoods with higher proportions of residents of color and living in poverty. That pattern holds for facilities that emit the highest levels of both greenhouse gases and cancer-causing particulates.
This could have set the stage for good news: If these facilities were reducing greenhouse gas emissions, that would be good for sustainability and environmental equity goals. But as it turns out, many weren’t.
How is that possible? Local residents tend to be most directly concerned about “emitter covered emissions,” a category that corresponds to localized, in-state emissions. But the cap-and-trade program also regulates out-of-state emissions associated with electricity imported into the state.
California has been able to meet emissions reduction targets by moving away from electricity imports generated by coal-fired power plants. According to the California Air Resources Board, emissions from electrical power decreased by 1.6 percent between 2013 and 2014. Yet emissions associated with imported electricity decreased while emissions from in-state electrical power generation actually increased.
Our analysis showed that in-state greenhouse gas emissions increased on average for several industry sectors regulated under cap and trade. Many firms also met emissions targets through offsets, a mechanism that allows firms to meet their obligations by, for example, preserving forests outside of California.
In fact, three-fourths of the offset credits used to date have been generated by such out-of-state projects.
This may be good for the planet but it has less direct benefit for California communities where factories and refineries emit pollutants that adversely affect health.
In light of these environmental equity concerns, what should the state do?
Gov. Jerry Brown signed AB 197 by Assemblyman Eduardo Garcia, D-Coachella. The bill instructs the state to prioritize direct emissions reductions. This is a good step. Implementing the bill will require improving data collection to facilitate better tracking of spatial, temporal and equity patterns of the cap-and-trade program.
The state could also declare “no trading” zones or require higher compliance burdens, such as more allowances per ton of greenhouse gas, in areas most impacted by air pollution.
Another possible element in a full strategy: Steer even more of the revenue proceeds to those socially vulnerable communities that are overburdened with polluting facilities.
What we can’t do is ignore the data. It is, to some degree, no surprise that cap and trade does not always yield localized greenhouse reductions. The program was not initially designed to do that.
But it could be. Environmental justice concerns, now proven to have merit, should be taken into account as we seek to achieve environmental equity and sustainability goals.