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Public Radio's Environmental News Magazine (follow us on Google News)

Cap and Trade

Air Date: Week of


CURWOOD: It's Living on Earth. I'm Steve Curwood. Chicago is among the many U.S. cities that often flunk federal clean air standards. A key source of pollution is industry's use of solvents and other airborne chemicals, which help form what most of us know as smog. The state of Illinois wants to try a new program to reduce Chicago's smog. It says it wants to issue abatement credits that can be traded among companies so that overall emissions can be cut efficiently. The emissions trading plan would be the first of its kind in the nation. And as Gary Johnson reports from Chicago, it's already sparking controversy.

JOHNSON: The primary goal of Illinois' so-called cap and trade program is to cap or limit industry's total emissions to help the region meet federal ozone standards by the year 2007. Chicago industries that release 25 tons of volatile organic compounds a year are required to participate in the program, which sets a cap at each company's 1996 ozone emission levels. The company then agrees to reduce emissions by another 12 percent. Allotment trading units are issued by the Illinois EPA for these emissions. If at year's end the company reduces more than 12 percent, it can sell its extra credits to a company that has not met its 12 percent goal. John Summerhays is a U.S. EPA environmental scientist in Chicago. He says the program allows the state to set emission limits rather than having the federal government decide how emissions must be reduced.

SUMMERHAYS: What excites me most about the program is that it gives companies the incentive to find new ways of reducing emissions. And in fact, companies have found very novel ways of reducing emissions that we never would have even thought to require in the old system.

JOHNSON: The challenge, goes the market-based argument, is to reduce emissions equitably, so industry, regional economies, and people's health do not suffer. Modern plants generally have an easier go of meeting standards, while dinosaur facilities face staggering costs to upgrade pollution technology. Alan Jirik is the director of environmental affairs at Corn Products International, just outside Chicago. This year his company sold their extra emission credits. He says the beauty of the program is that industry is rewarded for innovation.

JIRIK: It's very cost-effective. The environment gets what it needs. It gets the 12 percent reduction. But the economy of Chicago is benefited in that we're effecting these very significant reductions at the least possible cost. Which means goods and services are not impacted. The business climate is more positive. You don't have a very Draconian condition where companies are either leaving or not expanding.

JOHNSON: Some environmental advocates, meanwhile, want to be sure trading is not simply a shell game that shifts pollution to low-income neighborhoods where most older plants are located. Joanna Hoelscher is a policy analyst with the Chicago office of Citizens for a Better Environment. She appreciates the cap on total emissions, but wants assurances that pollution credits will be tracked accurately, and that trading be an apples to apples exchange of pollutants.

HOELSCHER: This is the first time ever that U.S. EPA has suggested approving a state program that would allow the trading of toxic air contaminants. And that's where the real problem lies. Because we're allowing companies to trade chemicals that are not equal. Some VOCs, volatile organic compounds, are non-toxic. Some are a little bit toxic. Some, like benzene, are known human carcinogens.

JOHNSON: The EPA's John Summerhays says there are pollution programs already in place that address toxic air emissions. And the state must review the trading program's effects on low-income areas on an annual basis. The U.S. EPA is accepting public comment on Illinois' cap and trade program until January twenty-sixth. Michigan and
New Jersey are also seeking federal approval for similar pollution trading initiatives. For Living on Earth, I'm Gary Johnson in Chicago.



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