California Cap & Trade & Environmental Justice

AAEA Supports California's Cap & Trade Program

Most legal challenges to CARB’s cap-and-trade regulations have come from environmental justice organizations that support the act’s mandate to cut emissions but favor a carbon tax or command-and-control style regulation of emissions over a cap-and-trade regime. The consensus within the environmental justice community is that cap and trade favors industry, is subject to gaming, cannot be adequately monitored, and increases the already disproportionate burden on poor communities and communities of color from industrial pollution.

AAEA disagrees with this assessment.  The program can be leveraged if community groups participate in the program.  AAEA is registered in EPA's Acid Rain & the RGGI Greenhouse Gas Reduction Programs.  Representatives of vulnerable communities should register in the programs and leverage offsets to assure reductions of pollutants in their communities. Offsets are voluntary greenhouse gas emission reductions made by entities not otherwise required to participate in the cap-and-trade program, such as a farmer who plants trees that he would not have planted otherwise.

The environmental justice community wants to force CARB to consider taking a more draconian approach to reducing emissions.

The larger environmental community, however, is by no means united in opposition to cap and trade.
Several national groups, including the Environmental Defense Fund, the Natural Resources Defense Council and The Nature Conservancy, support CARB’s cap-and-trade approach.

In June, a state appellate court upheld CARB’s overall blueprint for implementing the Global Warming Solutions Act, known as the 2009 Climate Change Scoping Plan.

The purpose of the scoping plan was to outline strategies for reducing emissions. Among the recommendations in the plan was the development of a cap-and-trade program.

An environmental justice group known as the Association of Irritated Residents (AIR) challenged the scoping plan on grounds including non-compliance with the act.

Most of the arguments AIR raised were technical: CARB did not consider the maximum technologically feasible reductions, as required by the act; CARB failed to apply a cost-effectiveness standard, as required by the act; and CARB failed to include direct regulation of agriculture and industry in the scoping plan. The court, however, found that the California legislature had granted CARB broad discretion in implementing the act. The court further found that CARB’s scoping plan was based on extensive technical expertise and review, as to which the court afforded deference.

Courts most likely will find that CARB was given broad discretion in writing the cap-and-trade regulations and, thus, will defer to the agency. A state court recently had that opportunity because two environmental justice groups brought a legal challenge to the cap-and-trade regulations, heard in November.

The case, brought by Citizens Climate Lobby and Our Children’s Earth Foundation, challenges the offset protocols adopted by CARB as part of the cap-and-trade regulations.

Offsets are voluntary greenhouse gas emission reductions made by entities not otherwise required to participate in the cap-and-trade program, such as a farmer who plants trees that he would not have planted otherwise. Offsets are permitted under the act, but they must result in reductions that are in addition to emission reductions already required by law or that otherwise would occur under normal conditions. This is referred to as the additionality principle. The suit challenges whether the offset protocols adopted by CARB meet the additionality requirement. Offsets are a significant issue because electrical generators and utilities in particular expect offsets to be a key tool in meeting compliance requirements.

Several California investor-owned utilities—Southern California Edison, Pacific Gas & Electric Co., San Diego Gas & Electric and Southern California Gas Co.—have intervened in support of CARB.

The Environmental Defense Fund, an advocate of cap and trade and offsets, also intervened in support of CARB, as have entities who hope to profit in the offsets market.

If CARB is prevented from using offsets, compliance with the emissions cap will become more difficult. A decision either way by the court almost certainly will be appealed, so it might be a long time before this issue is resolved.

The other pending challenge is an administrative proceeding before the Environmental Protection Agency brought by, among others, the Center on Race, Poverty & the Environment. People living within six miles of facilities regulated under cap and trade are disproportionately poor and people of color. The plaintiffs contend that if greenhouse gas emissions from these facilities were directly regulated, there would be a reduction in co-pollutant emissions (particulate matter, nitrogen oxides and volatile organic compounds), which threaten public health. The complaint argues that co-pollutant emissions could increase as a result of the use of offsets and, thus, cap and trade disparately and adversely affects communities of color.

A successful assault on CARB’s cap-and-trade regime simply would send CARB back to the drawing table either to modify the existing regulations or to formulate a new approach. The mandate to reduce greenhouse gas emissions significantly will not change. (Electric Light & Power, Nov/Dec/2012)