Important Article on GHG Trading and Hot Spots

by Dave Owen

September 09, 2013

For years, environmental activists have worried that emissions trading systems will create “hot spots.”  The fear, in a nutshell, is that even if the trading system succeeds in reducing overall levels of pollutants, pollution levels in areas with lots of emissions purchasers will rise.  It seems quite plausible to anticipate that the areas seeing increases will contain concentrations of older industrial facilities, and it seems equally plausible, based on years of environmental justice studies, to anticipate that those older facilities are more likely to be located in minority communities.  Trading systems therefore seem to threaten environmental justice.

Those fears played a central role in recent litigation over AB 32, California’s landmark climate change law.  Environmental justice groups challenged the law, arguing that its trading system would concentrate greenhouse gas emissions in lower-income minority communities.  While most GHG emissions are not toxic, and hot spots of GHG emissions would not themselves be a health issue, the activists feared spikes in associated emissions of toxic pollutants. 

A recent article by David Adelman ought to allay those concerns.  Adelman analyzed several national EPA databases on toxic emissions, and he discovered that even if industrial facilities do operate primarily as buyers in GHG emissions trading markets, they aren’t likely to create toxic hot spots.  The basic reason is straightforward: industrial facilities actually emit a relatively small share of toxic emissions, and the real driver of hot spot formation is the distribution and activity of mobile sources.  In other words, it’s the tailpipes, not the smokestacks that matter most.

Here’s a key passage that summarizes the findings and their implications:

The secondary status of industrial facilities as sources of toxic emissions has particular relevance to concerns about GHG-trading regimes. A simple calculation illustrates this point: If industrial sources account for roughly ten percent of cancer risks from air toxics, as they do in many industrialized census tracts in Los Angeles, then a drop of twenty percent in toxic emissions from industrial sources would cause at most a two percent decline in cumulative cancer risks. This ten-fold factor limits the potential for inequities to arise at the scale of a census tract or county. Other factors, both economic and technical, reinforce this limit on inequities originating from GHG trading by industrial facilities. These findings suggest that a tradeoff often presumed between efficiency and equity will rarely exist for GHG-trading regimes in the United States, and that, where inequities are a potential concern, targeted policies could be adopted to mitigate them without compromising market efficiency.

And in closing: 

It is my hope that the EPA data and preceding analysis will assuage concerns that toxic hotspots will be an unavoidable and substantial byproduct of implementing a national GHG trading regime. More broadly, I hope that this work will lower health-equity concerns about market-based regulations generally-including taxes.

Adelman’s article is filled with careful discussion of the strengths and weaknesses of the databases he uses and the limitations of his methodology.  Nevertheless, his conclusions seem powerful.  The article is well worth reading.

This blog is cross-posted on the Environmental Law Prof Blog.


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Also from Dave Owen

Dave Owen is a Professor of Law at the University of California, Hastings, College of the Law.

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