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Pollution Trading: Making Crime a Commodity
A scheme promoted by industrial interests will help destroy, not save the Chesapeake Bay
Pollution trading is being promoted by industry and industry-funded nonprofits alike as a solution to managing offending pollutants in our waterways. Nowhere is this a bigger problem than in the Chesapeake Bay, which is literally dying from agricultural run off from the powerful poultry industry there.
Despite being better known for killing cap-and-trade legislation to address greenhouse gas emissions, industry in general has long been a big supporter of such market-based approaches to pollution control because it’s simply easier than actually cleaning up their operations and reducing pollution. Take, for example, back in 2005, when George W. Bush’s EPA finalized a market-based approach to allow for the non-control of mercury emissions from coal-fired power plants. In truth, the trading of mercury pollution wasn’t EPA’s idea at all; it came from a law/lobbyist firm in DC called Latham and Watkins who was retained by many of the coal-fired power plant companies to promote their interests in DC. When Bush came into office, a senior L&W lobbyist, Jeffrey Holmstead, wheeled his office chair over to EPA headquarters to sit at his new desk as the Assistant Administrator for Air.
Holmstead worked for EPA in title only—the fact is he never stopped working for his industry clients. Along with his chair, Holmstead brought over to EPA a briefcase stuffed with his legal memos about how to deregulate the coal industry and relax pollution controls. At the top of his wish list was a plan to implement a “cap and trade” scam for the tons of mercury billowing out of his clients’ smokestacks. His underhanded efforts resulted in one of the most blatantly illegal EPA rules, known cynically as the Clean Air Mercury Rule (CAMR), ever promulgated by the Agency.
Back then, the environmental community rose up and unanimously condemned the free market approach to pollution non-control. Many went to court. Among their primary arguments against trading was that the section of the Clean Air Act that regulated mercury simply did not allow for the wheeling and dealing of pollutants. They also argued that trading would create “hotspots” of pollution. Eventually, in 2008, the court did what it had to do and found Holmstead’s CAMR to be illegal and the environmental community stood and cheered as one.
As the saying goes, that was then, this is now. Today, the coal-fired energy sector, through its trade group, the Electric Power Research Institute (EPRI), and much of the environmental community seemingly stand together to embrace market approaches and financial incentives to pollute our public trust waterways.
The federal government is playing cheerleader for pollution trading as well. In August of 2011 the United States Department of Agriculture handed EPRI, an organization with revenues in 2010 of over 387 million dollars, one million dollars to jumpstart a nutrient water trading program in the Ohio River Basin. Why EPRI? Because EPRI’s power plants emit levels of nitrogen that are destroying the Ohio River watershed, even down to the Gulf of Mexico. Faced with increasing pressure to reduce these devastating nitrogen levels, industry has figured out that a nutrient trading charade will allow them to keep pumping out nitrogen at current, or even greater levels, while pretending to be doing something good for water quality in the Ohio Basin.
Despite being better known for killing cap-and-trade legislation to address greenhouse gas emissions, industry in general has long been a big supporter of such market-based approaches to pollution control because it’s simply easier than actually cleaning up their operations and reducing pollution.
In the Ohio scheme, EPRI’s members buy their nitrogen pollution credits from Ohio Valley agriculture operations that swear on a stack of self-serving self-certifications submitted to state ag agencies that they’ve reduced their own nitrogen discharges. Of course, with no monitoring system in place, none of the reductions are ever really verified. It’s a whole new kind of farmers market for the 21st century – green apples, summer squash and sham nutrient credits.
In the Chesapeake, USDA didn’t have EPRI to jumpstart a nutrient trading program because nitrogen-spewing power plants just aren’t as prevalent in the Bay watershed as they are in the Ohio Valley, so last year the EPA played along and placed a trading component into the Bay Total Maximum Daily Load. Then USDA announced that it was spending up to 10 million dollars to promote trading in the Bay watershed. And this time some of the biggest proponents of trading in the Bay aren’t industry, but many of the same environmentalists who decried the trading of mercury just a few years ago.
