Cap, Trade and Skeletons

Did Waxman-Markey’s ancestors really deliver on their promises? 10

“RECLAIM” ... the wacky uncle: While D.C. regulators were setting up the acid rain program, southern California regulators were busy forming the REgional CLean Air Incentives Market to reduce the main ingredients in the Los Angeles basin’s soupy smog. There are lessons to be learned from the program’s successes and failures, regulators admit. In fact they compiled a long report on the subject.

Set up by the South Coast Air Quality Management District in the early 1990s, the aims were sweeping: slash emissions of nitrogen oxide (NOx) by 70 percent and sulfur oxide (Sox) by 60 percent from refineries, power plants, chemical plants and other major polluters, as part of the push by the region to meet tough federal limits on deadly air pollution by 2010.

Again, the language sounds familiar: “RECLAIM is a revolutionary new approach to air quality regulation. This program has the potential to clean up our air more effectively than traditional regulations by harnessing the power of the marketplace,” reads an agency fact sheet.

In reality, the program suffered major problems early on, including a bad case of fraud by a rogue emissions trader, recession pressures, and worst of all, the state’s electricity deregulation crisis in 2000 and 2001. Eventually it stabilized, and the targets were met and extended.

But William J. Kelly, co-author of “Smogtown: The Lung Burning of Pollution in Los Angeles,” who worked at the agency when RECLAIM was being set up, said if AQMD had stuck with existing regulations that required Southern California Edison, Los Angeles Dept. of Water and Power and others to install state-of-the-art pollution controls by the mid-1990s, the region’s air would have been cleaned up far faster. Instead, with the region in a deep recession and companies lobbying for less costly regulations, pollution credits were over-allocated. With plenty of credits to meet the cap, the major utilities and everyone else stalled on making costly improvements.

“We did give more generous allocations than we should have,” said Jill Whynot, director of strategic initiatives for AQMD. Still, emissions levels dropped slightly each year, thanks to the cap. But when the electricity crisis and the threat of blackouts hit, power plants cranked up their dirty, old equipment to maximum levels. Prices for credits shot skyward, and the cap was eventually ignored, with levels of nitrogen oxide skyrocketing above legal limits in 2000. After a few years, the program began achieving steadier reductions.

But Southern California today is still the nation’s most polluted air basin, with as many as 16,000 premature deaths a year due to air pollution. Environmental justice advocates in particular despise RECLAIM and a second “priority reserve” credit program, saying they allow big polluters like power plants and refineries to continue belching out deadly air pollution by buying credits from facilities elsewhere.

Local regulators say that is not the whole story. They say that apart from a few crisis years, the program has worked. They point out that the lion’s share of the remaining pollution in greater Los Angeles today comes from diesel trucks, trains, ships and planes, which they are not allowed to regulate under state and federal law. Whynot said there are other regulations in place to rein in localized pollution, said Whynot, and there is simply no way to satisfy the concerns of environmental justice critics who will never embrace emission trading. There are proposals in the works to try to shave another 20 percent off SOx still emitted by major polluters, using cap and trade.

“I think, personally, RECLAIM takes a lot more heat than it deserves. Even during the early years, when allocations were high, emissions were lower,” said Barbara Baird, district counsel for AQMD. “But if there was anything at fault, it was the early allocations. People didn’t think ahead that there was going to be a point where there would no longer be enough credits. And that’s why we have in our lessons learned (report) that people don’t necessarily behave the way you think they will.”

Janet Wilson is a senior fellow at USC Annenberg’s Institute for Justice and Journalism, and a veteran environmental reporter based in California.

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  1. ldmstr Posted 10:07 am
    28 Jun 2009

    Its amazing???  Greenies gone wild!!!  Again the libs in Congress have over reached and attempted to pass the all or nothing enviro bill.  The House wil of course pass it but the Senate will balk.  Spending billions to please a minority of activists is always the best way to make things happen with the enviromental problems we have.  Forgetting that the rest of the world do not have the billions to spend and we will be the only country to make the effort at risk to our economy and life style.  Yes we could change the way people think in the US but with the materialistic lifestyle we live there will be a limited response to the cry for change.  The best we can look for is a slow change in peoples minds while investing in change one step at a time.  Electric technology is not ready to take over for oil based fuels so a transition from gasoline to compressed natural gas to hydrogen to all electric is possible, but if you think you can force Americans to change look in the mirror and see that you yourselves will not change your minds on "Global Climate Change" without a fight, so where is the middle ground???  Its not an all or nothing argument.  Make the changes slowly making it affordable for everyone to get on the same road, and maybe we will get where we all want to be in the future.  Keep pushing all or nothing and we all loose.

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    1. OrganicCat Posted 8:06 am
      29 Jun 2009

      I think it's clearly evident that event slow changes get pushed back by the party of No.  Hard pushes are necessary for many reasons, one of which is because we can't sustain ourselves at our current level of consumption of resources and another (more obvious one) is that things get watered down so much that if we tried to implement "little" changes they'd be watered down into non-existence.  Larger pushes get changed into what we have here, not what we want, but better than nothing.  Could they try a more bi-partisan effect, maybe reducing the changes a LITTLE bit?  Probably, but in my (admittedly bias) opinion, we don't have the time to squabble over the pork and beans of it, we need to do it in a rational, efficient manner taking the vast majority of scientific evidence into account.As for the electrical comment, I kindly ask that you show evidence that electrical technology is somehow not up to standard for being able to replace current technology at the drop of a hat.  The only thing holding those technologies back are the money grubbing companies making billions off their old technology.  Fat lot of good that did them (like GE).

