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Blog Posts: Pollution Trading

December 13th, 2013

It was a Bad Idea in 1489…

By Eve Mitchell

Some things get better with age — fine wine, farmhouse cheese. Some just don’t.

It’s all the fashion these days to talk about a “new” way to ensure that companies involved in food production are held accountable for the environmental damage they do. Often called natural capital accounting or offsetting, the theory is that if we attach a notional price to, say, healthy soil and clean water, then companies can use that information to account for any damage they do, or be somehow rewarded for avoiding this damage.

Among the several difficulties with this approach are that (a) it isn’t new and (b) it doesn’t work.

To the folks promoting this stuff: please convince me that this isn’t an extension of the Enclosures and Clearances on a global scale, because it sure feels like it. Read the full article…

September 25th, 2013

Will Ecuador’s President Correa Shoot the Trees in Yasuni National Park?

By Ron Zucker

Photo provided by Sageo at Wikipedia Commons.

Ecuador hosts the Parqué Nacional Yasuni, a 3,800 square mile park of singular beauty and biodiversity and home to many indigenous people. Remote and situated at the intersection of the Andes, the Amazon region and the equator, this rain forest is one of the world’s wildest places. Unfortunately, it also sits on top of a bed of oil that, in 2007, was valued at $7 billion. That made it potentially worth more to Ecuador devastated and drilled than it was as a park. So President Rafael Correa came up with an idea.

There is a lot of talk, particularly at the World Bank and other world economic leaders, of “Payments for Ecosystem Services.” Under this theoretical framework, we’ll turn our natural resources into a bank and actually pay Ecuador for not drilling. You heard that right. To protect a national park, citizens would need to pay-off those those who seek to destroy it for profit. Read the full article…

California’s Shell Game Begins

By Elizabeth Nussbaumer

pollution tradingOn September 17, 2013, the California Air Resources Board announced they would begin issuing offset credits as part of their cap-and-trade market, which launched in January 2013.

Under California’s cap-and-trade market companies can meet their pollution targets by directly reducing emissions at the source, updating technology to be more efficient, or by purchasing excess emissions credits from a company with a surplus of credits.

Each company participating in the market is allowed to emit a certain amount of pollution and allocated an equivalent amount of credits to do so. However, if they want to emit more than what they are allowed, the company must purchase “unused” emissions credits from other polluters. But, these companies can also purchase offset credits.

What is an offset and what does it have to do with emissions reductions? An offset credit allows a company in California to pay for an emissions reduction that can happen elsewhere in the United States, instead of reducing emissions at the source in California.

A polluter in California could pay a landowner in Oregon to preserve the forest on their land. This is considered an offset because trees take carbon dioxide (CO2) out of the atmosphere. When trees are cut down they release CO2 so, according to the general rules of carbon offsets, not cutting them down counts as a prevented emission, which allows the company in California to qualify for an emission reduction. Read the full article…

April 5th, 2013

Ecuador Auctions Off Amazon to Chinese Oil Firms

Common ResourcesBy Mitch Jones

Sometimes the news reads like an edition of The Onion. Last week, The Guardian reported that Ecuador is looking to auction of as much as 3 million hectares of Amazon rainforest to Chinese oil companies. That’s 37 percent of the total rainforest in the country! And, indigenous leaders whose land is being sold out from under them have not been consulted in the process, despite a constitutional requirement that the government do so.

This is another example of outrageous land grabs taking place around the globe in which locals are being shoved aside for the interests of large corporations. Something similar is happening here in the U.S. with the development of shale oil and gas.

Developing this land for resource extraction will devastate the local environment; cut down forest for well pads, roads, and pipelines; and potentially lead to pollution of local waterways. At the same time it will undermine the indigenous groups’ way of life.

This latest attempt to exploit Amazonian forest for oil exploration comes only two years after a court ruled that Chevron had to pay indigenous farmers $8.6 billion in reparations for polluting the Amazon forest.

With such a history of environmental disaster, why would Ecuador be actively courting Chinese oil companies to drill for oil? It’s possible Ecuador’s $7 billion debt to China plays some role, as well as China National Petroleum Corp’s negotiations to buy a 30 percent stake in Ecuador’s Refineria del Pacifico oil refinery, which is expected to export up to 60 percent of the oil refined at it.

