As long as the initial distribution of the ability to emit is made by way of an auction open to all and subject to a reserve price assuring that society as a whole is compensated, allowing trading does not create injustice but more opportunity to acquire those allowances. Trading therefore makes for a more rather than less just system. Trading disserves environmental justice only where the initial distribution is free of charge and based on a metrics such as existing emissions. Those who have reduced the least or appropriated the greatest portion of the atmosphere would then be rewarded twice.
II. The EJ Criticisms of the RGGI and California Programs
The critics of the Regional Greenhouse Gas Initiative (RGGI) and California auction-cap-trade-and-invest programs make two more specific arguments upon which the critics base their contention that these programs disserve environmental justice. First, these critics argue that these programs harm the poor by increasing energy prices, and that this will have a disproportionate impact on disadvantaged populations. Second, the critics argue that the programs will cause hot spots that will concentrate air pollutants harming health in disadvantaged neighborhoods. These criticisms suffer because they are unsupported factually and ignore important aspects of the programs that significantly limit any disproportionate impacts on disadvantaged populations.
A. The Criticism Based on Price Impacts
First, critics of GHG emission pricing mechanisms sometimes suggest that GHG emissions pricing is regressive because it will lead to higher energy costs, which hurt disadvantaged communities the most. However, as an empirical matter, it is not at all clear that, for example, RGGI will lead to higher prices. Electricity prices have fallen in RGGI states, and the ways in which costs imposed on fossil fuel generators play through wholesale electricity auction pricing mechanisms for wholesale power, even in a static analysis, are not simple. See, C. Baird Brown & Robert B. McKinstry, Jr., From RPS to Carbon: An Evolutionary Proposal, 50 E.L.R.10755, 10762 (Sept. 2020). Moreover, the all-in cost of new renewable generation is now generally less than new natural gas generation. So as the system evolves to cleaner generation, the overall cost in addition to the marginal costs are most likely to come down. Finally, the general energy price level affects customers primarily through the structure of the utility tariff. If the tariff is regressive, disadvantaged people will bear the brunt of a price rise. That is a matter of concern but falls within the jurisdiction of public utility commissions. It is not an inherent characteristic of auction-cap-trade-and-invest programs and can readily be addressed through traditional utility price regulation.
The other dimension of the auction price effect is the significant GHG allowance auction proceeds that existing states participating in the RGGI and California programs have already directed and will continue to direct to eliminate adverse economic impacts on low-income people. For example, California has raised $14 billion in auctions to date and is required to direct at least 50 percent of those revenues into direct benefits for EJ communities. By directing funds to mechanisms such as subsidizing low-income weatherization, alternative energy, energy efficiency and transportation mechanisms, along with job training, an auction-cap-trade-and-invest program can create a net benefit for disadvantaged communities. This benefit does not consider the considerable benefits to disadvantaged communities resulting from reducing GHG emissions and the disproportionate adverse impacts that climate disruption will have on disadvantaged communities.
B. EJ Criticism Based on Hot Spot Concerns
The second line of attack suggests that a GHG auction-cap-trade-and-invest program will result in concentration of health-harming pollutants in low-income neighborhoods. This argument could have been true for the attempt by the Bush Administration to replace control of hazardous air pollutants from power plants under section 112 of the Clean Air Act with a cap-and-trade-program for mercury only. It is not at all true for a cap-and-trade program for GHGs.
The existing auction-cap-trade-and-invest programs have the principal and critically important goal of substantially reducing GHG emissions to address climate disruption, which has disproportionately high adverse impacts upon disadvantaged populations worldwide. These programs impose emissions reduction requirements above and beyond the requirements to comply with health-based standards for criteria and hazardous air pollutants. Pricing GHG emissions is one of the most effective tools to reduce those emissions. Carbon dioxide dissipates rapidly in the atmosphere and will not, itself, cause hot spots that can lead to adverse health impacts. To the extent that the GHG programs succeed in discouraging continued operation of fossil fuel fired power plants and other combustion sources, they also reduce emissions of other harmful pollutants. These include reductions in acid gases and acid gas aerosols, fine particulates, and metals––all of which can have significant acute and chronic adverse health impacts. In fact, for example, current modeling shows that the expansion of the RGGI program to Pennsylvania will reduce emissions from fossil fuel–fired power plants and cause the closure of many fossil-fired power plants, which can be located in low-income areas, so that emissions of those pollutants are likely to be reduced.
To cause a hot spot, one would need to show that the programs will cause increases in emissions of these other pollutants or building of new plants that affect low-income neighborhoods. Neither is likely, since the worst polluting plants will shut down and, even if new plants are built, they will be subject to more stringent new source emissions standards under sections. The inclusion of other sectors, such as transportation, in the California program will favor low emission or electric vehicles, which will have disproportionately high beneficial impacts on poorer communities that border highways. Thus, the programs will most likely reduce hot spots.
Moreover, the fact that a power plant or other major emitting plant may be located in a disadvantaged area does not mean that its emissions are felt there. Current air pollution control regulations that base air permit emissions limitations on local air quality impacts, requiring that those limits not exceed health-based National Ambient Air Quality Standards (NAAQS). This results in construction of tall stacks that carry pollutants miles away from the source rather than affecting the neighborhoods near the source. For example, in the Cross-State Air Pollution Rule modeling, EPA determined that emissions from sources in Texas would affect air quality in places as far away as Michigan and Pennsylvania.