Reflecting on 2009 from US climate change debates in Congress to the failure of Copenhagen, the task ahead for climate justice movement in the US is more critical than ever for the survival of our planet. More than ever, the consequences of market driven policies such as carbon emissions trading and offsets are jeopardizing the sovereignty and lives of Indigenous peoples in the Amazon and frontline communities in the US living next to toxic chemical plants and refineries.

As we're threatened to face at least a 2 degree rise in global temperatures and potentially more if nations like the US don't reduce their emissions, a key tactic is to debunk the false market driven solutions dominating the US climate debate. Many of the key lessons of the environmental justice movement from the 80s and 90s fighting market driven policies in local campaigns have parallels with today's struggle against market based climate policies. These lessons can illuminate how we can re-shape the discussions around climate solutions in Congress this year.

I would like to share an article from Eric Mann, who was the lead organizer for one of Strategy Center's early environmental justice campaign, Labor/Community Watchdog that brought Black, Latino, and working class communities in Wilmington, CA to directly confront corporate polluters.  The article outlines key arguments why market based pollution trading must be completely rejected as an environmental policy. This is critical if we are to win a rights based solution shaped by popular grassroots democratic participation instead of profit driven environmentalism promoted by the Obama administration, Congress, and mainstream environmental groups.  

Market-Driven Environmentalism-The False Promise

by Eric Mann (Original article printed in Economy & Environment 1992)

"In Los Angeles, the most polluted U.S. city, an "innovative" marketable permitting program to allow companies to buy and sell air pollution credits threatens efforts to improve air quality and jeopardizes public health.  A victory for marketable permitting in L.A. would be a defeat for the environmental movement nationally, and would send the wrong signal to an incoming Clinton/Gore administration that already grossly overestimates the progressive possibilities of business driven social policy.

In 1991, under pressure from Southern California Edison, Hughes Aircraft, Chevron and other corporations, the South Coast Air Quality Management District (AQMD) proposed virtually to scrap its regulatory strategy in favor of a marketable permitting plan beginning with the trading of credits for Nitrogen Oxides (NOx), reactive organic gases (ROG) and Sulfur Oxides (SOx).

The stated rationale is that further ratcheting down of emissions to comply with AQMD rules will drive businesses into bankruptcy or out of the area.  Advocates of pollution trading argue that since the California Clean Air Act requires a 5% annual reduction in the smog-producing "criteria pollutants," why shouldn't we allow business to find the least costly, most efficient ways of meeting those requirements?  Thus, if Company A reduces its NOx by 10% by installing new equipment, reducing output, or finding new chemical processes, it can sell its "surplus" (the amount over the mandated 5% reduction) to Company B that has not reduced its emissions at all.  Since in theory, an overall 5% reduction in the L.A. air basin has been achieved (the average of Company A and B), why is this not a brilliant use of the market to encourage rather than compel environmental progress?  Moreover, according to the plan's advocates, since each year 5% of the total credits will be removed from the trading market, the law of supply and demand will drive up the price of the remaining credits, eventually making their purchase prohibitive.  Thus as companies are unable to buy their way out of polluting, the "market," not the AQMD, will compel companies to invest in new technologies to reduce pollution.

While the problems with the plan warrant a War-and-Peace-length refutation, six points follow.

Marketable permitting counter-poses itself to a supposedly draconian command-and-control system in which heartless bureaucrats harass defenseless corporate polluters.  In actuality, the present regime is a system in which the public, acting through government, demands that business initiative be exercised within socially constrained parameters.  At its best, the process establishes health-based standards, identifies processes and products that are generating dangerous pollutants, and sets goals, timetables, and demands for reductions.  This relatively enforceable process is the only proven effective way to reduce industrial emissions.

The political Right's demagogic attacks on environmental regulation aim to

undermine the legitimate role of government to regulate the profit-driven behavior of specific firms.  It is in the realm of ideology that the buying and selling of pollution is most dangerous - because it discredits the entire theory of environmental regulation in a democracy.         