October 18th, 2012

Let’s Get Our (Clean Water) Act Together!

What’s a Great Way to Celebrate the Clean Water Act? Protect it From EPA’s Pollution Trading Provisions

Photo by Joesparks at Dreamstime.com.

By Rich Bindell

Today marks the 40th anniversary of the Clean Water Act. This critical piece of legislation has been fraught with challenges, even from the time of its inception. President Richard Nixon, who pushed hard for the legislation, actually had to veto the Clean Water Act in October of 1972 due to budgetary concerns. Congress eventually overrode the veto and the Act became law on October 18, 1972. The law was created to regulate water pollution with the ultimate national goal of completely eliminating all pollution into public waterways. While hugely successful, the Clean Water Act now faces another threat, its biggest in 40 years: the EPA’s attempts to gut strong regulations that worked and replace them with unproven pollution trading provisions.

The Clean Water Act begins with the idea that it is illegal to pollute and, as a nation, we should strive to eliminate water pollution from our lakes, rivers and bays. Unfortunately, the fundamental principal behind the Clean Water Act is often ignored. Water pollution trading schemes are a disastrous substitute for proven means of regulating harmful chemical discharges into our waterways. These schemes are part of a market-based approach to cleaning the environment.

Recently, the financial market has turned its interests toward public resources, including water. Market-based “solutions” to the problem of pollution are based on a system of credit accumulation that allow polluters to amass the “right” to pollute and trade that right as if it were a commodity. These broker-driven deals are promoted using phrases like, “cap-and-trade,” “free-market solution” and “internalize the externalities,” but they are merely carving a place for pollution into the cost of doing business. They give polluters leeway to pollute by creating a market for it. Read the full article…

October 5th, 2012

Fighting Pollution Trading to Preserve the Clean Water Act

By Wenonah Hauter

Wenonah Hauter, Executive Director, Food & Water Watch

This week, Food & Water Watch and Friends of the Earth filed a joint lawsuit to force the Environmental Protection Agency to preserve the integrity of the Clean Water Act as it turns 40 years old this month. Represented by the Columbia Law School’s Environmental Law Clinic, we are suing for the removal of the water pollution trading provisions that are part of the 2010 plan to clean up the Chesapeake Bay watershed.

This cap-and-trade plan for water, known as the Bay total maximum daily load or TMDL, is being promoted by both the EPA and the U.S. Department of Agriculture, both of which view the program in the Bay region as a national model that would be replicated in watersheds across the nation. But if this scheme is allowed to move forward it will allow new and increased pollution discharges into the Chesapeake Bay watershed under a complex system of market-based offsets and pollution trading that we believe is illegal under the Clean Water Act.

Pollution trading violates the fundamental concept that the Clean Water Act is built upon, which is that pollution is illegal and industries don’t have a right to poison our shared waterways. Ironically, this evisceration of the Clean Water Act is taking place as the landmark piece of legislation that was passed during the Nixon Administration is about to have its 40th anniversary. It is built on the premise that we should strive to eliminate water pollution from our lakes, rivers and bays. Water pollution trading schemes are a disastrous substitute for proven means of regulating harmful chemical discharges into our waterways.

And we should be clear that the Clean Water Act (CWA) has been an enormously successful piece of legislation. In 1972, two-thirds of our nation’s waterways were unsafe for fishing. Chemicals and wastewater were indiscriminately dumped into our waterways. Today, according to EPA about one-third of our nation’s waterways are unhealthy. Obviously there is more work to do, but why would we allow such an effective piece of legislation to be replaced by a scheme that essentially legitimizes pollution?

The water pollution trading that is being promoted in the Chesapeake Bay is based on buying and selling unverifiable pollution credits. It turns what is now illegal under the CWA into the right to pollute. It’s essentially an “entitlement” program for the financial services industry and polluters.

The federal plan for the bay that includes trading is based on the total maximum daily load of pollutants that can be discharged and still allow a water body to meet water quality standards set by the states under CWA. These pollutants come from energy facilities, factories and wastewater treatment plants and those harder to control nonpoint sources like many of the Bay’s agricultural operations.

The TMDL is, in the simplest sense, a rationing plan. It seeks to allocate pollution loads to our waterways among the many sources of pollution in the Bay. The TMDL can be an effective tool to reduce pollution, but it must be developed and implemented consistently with the goal to eliminate the biggest threats to the Bay watershed – nitrogen, phosphorus and sediment.

