Recently, a friend who does sustainability work for one of the largest defense companies (she will remain anonymous for this piece) brought up the ethical dilemma she faces regarding emissions trading in her industry. Yesterday, in my environmental and ecological regulatory compliance lecture, this issue was seen as one that could not only help companies balance prices overtime without buying new equipment to measure up to new emission plans (buy credits instead!) but also has helped the nitrogen oxygen levels in the United States over the last 15 years.
For those who don’t know, emissions trading is a market based method used to regulate pollution by allowing companies, groups, and individuals (you as well!) to buy and sell emission credits. In the US, the EPA (Environment Protection Authority) decides on the amount of total acceptable emissions and then divides the credits among participants that emit pollutants. If a company or organization emits more pollution over their credit limit they can buy credits from other companies that stay under their credit limit and vice versa.
Why this works
The overall goal of emissions trading is to lower the cap over time towards a reduction target by retiring credits hence lowering emissions. Also, many environmental groups (Sierra Club, Natural Resource Defense Council, etc.) buy credits and retire emission permits, driving up the price of remaining credits. Emissions trading offers significant advantages over regulatory approaches (mainly cost) and most people see this cap-and-trade market as significantly reducing overall emissions.
Why this doesn’t work
Some might argue that companies who have a higher emissions and need more credits are usually in low-income areas, creating pollution in concentrated areas creating a bigger disparity (racially and financially).
While I can see both sides, I still feel that alternate forms of emissions reduction should be measured that consider the community before buying more credits to increase pollution in the surrounding areas.