Environmental Groups Oppose Open Market Emissions Trading

A coalition of 20 environmental groups today sent a letter to Environmental Protection Agency (EPA) head Christie Whitman asking for a moratorium on “open market” emissions trading programs by states, which the groups said fail to ensure environmental integrity and fairness. Illinois, Michigan, New Jersey and New Hampshire all have open market programs that have been proposed for federal approval. Rather than creating a firm cap on pollution emissions from industrial sources, the open market systems do not cap emissions yet allow wide latitude to companies to create and trade emissions reduction credits.

“Economic incentive programs are a viable solution to some environmental problems,” states the letter. “Yet it is imperative that these programs match flexibility with the highest standard of accountability, such as that achieved through explicit caps on emissions, accurate emissions quantification, rigorous monitoring, and certain enforceability.”

“According to EPA’s own experts, open market trading is not ready for prime time,” said Jeff Ruch, executive director of Public Employees for Environmental Responsibility, which represents employees within EPA who have raised problems with the plan. “If EPA approves the four state trading programs without fixing the major quantification and enforcement weaknesses, it risks seriously undermining clean air protection nationally.”

The EPA’s own Office of Inspector General released a letter this week announcing it will investigate planned and completed trades under the state programs, calling the investigation “both warranted and timely.” The probe will examine the enforceability and rigor of open market trading as well as EPA’s internal approval process for the state programs.

“The public’s support for flexible approaches like emissions trading depends on the establishment of explicit, binding caps on pollution. Giving companies the privilege of trading without emissions caps and full accountability is self-defeating,” said Joe Goffman, senior attorney at Environmental Defense.

A copy of the letter and complete list of signatories may be found at www.environmentaldefense.org