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PRI's Environmental News Magazine

Emissions Credits Follies

Air Date: Week of March 6, 1998

Some folks say free market approaches have enormous potential to help improve air quality and spur investment in cleaner energies like wind, solar and hydro-power. Others, like commentator Michael Silverstein, call some of the recent economic incentive proposals pure folly. Commentator Michael Silverstein is with the Philadelphia based consulting firm - Environmental Economics.

Transcript

CURWOOD: A senior White House economist says the average US household would pay $70 to $100 a year extra in energy costs if the nation implements the global warming agreement crafted in Kyoto this past December. In the first step of what's expected to be a long and protracted effort to convince Congress to ratify the treaty, the head of the President's Council of Economic Advisors told lawmakers that one key to holding down costs would be an international emissions trading program in which industries and governments can buy and sell the right to pollute. Some folks say this free market approach has enormous potential to help reduce the emissions of greenhouse gases and to spur investment in cleaner energies like wind, solar, and hydropower. But others, like commentator Michael Silverstein, call the idea pure folly.

SILVERSTEIN: There's nothing quite so powerful in Washington these days as a bad idea whose time has come. Like trading emission credits. This right to pollute for a price is billed as a way to harness the free market, to bring into being innovative, cost-effective solutions to clean the air. It's nothing of the sort. As a sulfur dioxide emissions trading program operating in the US has shown, no company ever invests serious time or money in targeted efforts to create salable emission credits. What actually happens is that as a natural consequence of certain business decisions that would be made anyway, like closing facilities, installing new equipment, or changing a fuel source, a company's pollution output is reduced.

Under the emission trading umbrella, this creates fake assets that can then be sold to other companies that find it inconvenient to reduce their own emissions for several years. If practiced on an international scale, trading emission credits would not only keep this country's air dirtier than it should be, it will retard development of a domestic market for scores of 21st- century technologies. It will foster even more corruption among recipient foreign factory managers who will fast become experts in Potemkin greenhouse gas projects. It will provide endless opportunities for academic bean counters to gauge whether 87 pine trees in Patagonia are an adequate greenhouse compensation for a ton of CO2 emissions in Missoula, Montana.

What's the great appeal of pollution credit trading inside the Beltway? It's being strongly lobbied for by the same commission-seeking brokerages that contribute so generously to political campaigns of both parties. It comes packaged of free-market solution, a wrapper guaranteed to cause government officials to go glassy-eyed and loose-lipped. Perhaps the greatest appeal of this inherently silly exercise is that it creates the illusion of policy when no policy in fact exists.

Pollution credits are environmental da-da. They are a fundraising mechanism, a clean-up cop-out. If trading the right to pollute is indeed this administration's core initiative to checking domestic and international air pollution in coming years, this administration's always half-hearted environmentalism is well on its way to achieving near-total irrelevance.

CURWOOD: Commentator Michael Silverstein is with the Philadelphia-based consulting firm Environmental Economics.

 

 

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