Harmonizing Environmental Justice With Cap & Trade

PRESIDENT'S CORNER

By Norris McDonald

Environmental justice groups normally oppose cap and trade in climate change mitigation legislation and regulations becuase they believe it leads to disproportionate impacts - - that is, older, dirtier plants will remain open in minority communities while credits are amassed via newer facilities outside of these areas. They believe that so called 'Hot Spots' will continue to expose minority communities to disproportionate levels of air pollution.

AAEA has shared its solution to this problem to members of Congress and at EPA. Our solution is inclusion of an Environmental Justice Allowance Reserve (EJAR) in any cap and trade program.

AAEA believes climate change legislation and regulation will need to address environmental justice concerns related to the perception that emission trading programs cause disproportionate pollution from older, dirtier plants to negatively impact low-income and minority communities. There is also widespread belief that global warming and climate change will disproportionately affect low-income and minority communities. Some environmental justice groups oppose cap-and-trade programs.

AAEA is recommending an Environmental Justice Allowance Reserve (EJAR) to address the racial 'Hot Spots' issue. These allowances would come from a special reserve, similar to the current Acid Rain Program Renewable Energy and Conservation Reserve, when the initial allowance allocation is made. They would be awarded to utilities, automakers and others that undertake environmental justice practices and programs designed to mitigate or prevent price shocks, increase the installation of pollution control equipment, promote community education and enhance health-related activities. Utilities and automakers could choose to work with organizations and businesses that conduct environmental justice activities related to climate change mitigation and reductions in emissions of sulfur dioxide, nitrogen oxides and mercury.

As an alternative to legislation and as an insurance policy in case climate change legislation does not pass, AAEA has developed a voluntary EJAR program that provides a platform for utilities, automakers and communities to address and influence the Hot Spots issue. Any utility, automaker or citizen can: sell to, donate or purchase compliance allowances from, the voluntary AAEA-EJAR or otherwise support the EJAR program. AAEA is currently meeting with interested stakeholders to develop EJAR projects.

AAEA has also developed emissions trading platforms to directly facilitate exchanges. The Green Carbon Bank (GCB), Carbon Mercantile Exchange (CMX) and Carbon Dioxide Reduction Program (CDR) are available to facilitate emission free projects. AAEA has been registered in the EPA Acid Rain Program for years.

The AAEA EJAR program will leverage allowances and resources to promote environmental justice practices and projects designed to:

Increase the installation of pollution control equipment,
Promote community education and
Enhance health-related activities.

Allowances are fully marketable commodities. Once allocated, allowances may be bought, sold, traded, or banked for use in future years. Allowances may not be used for compliance prior to the calendar year for which they are allocated.

Participation in the EJAR will clearly show that a utility or automaker is exceeding emission compliance and is willing to include AAEA in the emission trading market. Significant participation in the EJAR will indicate that a utility's or automaker's units are not Hot Spot plants or emissions contributors. AAEA will publicize the EJAR participant list and projects.