Peace and Environment News* September 1997
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Peace and Environment News * September 1997 |
by David Mills
A pilot industry-based project has been initiated in Ontario to demonstrate the advantages of an emissions credit trading system to reduce smog in the Quebec-Windsor corridor.
The Pilot Emissions Reduction Trading (PERT) project began in 1995. Participants include Dofasco, Ontario Hydro, Stelco, John Deere Ltd., and others. PERT, which will end in March, 1998, is also being studied by the Ontario Ministry of Environment and Energy.
Emissions trading was conceived in the United States during the 1960s, but not put into practice until officially sanctioned by the 1990 Clean Air Act. Emissions trading encourages industry to get involved voluntarily in environmental control: a company can sell pollution credits to another company within a designated area. A company earns credits for keeping pollution below a certified level. It then sells them to another company less able to comply with emissions control standards. Meanwhile, emissions controls are tightened, which leads to fewer credits available and an increase in their price. Less emissions-efficient companies will find it cheaper to overhaul or replace their systems than to buy the now more expensive credits. In addition, the seller of credits "retires" (does not sell) 10 percent of its overall credits, thereby avoiding some potential pollution.
Through emissions trading, industry can reduce its pollution output within a profit system. Voluntary participation means that industry can gradually, and less expensively, install anti-pollution technology without the government having to regulate them directly into doing so.
The emissions credit trading system has had good results in several American states during the past 5-7 years. The southern California RECLAIM program, started in 1993, has cut industry's compliance costs in the smoggiest region of the U.S. Emissions trading has started in New England, and several interstate credit exchanges have been set up. Pollution credits are currently sold on the Chicago Stock Exchange.
Critics cite difficulties in determining the overall level of allowable emissions. Others question the morality of allowing toxic waste to be traded for profit. One concern is that industry, if allowed an increasingly voluntary role in emissions reduction, might attempt to reshape and eliminate government legislation.
In Ontario, international credit trading has already begun. Ontario Hydro sold credits to Detroit Edison in 1996. Other credit exchanges are in preparation, involving Ontario, the U.S. and Quebec.
In Metro Toronto, the Vehicle Retirement and Recovery Program pays car owners $400 to turn in their older, more polluting models. Ontario Hydro withdraws those cars from service and converts them into pollution credits. Through a similar program begun by General Motors in the U.S., companies research which cars cause the most auto tail-pipe emissions. Brokers approach the owners of the cars with a deal: sell the cars to them or install anti-pollution devices, all on a voluntary basis. Cars sold to brokers are turned into pollution credits bought directly by companies or sold on the open market. This program has had good results in reducing the number of polluting cars on the highway.
Credit exchanges have even been proposed on a global level. An international carbon tax would encourage industries to pollute less. Developed countries would remit part of the taxes they receive to Third World countries to help them reduce their emissions.
David Mills is on the PEN Editorial Committee.
Converted January 28, 2000 - Lg
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