Moratorium Needed On Open Market Emissions Trading

Environmental Defense today called upon the US Environmental Protection Agency (EPA) to withhold approval of all air pollution control programs that rely on a flawed emissions trading scheme known as “open market trading.” Several such programs have been planned in various states, and most recently EPA has proposed to give approval to a New Jersey program that would allow open market trading for nitrogen oxides — a pollutant which contributes to smog and acid rain.

At issue is a system of emissions trading that risks an increase in air pollution. Unlike rigorous “cap and trade” programs that place fixed limits on emissions, open market trading allows regulated sources to increase their emissions with the use of “credits” purchased from other sources that do not have a cap.

“Open market trading threatens to undermine public health and the environment,” said Joe Goffman, Environmental Defense senior attorney. “If Administrator Whitman wants to advance the use of market mechanisms for environmental problem solving, the effort must match the Bush approach on education. It should set strong goals, but achieve them with flexibility, producing lasting, real-world solutions. The focus of environmentally beneficial emissions trading should be on proven cap and trade programs. The open market trading approach must be halted.”

“In order to verify that emissions reductions are valid and not just paper credits, regulatory agencies in so-called open market trading systems are forced into time-consuming case work that makes enforcement very difficult. Allowing credits to be exchanged for fixed emissions allowances is a loophole through which sources can emit more pollution. The end result is that the air, and the people breathing it, would face more pollution,” said Andrew Aulisi, Environmental Defense, business liaison.