Strict regulatory enforcement is inherently technology forcing.  Research, development and manufacturing of solar energy, hydrogen fuel cells, non-polluting paints, electric cars, and many other new technologies depend upon strict air quality standards to create a guaranteed market (e.g., the state Air Resources Board’s requirement that 10% of all cars sold in California by 2010 must be zero emission vehicles has prompted the development of an electric car industry).  Ironically, pollution trading will weaken the pressure to evolve new technologies – because, while the theory proposes that the most modern, highly capitalized firms will invest in new technologies in order to sell their reductions, the more likely outcome is that older, already “dirtier” plants (often located in low-income communities of color) will buy their way out of costly new changes.

The AQMD marketable permitting plan is based on at least two spurious scientific assumptions: 1) that it will have no neighborhood-specific impacts; and 2) that air toxins will be excluded from the trading market.  The advocated of the program argue that since the entire L.A. basin will show an annual 5% “average” reduction of ROG and NOx, each “average” person will enjoy an equal amount of environmental improvement.  But what if five oil refineries in Wilmington (a predominantly low-income Latino community) decide to buy their way out of reducing oxides of nitrogen?  Studies at the University of Southern California indicate that NOx as levels similar to ambient air in L.A. cause a depletion of T cells in the immune system and the metastasis of pre-existing cancers.  Since most polluting industries in L.A. are located in low-income communities of color, these “hot spots” will compound the injuries of class and race.

Pollution traders reassure us that there will be no trading of air toxins – chemicals that cause cancer, nerve damage, and reproductive hazards – agreeing that companies should not be allowed to buy their way out of reducing life-threatening emissions.  But so far the AQMD had classified only 49 chemicals as air toxins, while even the tepid federal EPA has so classified at least 189.  Moreover, while arguing that Reactive Organic Gases can be traded, the plan engages in semantic deception, for “reactive organic gas” is a broad category that includes some toxic chemicals, such as benzene, toluene and trichloroethylene.  Ignoring these air toxins may be economically motivated: the more chemicals are traded, the more attractive the market, thus the pressure to “accept” a greater number of dangerous chemicals into the process.

The marketable permitting plan shifts the technical debate from public health and corporate responsibility to economics and finances.  The environmental justice perspective has helped shift the debate into communities (often of color) that are most impacted by the ravages of pollution and contamination and can often most effectively pressure regulatory agencies and corporate polluters. Contrary to some stereotypes, community residents have mastered complex environmental impact reports and health risk assessments.  But under marketable permitting, activists will approach a company and say: “According to your health risk assessments you are emitting X tons per year of dangerous organic gases.”  The company will say: “Well, that’s true, but here is my permit, I bought my way out of the problem”  This will make it even harder for neighborhood specific movements to develop, as public health challenges will be met with the answer, “If you have any further questions, please see my broker.”

Since so much of air quality regulation is based on self-reported data, marketable permitting creates a financial incentive for fraud.  There will be strong financial pressure for potential “sellers” to overstate their reductions and potential “buyers” to significantly understate emission levels.  AQMD enforcement staff acknowledge that monitoring emissions is already grossly imprecise, with most companies under-reporting – and there are no plans for effective compliance monitoring.  With greater profit incentives at stake, reporting and enforcement will become a nightmare.

The critique of marketable permitting cannot be separated from its historical context: our society’s fundamental inability to achieve lasting reform.  Just as the victories of the 1930s labor movement and the 1960s civil rights movements were radically reversed during the Reagan-Bush years, the early victories of the environmental movement have been met by an organized business counter-attack.  In California, following in the footsteps of the Quail Council on Competitiveness, a similar body, headed by Peter V. Ueberroth, was set up.  That body has introduced a spate of legislative proposals to reduce the regulatory authority of the AQMD, the CAL EPA, and other agencies.

Today, the debate about national environmental policy (of which marketable permitting is just one reflection) must begin with the word that is anathema to marketophiles – planning.  For the role of government, rather than validating and replicating the worst abuses of a market system, is to compensate for its irrationalities and inhumanities – shaped by popular democratic participation from the bottom up.  In campaigns for worker and community right-to-know, in the direct confrontations between impacted communities and corporate polluters, and in direct challenges to the madness of profit-driven environmentalism, a reinvigorated environmental movement can reorient itself, and provide some leadership to a new administration in Washington."