Viewing the Environmental Justice Critiques of Greenhouse Gas Auction-Cap-Trade-and-Invest Programs Through an Ethical Lens

Abstract

Existing North American regional programs for capping and reducing greenhouse gas emissions have come under criticism based on concerns regarding their perceived impact on environmental justice communities. When viewed through an ethical lens, programs that distribute emissions allowances by way of an auction with a sufficient reserve price comport better with principles of distributive justice than traditional permitting mechanisms, which award pollution allowances based on prior appropriation and do so without compensating society for consumption of a scarce resource. There is no evidence supporting claims that these programs increase levels having adverse health effects in disadvantaged communities. While levels of pollutants having adverse impacts on EJ communities were disproportionately increasing before the 2013 initiation of the California program, that trend reversed after the program’s initiation. By reinvesting auction revenues in programs to increase energy conservation, efficiency, and distributed generation in disadvantaged communities, the existing programs offset or eliminate adverse price impacts.

Keywords: GHG, Greenhouse Gas, Cap-and-Trade, Environmental Justice, EJ, Ethics, California, RGGI, Regional Greenhouse Gas Initiative

JEL Classification: K32, K23, Q28, Q48, Q52, !56, Q58