Editorial:

Editorial: Selling Pollution

IN EARLY MAY, accompanied by great media and corporate fanfare about the wonders of using market forces to control pollution, the Wisconsin Power and Light Company sold "pollution credits" - in effect, a licence to spew out sulfur dioxide - to the Tennessee Valley Authority (TVA), an electricity utility serving Tennessee, Alabama and Kentucky. For about $3 million, TVA purchased the right to emit an additional 10,000 tons of sulfur dioxide, the chemical which is the primary cause of acid rain, from the Wisconsin utility.

The deal is the first to be implemented under the pollution credit trading system authorized by the 1990 Clean Air Act. The Act granted plants pollution allowances which set ceilings on the amount of sulfur they will be able to emit after 1995. If a plant reduces its emissions more than is required by the law, it can sell its "extra" emissions reductions - or "unused credits" - to another plant that fails to reduce its emissions to the required level.

The concept was most recently proposed by Dan Dudek of the Environmental Defense Fund (EDF), which pushed the concept with the Bush administration. EDF defends the plan, saying that the emissions trading provision in the Clean Air Act paved the way for a reduction requirement that was tougher than what President Bush would otherwise have agreed to accept. But compromise is often the first step to corruption, and the pollution credits deal advocated by EDF has the potential to do more harm than good for the environment.

Pollution credits serve the interests of polluting utilities, at the expense of consumers, the environment and public health, in several ways:

Pollution credits undermine positive effects of straight regulation. In the past, when governments mandated lower pollution levels, they forced companies to develop and adopt cleaner technologies because that was the only way to meet the government requirements. Under the credit system, instead of buying smoke scrubbers, companies buy the right to pollute.
Pollution credits work against the future reduction of emissions. Although credits are not legally property rights, they are effectively property rights that will make further sulfur reductions much more difficult. The government should be constantly moving to reduce emissions, not guaranteeing companies the right to pollute for an indefinite period of time.
Because allowances are based on past fuel use and emissions rates, companies that were wasteful of fuel and, in some cases, companies that polluted excessively, received the biggest allowances. It is then possible for these companies to profit most by selling credits.
Cleaner air in Wisconsin comes to mean more pollution in Tennessee. Even if the system does reduce overall sulfur emissions, it allows some companies to continue emitting pollution. Companies that are doing well can afford to buy the right to pollute, and people living around their plants continue to breathe in toxic fumes. A system intended to control pollution should not force a trade-off between reducing acid rain and protecting the general public health.
Credits were granted to companies in existence at the time of the 1990 Clean Air Act. Since the right to emit pollution has in effect been turned into a commodity, this means that the federal government simply handed over assets of considerable value to these utilities.
The system does not even stop the acid rain as it is intended to. Even if some companies in a region clean up, others in the area may choose to buy credits to allow them to emit pollution that continues to cause acid rain.

This bad idea is spreading: Southern California has implemented a similar program in an effort to reduce smog-causing emissions; Canada is considering pollution trading for air and water emissions; the United Nations has even tossed around the notion of setting up a global market in which greenhouse gas credits would be bought and sold. The TVA/Wisconsin exchange sets a dangerous precedent.

The Clean Air Act pollution credits program is based on the fundamentally flawed premise that a certain level of pollution is acceptable. As Chris Blythe of Wisconsin's Citizens Utility Board says, "Clean air should be protected, not traded and sold like a used car. What's next - the Los Angeles Police Department trying to buy civil rights credits from Wisconsin?"

The value of human health and the environment cannot be determined by market forces. It is no surprise that the idea plays well with the Bush administration and anti- regulation big business, but an environmental organization like EDF is tainted by pushing a plan which accepts the health and environmental costs associated with pollution.

Most environmental organizations oppose this EDF initiative. U.S. citizens should demand strict limits on polluting sources, much stronger emphasis on pollution prevention, moves toward a total elimination of emissions and the abandonment of a system that turns harmful sulfur fumes into valuable assets. Creating a market in pollution will never clean the air.