21. How to Sell Pollution for Profit

Sources: Multinational Monitor, PO Box 19405 Washington, DC 20036, Date: June 1992, Title: "Selling Pollution," Author: Holley Knaus; Associated Press, 50 Rockefeller Plaza, New York, NY 10020, Date: November 5, 1992, Title: "L.A. Incentives to Clean Air; Credits Traded for Less Pollution"; Santa Rosa (CA) Press Democrat

SSU Censored Researcher: Kenneth Lang

SYNOPSIS: In early May 1992, the Wisconsin Power and Light company sold "pollution credits" to the Tennessee Valley Authority (TVA) for about $3 million. In effect, this deal gave TVA permission to spew into the air an additional 10,000 tons of sulfur dioxide, the primary source of acid rain.

The sale, the first to be implemented under the pollution credit trading system, authorized by the misnamed 1990 "Clean Air Act," was hyped by the media as an example of using market forces to control pollution. Outside of environmental groups, few questioned the dangerous precedent set by this deal.

The act sets ceilings on the amount of sulfur that polluters will be allowed to emit after 1995; then, incredibly, if a plant reduces its emissions more than required, it can sell its "extra" emissions reductions to another plant that fails to reduce its emissions to the required level.

Critics say the pollution credit program is based on the fundamentally flawed premise that a certain level of pollution is acceptable. "Clean air should be protected, not traded and sold like a used car," says Chris Blythe of Wisconsin's Citizens Utility Board.

Pollution credits serve the interest of polluters, at the expense of consumers, the environment and public health, in several ways:

1. Pollution credits undermine positive effects of straight regulation; under this system, instead of buying smoke scrubbers, companies buy the right to pollute.

2. Since allowances are based on past fuel use and emission rates, companies that polluted excessively received the biggest allowances. It is thus possible for these companies to profit the most by selling credits.

3. Since the right to emit pollution has been turned into a commodity, the federal government, in effect, has handed over valuable assets to polluters.

4. The system allows companies who are doing well financially to buy the right to pollute indefinitely, forcing the public to keep breathing the toxic fumes.

Unfortunately, the idea is spreading. Canada is considering pollution trading for air and water emissions, and the United Nations has considered a global market for greenhouse gas credits to be bought and sold. And in November, Southern California officials announced. they were considering the incentive program for the nation's smoggiest region-a four-county area (Los Angeles, Orange, Riverside and parts of San Bernardino) involving more than 2,000 pollution sources.

As the Multinational Monitor points out, "The value of human health and the environment cannot be determined by market forces.... U.S. citizens should demand strict limits on polluting sources, much stronger emphasis on pollution prevention, moves toward a total elimination of emissions and the abandonment of a system that turns harmful sulfur fumes into valuable assets."

However, the citizens will not know what to demand if the media don't explain to them that creating a market in pollution, such as the "clean air act" has done, will never clean the air.

COMMENTS: The concept of issuing pollution credits to promote clean air -- allowing polluters to buy and sell pollution -- is one you could expect only from an administration that believed a "trickle-down" theory of economics would work. The only aspect less credible was the media's failure to explain this environmental outrage to the public.

Investigative author Holley Knaus says, "While the subject was covered in the mainstream press, most of the reporting was uncritical of the concept of 'pollution credits' and failed to express the views of those opposed to the idea. The implications behind the idea of pollution markets went unexplored. I am also unaware of any editorial in the mass media that argued against pollution credits.

"The public receives far too little information on benefits given to corporations at the expense of the environment and human health.

"Pollution credits undermine the efforts of those environmentalists working for pollution prevention and emission reductions -- critical reporting on this issue should make clear the opposition of most of the environmental community to this idea pushed by the Environmental Defense Fund. Exposure to the arguments against pollution credits would inform citizens' responses to the idea."

Knaus also points out that utilities particularly those that are buying credits rather than cleaning up their pollution are the ones who benefit from the flawed "pollution credits" concept and the limited coverage given it by the press.