That shift to market approaches to water pollution can only mean bad news for the Bay and watersheds across the country. Putting the illegality aside, there is simply no support for the position that nutrient trading will clean up the Bay. Water pollution trading is built on the misguided premise that polluters have the right to destroy our public waterways and we need to create an equally false market incentive to get them to stop turning a crime into a commodity. It’s been used elsewhere and never been shown to be effective anywhere. It allows unverified claims of nutrient reductions from nonpoint sources of pollution and it’s fraught with the potential for purposeful industry mismanagement in the point source sector. Keep trading as a part of the Bay clean up plan, and there is little doubt that the Bay will continue its not-so-slow decline into extinction.
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14 Comments so far
Show AllExcellent article! I am so sick and tired of the carbon offsets/pollution trading schemes. They just seem to be yet another greenwashing attempt by big industries to make themselves look better while escaping meaningful regulation. Meanwhile, not only is the health of local communities and ecosystems that are directly polluted by industry impacted, but, in some cases, the "green" activity meant to compensate for the pollution doesn't really do so - I mean, shouldn't the issue be to reduce pollution, across the board, and massively, now that climate change is advancing so rapidly? For instance, with regard to the planting of trees/forests as "offsets": I've heard of cases where indigenous peoples were negatively affected because their traditional uses of land were restricted by the plantings, non-native species of trees were planted, and there was mismanagement of ecosystems in which the trees were planted.
There should be NO escaping regulation of massive emissions/pollution reductions. We live in a time when environmental pollutants of all kinds should be attenuated, everywhere, and quickly.
Money out of politics, or bust
Won't be able to get money out of politics, especially since they have figured out creative new ways to get a ton of more money into politics. One of the biggest villains in this whole ongoing debacle are the big media who are the ones on the receiving end of most of that money.
Other countries on this fair earth have forbidden paid political advertising in their elections. If some sort of groundswell of disgust with the way our political system works (or, more accurately, doesn't) to get the media to surrender this enormous cash cow, that could change things. But even with the increasing fretfulness with it all as measured in the polls, the odds of eliminating the money mess are microscopically teensy. They are job creators for advertisement producers of all sorts, who are getting rich at the expense of any foreseeable future.
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whizbang wrote:
Other countries on this fair earth have forbidden paid political advertising in their elections. If some sort of groundswell of disgust with the way our political system works (or, more accurately, doesn't) to get the media to surrender this enormous cash cow, that could change things. But even with the increasing fretfulness with it all as measured in the polls, the odds of eliminating the money mess are microscopically teensy. They are job creators for advertisement producers of all sorts, who are getting rich at the expense of any foreseeable future.
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My Reply:
whizbang,
You've got that right.
For years election campaign politics have been described using such terms as campaign war chest, the bandwagon effect, wasted vote, the money primary, and now more recently the quadrennial effect.
The quadrennial effect refers to the jump in advertising revenue for media companies due to one form or another of election campaign advertising in presidential elections years.
If, as you state, industry had not killed the cap-and-trade legislation to address greenhouse gas emissions, surely the driving public would have run over it due to higher prices at the pump. The public would be more amenable to regulation such as increased Corporate Average Fuel Efficiency (CAFÉ) standards that allow more mileage without more cost. This is known as free ride by regulation and a big reason that regulation leads resource rent taxes in popularity.
Pollution trading is an effort to introduce market forces where a market does not exist. Markets are more efficient than command and control such as CAFÉ standards. But in the matter of cutting greenhouse gas emissions, the market structure already exists. Simple as can be. Just apply a carbon tax to fossil fuels at the extraction or entry points into the economy. No need to go offsite to plant trees and other political mitigation charades. But there would be this need to sell the increased cost, for example at the pump, to voters.
Your announcement that the USDA is spending up to 10 million dollars in the Bay watershed to promote nutrient trading is an example of government intervention necessitated by previous intervention. The USDA and the 2012 Farm Bill subsidize factory farms that pollute. Then the USDA comes up with nutrient trading to ameliorate the pollution. Just a part of the justification for the continued employment of more than 100, 0000 employees at the USDA.
Another Koch Brothers think tank spokesperson coincidentally here, in this forum, to make an argument against government under the fiction that industries will act as good citizens and clean up their own act. Sure. BP and the Gulf of Mexico come to mind, as does Exxon-Valdes... and then there's the question, "What about the Frackers?" Just because the feds don't always get it right (and with all the lobbyists' money pouring in to weaken regulatory agencies, that's a given), hardly means everything should be left to the good faith and "good will" of industries (a/k/a industrial polluters).
