State cap-and-trade program not benefitting disadvantaged communities

California law requires 25 percent of the revenue from the state’s cap-and-trade program, designed to limit emissions of greenhouses gases like carbon dioxide, to be invested in measures that benefit disadvantaged communities. But a newly published study by San Francisco State University, the University of California, Berkeley and others comparing emissions before and after the program began in 2013 found that disadvantaged communities are not yet benefitting — and have actually seen an increase in pollutants.

Lara Cushing, SF State assistant professor of health education. Photo by CS Sharada Prasad

“Good climate policy is good for environmental justice,” said SF State Assistant Professor of Health Education Lara Cushing, the study’s lead author. “What we’ve seen from our study is that so far, California’s cap-and-trade program hasn’t really delivered on that potential.”

California is a world leader in adopting ambitious greenhouse gas reduction targets and boasts the world’s fourth-largest carbon-trading program. The program caps total greenhouse gas emissions in the state but allows individual companies to increase their emissions by purchasing pollution “allowances” from other companies that pollute less. Each year, the cap is lowered.

According to the study, total emissions statewide remained below the allowable limit since the program took effect. Yet at the same time, 52 percent of facilities regulated under the program reported higher average annual in-state greenhouse gas emissions after the program began — and most of those facilities are located in disadvantaged communities.

Increased emissions from regulated facilities occurred more often in neighborhoods populated by people of color or low-income, less educated and non-English speaking residents, according to the study, which is the first to examine social disparities in existing cap-and-trade programs. More facilities with heavy emissions — cement factories, refineries and oil, gas and electricity production facilities — are located in those communities, said Rachel Morello-Frosch, senior author on the study and a UC Berkeley professor of public health and of environmental science, policy and management.

The impact on the people who live there could be severe and long-lasting. Many air pollutants — particulate matter, nitrogen oxides, sulfur oxides and volatile organic compounds, among others — are associated with carbon dioxide emissions, and these “co-pollutants” are linked to respiratory and cardiovascular disease.

The study assessed emissions patterns of greenhouse gases and associated air pollutants between 2011 and 2012, prior to the start of the state’s cap-and-trade program, and from 2013 through 2015, after carbon trading began.

Despite the study’s findings, Cushing says California is to be commended for committing to ambitious climate goals and that things could change for the better moving forward. For example, the state’s urban greening program funds urban forests and greenways in many disadvantaged communities, but because many of those projects have not yet matured, their air quality benefits may not yet be detectable. Additional measures may be needed to ensure that California’s cap-and-trade program truly benefits the state’s disadvantaged communities.

“Placing geographic restrictions on trading and limiting the amount of pollution ‘offset’ credits that companies can use to comply with the program could help incentivize local emissions reductions,” said Cushing. California emitters are currently allowed to purchase offset credits out of state. “The communities that live on the fence line near these industries saw hope in the [cap-and-trade program] that emissions might be reduced. But so far, we haven’t seen the kind of environmental equity benefits people were hoping for.”

Other co-authors on the study are Dan Blaustein-Rejto of UC Berkeley’s Goldman School of Public Policy, Madeline Wander and Manuel Pastor of the University of Southern California, James Sadd of Occidental College in Los Angeles and Allen Zhu of UC Berkeley’s Department of Electrical Engineering and Computer Sciences.

The work was funded by California Office of Environmental Health Hazard Assessment and the Institute for New Economic Thinking.