A Critical Conversation on Climate Change ... - Green Choices

lessons unlearned 85Utility Commission had to rule that profits from sales of allowancesshould go to ratepayers, not stockholders. 59 Sulphur dioxide levels inthe US actually increased by 4 per cent in 2003 as a result of the programme’sbanking mechanisms. 60Similarly for Los Angeles’s Regional Clean Air Incentives Market(RECLAIM). Emboldened by economic theory and the Clean AirAct Amendments of 1990 authorising states and local air districts todevelop market incentive programs, Los Angeles industry successfullylobbied local government to replace existing and proposed airquality regulations with a trading programme.The South Coast Air Quality Management District (SCAQMD)allocated pollution allowances to 370 big polluters including oil refineries,power plants, aerospace companies, asphalt batch plants,chemical plants and cement plants. In response to industry pressure,the aggregate number of pollution permits issued was generously setequal to the amount of total pollution that would enter the air duringperiods of peak production and economic boom, when emissionswere highest. Over 40,000 tonnes more permits to pollute with nitrogenoxides (NO x ) and sulphur dioxide were allocated in the first yearthan there was actual pollution.As a result, reducing the number of credits in circulation at first didn’tactually reduce emissions. In the first three years of the programme,the ‘cap’ was tightened by 30 per cent, but actual industrial NO xemissions declined by at most 3 per cent, compared to a 13 per centdecline in the preceding three-year period. In 1999, ambient levelsof NO x actually increased, following a decade of consecutive reductions.RECLAIM arguably wound up reducing pollution moreslowly than previous regulations that assigned control technologiesor emissions levels for particular firms would have done if they hadbeen continued. For example, RECLAIM allocations for NO x weregreater in most years of the program than the comparable allocationsfrom the 1991 Air Quality Management Plan that RECLAIM replaced.Dismantling the previous regulatory regime also took time,costing lives. 61Emissions trading has also slowed down reductions elsewhere. For example,the US required 23 years to eliminate leaded gasoline througha trading programme, a task that took China three and Japan 10,without trading. 62 Even in the short term, the US lead trading programmecan be said to have slowed the phase-out of lead in gasoline.Lead trading allowed refiners that banked purchased lead credits tocontinue exceeding lead limits through 1987, whereas the previousregulation had required refiners to meet the standard by 1986. 63