Sure.
"Markets are more efficient than command and control such as CAFÉ standards."
If markets are so efficient, why do corporations use command and control structures? Why don't they use "efficient" market mechanisms instead of centralised command-and-control structures? Why do they MERGE all the time into unified, power-centralising HIERARCHIES if markets are so much more efficient? Why don't corporations divide all the time so that the market can work its wonders of efficiency?
Maybe because this is just pure, unsubstantiated, baseless ideological bullshit? Maybe because the only form of markets (perfectly competitive markets) that can in fact be efficient ONLY EXIST IN THEORY and not in the real world? In fact, "markets" are constantly getting FURTHER AND FURTHER away from "perfect competition" and thus efficiency - and are in the real world nothing more than a facade for complicated command and control structures (and more and more, for conflict between a number of these large command and control structures which is often called "competition" - despite the fact that every economist who's not a total idiot recognises that this has nothing whatsoever to do with competition in its real "economic" sense. One of the nicest and simplest explanations for this actually comes from Hayek ffs). But ideologists still spout the "market efficiency" crap without being able to substantiate it in any way. Economics as it exists in society has betrayed all the principles of science - this crap is pure unsubstantiated belief, nothing more than a fundamentalist religion.
And finally, efficiency? Fuck off. If you mean "productivity", say productivity. (And if you don't mean it, you are clueless. What part of current economic production could be considered efficient? I only see waste, waste, waste, not a bit of efficiency. Seriously.) Markets as they exist now are indeed productive, that is, they use as little labour as they can to produce as much as they can. The reason for this is that labour gives you a *right* to some part of the products of the economy, at least enough for self-sustenance, moral claim over the surplus and of course some degree of POWER over the process of production. These all have to be minimised, in the name of "efficiency" - and "surprisingly" this all happens through, yes, using strict, dictatorial "command and control" structures for production control (very often explicitly at the cost of efficiency - centralised control over production is clearly operatively much more important than efficiency) - and by abusing the fact that there is an incredible oversupply of labour to keep prices down - possibly below even sustenance level. The result is of course an incredibly wasteful and inefficient (in realistic terms) system that does indeed minimise human labour as much as it can - while wasting energy, water, land, and whatever other resource you can think of. Efficiency is a fucking lie. It is all about productivity - and productivity is all about excluding unnecessary, "surplus" people from the economic system so that the important and deserving ones, doing the "real work" - managers and other controllers and primarily owners - can get more and more.
Now of course this myth has some roots based in reality. Low-granularity, democratic, "flat" organisation of economic production can in fact be very efficient, as proven time and time again whenever there's a chance for people to arrange things according to their will. And a properly competitive market structure (which may or may not be achievable through very strict market regulations) could help this in some cases and in some areas of production. But this is just a theory, and idea or an ideal. Nothing whatsoever to do with actual reality. The type of market that could work for everyone, you know, the type that would minimise profits or, as it should in theory, eliminate them completely through actual competition, has never existed.
Neither industries nor citizens will have incentive to clean up their acts while being paid by government to foul the common nest. BP, Exxon-Valdez, frackers are all examples of dirty old fossil industries being subsidized to rape Mother Earth. Why is the voting majority a passive onlooker, refusing to intervene in the one way that these dirty old rapers can understand–the bottom line? Could it be these passive voyeurs sense the elimination of petroleum subsidies compounded with the recovery by government of the resource rent of the commons, including petroleum, will incur a price at the point of use, such as at the gas pump? There is a way to allay this fear and underline the common ownership of the commons: the price to be paid for the use of the commons should be paid out equally to each commoner in the form of a common stock dividend. This price to be paid for the necessary use of the commons will be high, restraining users from abusing Mother Earth. Should this not be a common dream?
I am not an anarchist. I believe one role of government is to prevent people from raping each other, whether by taking their bodies, their earnings, or their share of the commons. Unfortunately, this rape is taking place now, influenced by money and what it can buy–the vote of the voting majority–the real power in a democracy.
Thank you for implying I am a Koch Brothers think tank spokesperson. The fact is that I know of no one who would hire me as a spokesperson. Perhaps because I speak the truth as I see it. Truth, or as much as I am continuing to learn of it, is a two-edged sword.
