=======================Electronic Edition========================
RACHEL’S ENVIRONMENT & HEALTH WEEKLY #442
—May 18, 1995—
News and resources for environmental justice.
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THE RIGHT TO POLLUTE
Washington is buzzing. Old-style environmental protection–in
which people expected government to protect their clean air and
clean water–is out. A new “third wave” of environmentalism is
coming into vogue. This “third wave” relies less on
confrontation between polluters and their victims and more on
cooperation between polluters and the big environmental groups.
The key concept of the “third wave” is market-based incentives
for polluters to clean up, rather than demands by government to
clean up. What are market-based incentives?
The only working example of a market-based incentive that we know
of is the trading of “emission reduction credits,” also known as
buying and selling “pollution rights.” This concept was invented
by lawyer Fred Krupp and economist Dan Dudeck, both with the
Environmental Defense Fund (EDF) in the late 1980s. [1] EDF’s
“pollution rights” scheme was written into the Clean Air Act of
1990. (“Pollution rights” is our phrase for what EDF calls
“emission reduction credits.”) The idea is basically simple:
U.S. Environmental Protection Agency (EPA) sets a nationwide
“cap” on the total amount of a pollutant, such as sulfur dioxide,
that can be released. Then EPA gives out “pollution rights” in
the form of permits to companies that are emitting sulfur
dioxide. The amount of each permit is based on a company’s past
history of pollution; the biggest polluters are given the biggest
“pollution rights.” The polluters do not pay for these permits;
they are handed out free by the government. If a polluter
manages to reduce his or her pollution below the amount allowed
by the permit, then a portion of his or her “pollution right” is
unused and can be sold for money to another polluter. By
allowing companies to “bank” the permitted pollution they are NOT
pumping into the atmosphere and sell it to other companies that
are unable to meet emissions standards, the government hopes to
lower toxic emissions nationwide without driving undercapitalized
electric utilities out of business. In practice, the concept is
so popular among polluters that the Chicago Board of Trade now
conducts a brisk business in “pollution rights,” buying and
selling the right to pollute. Companies that need to comply with
their “pollution-right” permit can either install control
equipment to comply, or they can buy someone else’s “pollution
right” and continue polluting, whichever is cheaper. According
to economists like Dan Dudeck, the result is the “least cost” way
of keeping total pollution at or below the “cap” level.
According to Alice LeBlanc, an economist with EDF, since passage
of the Clean Air Act of 1990, other “emission trading schemes”
have come into use. [2] She points to South Coast Air Quality
Management District (AQMD) in southern California which has
adopted the RECLAIM program (Regional Clean Air Incentives
Market) which now gives out permits to polluters giving them the
right to release nitrogen oxides and sulfur oxides into the
air. [3] The AQMD is now considering issuing “pollution rights”
for volatile organic toxics. Ms. LeBlanc mentions other existing
uses of the “pollution-rights” concept: “the trading of lead
rights among gasoline refiners” and “an allowance for the
transfer of production entitlement for CFCs.” (CFCs are the
chemicals that are depleting the Earth’s ozone shield). And
lastly, Ms. LeBlanc mentions that EDF is actively promoting the
use of emission trading internationally for carbon dioxide, the
main “greenhouse gas” driving the planet toward global warming.
It seems evident that EDF’s original concept of buying and
selling the right to pollute is becoming more popular among
polluters. In recognition of the usefulness of this invention by
EDF, President George Bush called Fred Krupp “my kind of
environmentalist.” [4]
In his new book, LOSING GROUND, author Mark Dowie examines this
concept of “pollution rights” in some detail. Dowie and others
are critical of the underlying philosophy.
For example, lawyer Richard Ayres, one of the founders of the
Natural Resources Defense Council (NRDC) says, “There was no
mention from environmental leaders of the fact that the 1990
Clean Air Act was giving people the right to pollute. The air is
a public resource. It should not have been given away to private
operatives. Congress, with the cooperation of environmentalists,
was giving away a public resource. The morality of that was
never discussed.” [5] Elsewhere Dowie notes that Congress [which
was controlled by Democrats at the time, we note] gave away the
nation’s air quality for free, so the public got nothing but
pollution in the bargain. Polluters on the other hand got a
valuable “right to pollute” which they are now buying and selling
profitably among themselves. [6] Furthermore, because “pollution
rights” are allotted on the basis of previous fuel use and past
emission rates, the biggest polluters have been rewarded most. [7]
Trading “pollution rights” does nothing to reduce pollution. The
amount of pollution is established by the “cap,” which is set by
EPA in an old-style “command and control” decision. The buying
and selling of “pollution rights” (“trading under a cap”)
actually works AGAINST pollution reduction because it reduces the
incentive to search out, and adopt, less-polluting technical
innovations; at some point it becomes cheaper to purchase the
right to pollute than to prevent pollution.
Instead of reducing pollution, the market in “pollution rights”
simply moves pollution from one region to another, or from one
neighborhood to another. Since technically inferior,
highly-polluting facilities are often located in poor
neighborhoods, those are the facilities most likely to purchase
“pollution rights,” thus increasing the relative pollution burden
falling on the poor, and people of color. The buying and selling
of “pollution rights” changes the discussion from one of fairness
and public health to one of economics and high finance –thus
moving the discussion into the realm of monetary experts, masking
the ethical issues and removing them from public debate.
At this point, we might ask, are there real consequences from
living in a polluted neighborhood? In the medical journal LANCET
on April 8, 1995, a British researcher, Dick van Steenis,
described children in the town of Johnston, England, who live
downwind from 3 oil refineries and an oil-burning power plant. [8]
Thirty-five percent of the 8-and 9-year-old children in the town
have asthma so badly that they carry medically-prescribed
inhalers to school. Van Steenis writes, “To localise matters and
to reduce the influence of variation in diagnosis and
prescribing, it was decided to ascertain the proportions of
primary school children (5-11 [years old])… taking inhalers to
school for asthma. Some 1 in 5 [20%] took inhalers to school
very close to the Pembroke power station/Texaco refinery complex;
some 1 in 7 [14%] took inhalers to school directly downwind for
about 72 kilometers [45 miles]; some 1 in 15 [7%] took inhalers
to the schools receiving outfall [air pollution] 1 to 2 days a
week; and only some 1 in 50 took inhalers to schools on the
coasts not usually in any downwind [area]. The map is remarkably
consistent,” van Steenis wrote. He mentioned similar effects
observable in the towns of Kent near Richborough and Ince on
Merscyside. Thus we must conclude that transferring pollution
into particular neighborhoods has serious negative consequences,
especially for the children living there.
The sharpest criticisms of the “third wave” scheme for buying and
selling “pollution rights” come from the viewpoint of democracy
and justice. Peter Bahouth, former executive director of
Greenpeace, told the WALL STREET JOURNAL, “If you were trying to
handle drug problems in your community, you wouldn’t be saying:
‘Let’s try to work this out with the drug dealers.’” [1]
Mark Dowie says, “The worst aspect of third-wave environmentalism
is that it is essentially anti-democratic. Environmental
protection, to the extent that it is achieved at all, is won
through negotiation among the powerful. When Fred Krupp,
director of Environmental Defense Fund, cuts a deal with General
Motors over automobile emissions there is no public
participation. When he enters that board room in Detroit whom
does he represent? The 36 members of the EDF Board? The 120,000
passive contributors? The donor foundations? Himself, or some
vague principle he believes will benefit the environment? More
important than these questions is whether or not he represents
the public. And if he does, where was the public hearing?” Dowie
asks. [9]
The intention of third-wave environmentalism is to protect the
environment while preserving economic prosperity and price
stability. But the hidden costs of cheap lumber, cheap energy,
and cheap gasoline are extinct and vanishing species, loss of
farmland, an early death for tens of thousands of city dwellers
each year (see REHW #440), and future generations of deformed
children. Until those “externalities” are dealt with in an open
and democratic way, third-wave “market incentives” won’t make
sense.
To gain support from most environmentalists, free market
enthusiasts would have to base their programs on charging the
full, true environmental costs for all resources used and all
harms done. And it would help if companies were required to seek
out (and publicly discuss) least-damaging technical alternatives,
including the alternative of doing nothing, thus requiring them
to discuss the need for their project.
In sum, we conclude that the free market has a potentially
valuable role to play in environmental protection, but that
buying and selling “pollution rights” does not.
Objections to the third-wave concept of “pollution rights” come
into sharpest focus if we consider that clean air and clean water
are fundamental human rights, in the same category as the right
to be free from arbitrary incarceration, or the right not to be
tortured. It is inconceivable that human rights activists would
negotiate the right to torture. (“You may torture 5% of your
citizens, a 50% reduction from the 10% you tortured last
year.”) [10] But something similar is going on when EDF and other
third-wave environmentalists negotiate buying and selling of the
“right to pollute” and therefore the “right” to make people sick.
Such a right never existed until “third-wave” environmentalists
created it.
GET: Mark Dowie, LOSING GROUND (Cambridge, Mass.: MIT Press,
1995); $25.00.
                
