AZ should reconsider 'cap & trade' pollution idea

Polluting coal plant in eastern Arizona

PHOENIX -- As Arizona, other states and Canadian provinces plan to meet soon as part of the Western Climate Initiative -- an effort I support -- Gov. Janet Napolitano and other leaders should reconsider over-reliance on risky unproven 'cap-and-trade' pollution credits.

While cap-and-trade may be the most politically palatable approach for controlling greenhouse gases, it may be the most ineffective and unreliable. These problems are evident in an open letter by EPA experts released this May detailing major impediments in implementing an effective trading program.

Experience with harnessing market forces to control air pollution has not been promising, according to analyses of three recent programs. These programs are analogous to the cap-and-trade plans now being considered by politicians as the principal mechanism for reducing greenhouse gases contributing to global warming and related climate change.

The most studied program was the Regional Clean Air Incentives Market (RECLAIM) program by the South Coast Air Quality Management District to reduce nitrogen oxides (NOx) and sulfur oxides (SOx) emissions through a cap and declining balance set for more than 350 of the largest polluting facilities in Southern California. RECLAIM has the longest history and practical experience of any locally designed and implemented air emissions cap-and-trade program.

An audit of the nine-year RECLAIM record by the U.S. Environmental Protection Agency in November 2002 found that the program did not come close to living up to expectations:

• RECLAIM “produced far less emission reductions than either were projected...or could have been expected from [traditional control regulation]”;
• Contrary to claims about stimulating new technology, EPA found an extremely low “likelihood such programs will produce innovation”; and
• Overall, EPA found “little in the literature and reports by implementing agencies describing how the underlying theories or assumptions of market incentives programs are to be (or were) practically tested.”

The RECLAIM disappointment was not unique. In Chicago, a cap-and-trade program, called Emissions Reduction Market System (ERMS) for volatile organic materials (VOMs), also failed to significantly reduce emissions, according to a 2006 analysis. In 2002, an EPA-sponsored emissions trading program based in New Jersey and Michigan completely collapsed due to crippling verification and enforcement deficiencies.

While some proponents see a lucrative market in trading emissions credits, there is also a potential for environmental Enrons. The call to harness market forces may in fact be a siren song to hitch our wagon to a scam.

- info from PEER