This mechanism will not in any was lead to ceasing the exploitation of polluting and dangerous resources. The only way to achieve that goal with market mechanisms was if all damage done by resource extraction and use was paid for immediately (at the point of extraction) and all this money and effort immediately went into repairing the damage. That is, if costs of resources would completely and immediately reflect their real costs, making it impossible to exploit them without having all the means and resources necessary to repair the damage their cause; and if the damage done is always repaired fully with 100% reliability. This is imo mostly impossible - both because we obviously have no way to repair the damage we cause when extracting these resources and because it is impossible to create and maintain such a mechanism while allowing the "market" to accumulate overwhelming power without any limits (ie. without imposing some sort of external control over markets). Markets will always find a way to turn any regulation that is only applied on the level of technical control into its opposite :-/ The only way to really control and regulate markets is by imposing strict PHYSICAL limits, limits that exist in actual, not virtual economic reality
The collection of resource rent from the use of the commons is the most efficient means of preventing pollution. This, along with no collection of the fruits of honest labor, is enough to shift the efforts of entrepreneurs from unsustainable endeavors to efforts such as renewable energy and conservation. The use of regulation to cover up for paying polluters is not a paying proposition. Regulations become so complex that all transparency in government is lost. It is in this impenetrable darkness that thieves thrive best. I must run now but I leave you with a KISS (Keep It Simple Stupid).
"The collection of resource rent from the use of the commons is the most efficient means of preventing pollution."
Please, please explain this to me. How exactly will collecting rent keep resources in the ground?
"This, along with no collection of the fruits of honest labor, is enough to shift the efforts of entrepreneurs from unsustainable endeavors to efforts such as renewable energy and conservation."
This is just a convenient myth with no support from reality. Absolutely none. Entrepreneurs" can't see further than their noses. They can't even look forward half a decade, let alone several decades :-/
Profit equals revenue minus cost. The part of business cost due to mining the commons will be heavily taxed to sustain the commons and recover the resource rent for us to share equally. But each of us should be entitled to keep earnings. Innovation will be at a premium and should be rewarded. Earnings from labor and capital should not be taxed at all in the name of sustainable economic development and the fact that a laborer is worthy of his wages. Therefore entrepreneurs will shift labor and capital to where profit is maximized, i.e., where land and natural resource inputs are minimized due to the tax on the commons. That will tend to keep uranium, Alberta tar sands, and that fracking gas in the ground.
Subsidies will consist only of the land dividend due each of us. Big banks, pig farmers, coal and nuclear electricity, and the military-industrial complex are just the tip of the iceberg of businesses that will be underwater and need to declare bankruptcy due to discontinuation of subsidies. The capital in these parasitic institutions can then be allocated to entrepreneurs in a free economy where sustainable and profit are synonymous.
I still don't understand how this makes sure that resources that are cheap to extract but have huge but not easily accountable externalities and for which there's an immediate short-term need will still stay unextracted - without some external mechanism that actually makes sure that there can be *no* such externalities or compensates for them completely IN THE PHYSICAL WORLD (not in the virtual world of economics) and in the very short term if possible (and stops the process of extraction if it's impossible).
"Therefore entrepreneurs will shift labor and capital to where profit is maximized, i.e., where land and natural resource inputs are minimized due to the tax on the commons. That will tend to keep uranium, Alberta tar sands, and that fracking gas in the ground."
How exactly? Maybe it'll slow down the process, but as long as you can extract energy with a good EROI, what will make sure that it won't be extracted? I understand it will be costlier, but so what? Those immediate market based costs may easily be worth it if a large part of the long term damage can be ignored. What will make sure that *all* costs are counted and paid? What makes sure that the costs that can be "deferred" to future generations (maybe in the form of, you know, living a short and shitty life) will not even be incurred?
Also, as far as I can see, profit is a form of rent. It is something you get because you have controlling power (ownership, management power etc) over some part of the process or tools of production, just like with any other type of "rent". I have no idea what the difference is, and believe me, I've been trying to understand it for a while now :-)
Was the carbon cap and trade scheme different than other pollution markets trading in privatized economic crimes against nature and humanity?