                
                
                
    
–Peter Montague
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[1] Rose Gutfeld, “Environmental Group Doesn’t Always Lick ‘Em;
It Can Join ‘Em and Succeed,” WALL STREET JOURNAL August 20,
1992, pg. B1; and Mark Dowie, LOSING GROUND; AMERICAN
ENVIRONMENTALISM AT THE CLOSE OF THE TWENTIETH CENTURY
(Cambridge, Mass.: MIT Press, 1995), pg. 109.
[2] Alice LeBlanc, “The Third Wave,” ENVIRONMENTAL ACTION
(Winter, 1994), pgs. 24-26.
[3] Eric Mann, “Trading Delusions,” ENVIRONMENTAL ACTION (Winter,
1994), pgs. 22-24.
[4] Dowie, cited above, pg. 117.
[5] Ayres quoted in Dowie, cited above, pg. 123.
[6] Dowie, cited above, pg. 111.
[7] Dowie, cited above, pg. 110.
[9] Dowie, cited above, pg. 124.
[10] Dowie, cited above, pg. 245.
Descriptor terms: pollution rights; air pollution; electric
power; coal; fossil fuels; human health; edf; environmental
defense fund; south coast air quality management district; aqmd;
reclaim; regional clean air incentives market; chicago board of
trade; emission reduction credits; fred krupp; dan dudeck; cfcs;
lead; ozone depletion; greenhouse effect; greenhouse gases;
global warming; carbon dioxide; losing ground; book reviews;
richard ayres; nrdc; natural resources defense council; mark
dowie; asthma; oil refineries; petroleum industry; democracy;
human rights;