Cross-posted from Legal Planet.
I should probably start by putting my cards on the table. I’m not really an advocate of cap and trade as compared with other forms of regulation. What I care about is getting effective carbon restrictions in place, whether they take the form of cap and trade, a carbon tax, industry-wide regulations, or something else. The big advantage of cap and trade from that perspective is that some systems are already up and running, and unlike a carbon tax, it doesn’t directly violate any political taboos. Any of these systems will only be as good as its implementation anyway.
There’s been a lot of debate about environmental justice and cap-and-trade, including some interesting exchanges on this blog prompted by the California litigation on the subject. I thought it would be worth looking into this more carefully, resulting in a short paper on the subject. The most debated issue is whether disadvantaged neighborhoods are likely to get a disproportionate share of pollution (“hotspots”) under cap and trade. The answer depends at least in part on how you define the comparison.
If the question is whether pollution will be higher when you add a new cap-and-trade scheme on top of existing pollution laws, the answer is probably no. The empirical studies of existing trading schemes don’t support show that. As a matter of economics, this would only be if for some reason it was cheaper to add even more controls, restrict production, or close down newer, more efficient plants rather than old, inner-city ones, which seems unlikely.
On the other hand, it’s harder to say how the results of a cap-and-trade scheme compare with those of conventional technology-based regulation in terms of pollution at specific locations. Presumably, as a result of trading, emissions would be higher at some places and lower at others than they would be under a uniform regulation. One complicating factor is that the conventional regulations will cost more and as a result, it may not be politically feasible to aim at the same overall reduction in emissions. For instance, one study found that low-income neighborhoods actually did better under a California cap-and-trade scheme for NOx than they would have done under conventional regulation. In addition, the higher costs of conventional regulation would be reflected in utility rates for low-income consumers, another fairness problem. One advantage of cap and trade is that it may be easier to build in mechanisms to finance programs to decrease the burden on those consumers.
On the whole, the environmental justice issues can’t just be dismissed, but they’re fairly speculative. Notably, the trial judge in the California case upheld the government’s approach, which was to do some modeling to check out existence of hot spots and then monitor to see if any actually develop later. That strikes me as a reasonable approach.
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Daniel Farber | September 1, 2011
Cross-posted from Legal Planet. I should probably start by putting my cards on the table. I’m not really an advocate of cap and trade as compared with other forms of regulation. What I care about is getting effective carbon restrictions in place, whether they take the form of cap and trade, a carbon tax, industry-wide […]
Sidney A. Shapiro | August 31, 2011
House Republicans have promised this week that upon their return to Washington after the recess they will attempt to stop 10 important proposed regulations because they are “job-destroying.” Adhering to the belief that “if you say it often enough, people will believe its true,” the party continues to insist that regulations cost jobs. But, as I […]
Matt Shudtz | August 25, 2011
Shortly after my August 5th post criticizing their Data Quality Act complaint to EPA, the International Platinum Group Metals Association sent me a kindly-written response letter (Inside EPA recently reported on the letter). Accusing me of both missing the point of their complaint and brushing aside important scientific concerns to make a headline-grabbing call for “over-regulation,” […]
Rena Steinzor | August 23, 2011
The final agency regulatory “look-back” plans, released by the White House this morning, don’t appear to satisfy anyone. They fall far short of their obvious goal: to placate greedy and intemperate industry demands that major rules be cancelled. And they distress public interest advocates, who fear they will preoccupy agencies with make-work at the expense of crucial […]
Sidney A. Shapiro | August 22, 2011
The current anti-regulatory mantra of Republican legislators (e.g., Cantor, Boehner, Issa) and conservative think tanks (e.g., CEI and Heritage) is that regulation is a “job-killer.” And a top plank of Republicans’ job agenda when they return from the summer recess is to limit regulations. There is just one problem with this rhetoric. It is not backed up by […]
James Goodwin | August 16, 2011
What would you do if a report you funded was debunked by a scathing critique from the nonpartisan Congressional Research Service? What if you found that the researchers you funded had based 70 percent of their analysis of the costs of regulation on a regression based on opinion polling data? What if the researchers who […]
Ben Somberg | August 12, 2011
Former Senator Blanche Lincoln, now heading the National Federation of Independent Business’s new anti-regulatory campaign, faced criticism in recent days for citing the debunked SBA study claiming regulations cost $1.75 trillion in a year. The NFIB used that stat last week in launching its campaign (see ThinkProgress), and Lincoln cited the number in a National […]
Celeste Monforton | August 12, 2011
Cross-posted from The Pump Handle. Tyler Zander, 17 and Bryce Gannon, 17 were working together on Thursday, August 4 at the Zaloudek Grain Co. in Kremlin, Oklahoma. They were operating a large floor grain aguer when something went terribly wrong. Oklahoma’s News9.com reports that Bryce Gannon’s legs became trapped in the auger, Tyler Zander went […]
Matt Shudtz | August 11, 2011
On Monday, EPA announced its intention to revise the emergency planning rules for industrial facilities. The goal of the revisions is to give state and local emergency planning committees better information that they can use to prepare for chemical spills, explosions, and other disasters at industrial facilities. In the initial proposal released Monday, EPA disregards a request […]