Chapter Introduction
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CHAPTER 24
ENVIRONMENTAL POLICY
COUNTERFEIT COOLING
In the global efforts to thwart climate change, some lessons are learned after the fact
CORE MESSAGE
Society seeks to protect the natural environment and public health by establishing environmental policies that define what is acceptable behavior for individuals, groups, or nations with respect to the environment. National and international policies are needed when environmental problems extend across state or national boundaries. Because environmental problems are complex, policies are often compromises between various stakeholders. Getting agreement on national or international policies can be difficult.
AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO ANSWER THE FOLLOWING GUIDING QUESTIONS
1 Why are environmental policies sometimes needed at a national or even international level? What are some of the major U.S. environmental laws?
2 How are policy decisions made? How does lobbying influence policy decisions?
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3 What policy tools can be used to implement and enforce environmental policy?
4 How are international policies established and enforced? How has the international community responded to the issue of climate change?
5 How successful have efforts to reduce CO2 emissions been? Why has the Clean Development Mechanism been less effective than expected in reducing greenhouse gases?
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In the spring of 2006, when he was still a law student at Stanford University, Michael Wara had a Eureka! moment—a discovery that would eventually confirm scientists’ and policy makers’ worst fears. Wara, a former climate-change scientist who was now focused on climate law, had set out to assess a particularly controversial global environmental policy— one that had been implemented a few years earlier in an effort to slow the rise of greenhouse gas emissions.
The emissions trading policy known broadly as cap-and-trade was based on a deceptively simple-sounding idea: A cap, or upper limit, is set on the amount of any given pollutant—in this case greenhouse gases—that a country (or an industry within a country if it is a national program) is allowed to emit each year. Greenhouse gas producers within that country (i.e., industry or power companies) are each issued permits for the amount of pollution they are allowed to emit, and all those permits all add up to the preestablished cap. If a company reduces its emissions below its allowance, it can sell, or trade, those leftover permits as “carbon credits” in the global marketplace—often for a hefty sum, usually to other companies that have yet to meet their own emission-reduction targets. By purchasing the carbon credits, companies that can’t manage to reduce their own emissions can still contribute to reduction initiatives elsewhere—in other industries or other parts of the world (see Chapter 20).
cap-and-trade
Regulations that set an upper limit for pollution emissions, issue permits to producers for a portion of that amount, and allow producers that release less than their allotment to sell permits to those who exceeded their allotment.
In an effort to reduce carbon emissions in developed countries, the Clean Development Mechanism (CDM) was created in 2003. Under this cap-and-trade program, industrialized nations that were required to lower their carbon emissions would fund emissions-curbing technology and projects in developing, unindustrialized nations by purchasing carbon credits (also referred to as carbon offset credits) that these projects earned. In this trading scheme, 1 credit offsets 1 metric ton of carbon; this means a company can release 1 metric ton of carbon over its allowable amount for every carbon credit it purchases. “For example,” Wara explained in a 2007 Nature article, “rather than build an ineffectual but cheap coal-fired plant, a Chinese utility might instead build a more efficient gas-fired plant that emits less CO2; the difference in potential carbon emissions between the coal plant and the gas plant can, after monitoring and certification, be converted into CDM [carbon offset] credits that can be sold to an industrialized nation. The revenue from the credits enables the utility to afford the more expensive gas plant.” These clean energy projects were seen as the most cost-effective ways to reduce overall carbon emissions worldwide because they helped developing countries that would otherwise resort to using fossil fuel resources as they grew and developed.
Clean Development Mechanism (CDM)
A UN program that allows a country that is committed to reducing greenhouse gases to implement emission-reduction projects in developing countries.
Straightforward as it all sounded, though, policy makers and environmentalists had been sharply divided since the program’s inception on one major question: Would the policy actually result in emission reductions? With the emissions trading program now well established, it was time to find out. Wara had deployed an army of formulas across a mountain of spreadsheets, over many, many weeks.
The final tallies were more than disheartening: Somehow, this program that had been designed to reduce greenhouse gas emissions was actually contributing to their increase. “It really shocked us,” Wara recalls. “Nobody could believe it at first.”
It looked like one group in particular was gaming the system: the coolant makers of India and China, whose gaseous products (called HFCs) are used to keep air conditioners and refrigerators nice and cold. Producing this coolant also generates a waste gas as a by-product. Both the coolant and this by-product waste gas are well-known potent greenhouse gases. As Wara discovered, these companies were eliminating the waste gas and earning thousands of credits (that they sold for tens of millions of dollars to developed countries) to do so. And the companies were churning out both gases in spades. “They were producing twice to three times as much coolant gas as they needed to meet market demand,” says Wara. “It didn’t matter if the coolant sold or not, because they were making a fortune off the credits they were earning by destroying all the by-product.”
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KEY CONCEPT 24.1
Because the causes and consequences of environmental problems often transcend state or national borders, national and international policies are needed to address them.
Carbon and greenhouse gas regulation—including the cap-and-trade system created for it—had come amid a protracted and impassioned global conversation. Political leaders, policy makers, scientists, and environmental activists all over the world had converged on the question of how best to curb emissions and thus stave off global warming. (See Chapter 21 for more on climate change.) With all that chatter and debate, how did it come to this?
The answer to that question contains a broad lesson about the challenges of protecting the environment through treaties and legislation.