As a practical matter, the trading of pollution credits is inherently fraught with problems.  In this case, EPA is allowing trading without setting clear and enforceable minimum limits on trading activity, including providing safeguards to prevent fictitious or overstated pollution reductions from being used as offsets.

The “pay-to-pollute” trading program allows financial middlemen to identify and purchase nitrogen and phosphorus “credits” from industrial agriculture operations in the watershed that attest to reducing their pollution levels in the future. These unverifiable credits are then aggregated and bundled together, and sold to power plants, wastewater treatment plants and other “point source” polluters who are either unable or simply unwilling to meet their CWA permit limits.

Many states have tried to implement nutrient trading schemes around the country, but there is no documented, successful nonpoint-to-point source trading program implemented in any watershed in the United States.

And, we must look at this trading scheme in context. Rather than regulating pollution, it is part of an on-going effort spurred by the financial services industry of using the market to allocate costs to the environment, rather than using the performance-based indicator of meeting a regulated standard.

But, in the wake of the largest financial crisis in 75 years, one both created and spread by the irresponsible behavior of the financial service sector, the argument that free market-based principles should replace traditional environmental regulation is wrong minded. It represents a financialization of nature and the transferring of the stewardship of our common resources to private business interests. It makes the responsibility of caring for our natural resources secondary to the economic interests of the few.

Leaving the health of the bay to this trading scheme is reckless and it is a recipe for disaster.

September 11th, 2012

Keep Wall Street Out of Our Waterways

By Scott Edwards

Food & Water Watch Report: Bad CreditUp until now the United States has adhered to a public trust approach to our waterways, maintaining that waters were part of the commons—owned by no one and by everyone—and protected for future generations. It was a doctrine that gave rise to a body of water law that holds that no one can mistreat our waterways in a way that injures the rights of others. Public trust provides the underpinnings of our Clean Water Act (CWA), which recognizes that industries simply don’t have the right to pollute. Unfortunately, though, there’s an insidious shift underway in our nation’s water policies that can only mean disaster for the most precious resource on the planet.

As populations grow, water demands increase and industry seeks workarounds from our environmental laws, the Wall Street investment industry is looking for new ways to profit. And what’s the best “commodity” for any investment banker? As Goldman Sachs puts it, “As a necessity for life, there is no substitute for water. It is the only utility you ingest….” For the investment banking industry, water-related death, drought and degradation aren’t calamities; they’re profit opportunities. “If you play it right,” says one hedge-fund advisor, “the results of this impending water crisis can be very good.”

Market managers have been pushing for years to turn our waterways into widgets. Allowing bottled water companies to suck dry our aquifers and facilitating privatization of our water delivery infrastructure isn’t enough. With the latest move to steal away our public waterways, Wall Street’s getting yet some more federal assistance. Read the full article…

August 24th, 2012

Seven Million Taxpayer Dollars Down the Drain

By Mitch Jones

Earlier today, the U.S. Department of Agriculture announced that it is awarding over $7 million in grants to organizations and state agencies across the country to develop water quality trading, or cap-and-trade for nitrogen and phosphorous pollution. Under the guise of controlling pollution, the government is actually trying to give people the option of buying and selling the “right” to pollute.

This is a complete waste of taxpayer dollars.

Water quality trading is nothing new, although the government is pushing to make it the dominant way that we try to control pollution in our waterways. In fact, over the past 20 years, few if any trading schemes have delivered positive results. Delmarva Poultry Industry, Inc., the trade industry for the poultry industry in the Chesapeake Bay watershed, knows the real effect of water quality trading. In their June 2010 newsletter, they described the idea as “a program … to help farmers earn money while providing polluters with the opportunity to increase their pollution to the Chesapeake Bay and its tributaries.” And taxpayers subsidize it all. 

Water quality trading is really just a way for the government to avoid regulating pollution in our waterways while turning over its responsibilities to financial interests. Wall Street bankers are looking for new opportunities to create big bonuses for themselves, and they are turning their sights to our common resources. In awarding $7 million to help make this possible, the USDA is selling out our resources to the Wall Street casino. If you like what they did with the housing market, just wait ‘til you see what they do with our water.