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  2. Clifford Wells's avatar

    Clifford Wells Posted 3:17 pm
    28 Jun 2009

    How to fix the cap 'n' trade of the old SO2 program, and similar ozone programs such as for NOx?  To me that issue can be resolved to some extent by imposing a "green tax" on the credits.  Often these are expressed as a percentaage such as 15%.  So if you document 100 tons of reductions, you actually get a credit for 85 tons.  One could increase the green tax higher.I didn't get all the way through your article, but another problem was on the issue of "allowances."  Back in the day, air pollution permits had a "maximum emission rate" expressed in watts, BTU, resulting pollution, etc.  These allowances were set very high, assuming dirty fuels such as coal or Bunker-C fuel oil.  All the company had to do was to convert to natural gas or import some Wyoming coal and the problem disappeared overnight - instant credits of thousands of tons.  I am not sure if the Waxman bill allows such gaming of the system.You can bet the lawyers will have a field day with this hot potato though, since they get to comment and sue over any agency regulations in addition to the Congressional votes.  Things should be interesting this fall when the Senate debates the bill, and then EPA and other agencies have to draft regulations such as an "advanced notice of proposed rulemaking" (ANPR).  Hah, they'll be fighting over the clear meaning of words buried in the thousand-page missive as opposed to "unclear legislative intent."  Oops, did I infer the rule is too dang long and is too darn laden with pork?  Me?? Should be interesting viewing!

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    1. ClaudeB Posted 6:25 pm
      28 Jun 2009

      Clifford, that's the point. The idea was to reduce SO2 and NOx levels. If, by substituting their fuel source, they reduced overall emissions at the lowest cost possible for them, that's exactly the point. The economy is all about incentives and profit is the biggest of all.

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      1. Clifford Wells's avatar

        Clifford Wells Posted 7:16 pm
        28 Jun 2009

        Hard to explain this, but Bunker C and high-sulfur coal was rarely if ever used, and only for "emergency" uses.  These were not normal emissions in the least.  What happened was that during the fuel crisis of the 70s and early 80s, facilities were allowed to amend their permits to use high sulfur fuels in case of a national emergency.  So a unit might go from 20,000 TPY to 35,000 TPY and the upper number became the "allowable" under which you could trade.  Hey, nice to be able to trade off 15,000 tons of SO2 credits at 70 dollars per ton, and not do a darn thing! I don't have a lot of good to say about the concept, no matter how good it sounds.  If it works so well, why are CO2 emissions not being significantly reduced in Europe?  Were folks trading phoney date plam tree and airline miles for credits that were used for extra in Eastern Europe?  From a practical standpoint, such Ponzi schemes never really worked as well as they were advertised. The alternative seems to be a carbon tax.  Excuse me, since when did a tax every help anybody?  I believe in helping the needy and stuff, but with a carbon tax?  You must be crazy.  The way to limit CO2 is by restricting CO2 and other greenhouse gas emissions in terms of grams per mile, pounds per million BTU, pounds per therm or million cubic feet of natural gas, grams per kilowatt-hour, kilograms per tonne of fuel, or whatever rate-based measure you can find.  Plain and simple. that's how you do it. 

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  3. Tr2828 Posted 6:20 am
    29 Jun 2009

    Look at the picture is being güvenlik kabini used gasoline in the  United States.

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  4. bmengr Posted 5:32 am
    08 Jul 2009

    We don't have to perfectly account for carbon emissions at the beginning.  Why not start with the easiest measure, which would require permits to sell fuel, give credit for carbon capture, and include the effects of large-scale agricultural activities?  Fine tuning the system could give bonuses for actions that will reduce carbon emissions in the future or take into account smaller actions (and the prospect of a cap being implemented could encourage people to use current, uncapped energy to make more solar, wind, etc devices).From the consumer's perspective, the costs are just built in, so there's no paperwork to be done.  When you pump your gas, the seller will have arranged for permits to cover its use.I'm certainly worried about the potential giveaway of billions of dollars worth of carbon permits to the energy industry, given corruption trends. If we imagine that it is politically possible to have a 100% auction system, however, there would be no reason for companies to pretend to be worse than they are, and thus there wouldn't be a "bunker coal" situation.  Two problems solved at once!  If money from the auction were distributed equally to all American citizens and maybe permanent residents, those consuming the least would come out ahead and there would be better incentives to reduce all around. It will be important to have the infrastructure in place for taking more dramatic action if it does turn out to be needed, or increase the cap if the earth is doing 'ok' and the models start looking more livable.  There's no reason auctions couldn't be held quarterly or even more often, and this would allow a rapid response to actual results.Cap and trade will increase costs or some people, but it will also reduce the extent to which the costs of consumption are externalized and produce a system that is more fair to those who use less.  The tradeoffs between different consumer choices will shift, so that a decision that is best for the environment is more likely to also be better for the purchaser's bottom line.  Hopefully water usage and trash production will also factor in somehow, so that these metrics don't worsen.Remember, we're not just talking about climate change.  Ocean acidification will probably cause the elimination of shellfish, reduce fish production, and kill off reefs - all within the lifetimes of most people here.   Personally, I like being able to eat fish.

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