Pollution Rights and Environmental Problems
What is Pollution Rights trading
When a company has pollution rights, the company is allowed to discharge an agreed amount of a specific waste into the environment (Byrns, 2010). The Environmental Protection Agency as a regulator of environmental pollution for instance suggests the use of the government-issued license to allow companies emit such given quantities of waste. When talking of tradable pollution rights, this means that the pollutions permits can be sold and purchased at free market prices (Social Change, 2006). What happens is that firms that emit pollutions below their accepted maximum amounts are free to put the remaining allowances in the free market whereby firms that are polluting above maximum allowed or those intending to emit wastes exceeding this amount can buy the allowances. The government may decide to trade the rights by simply selling them or otherwise it may opt to auction them with the highest bidder qualifying for the rights. The whole idea of pollution rights trading is also considered as the cap-and trade policy with the cap implying that a firm can emit pollution only up to a set maximum and trading the rights to higher polluters with adherence to market forces (Byrns, 2010).
Impact of pollution rights trading
The concept of trading pollution rights is based on the take that open access to resources leads to pollution especially air and water pollution. Since there is no individualprivate ownership of these resources, it is suggested that individuals lack the sense of responsibility in preventing pollution (Social Change, 2006). It therefore follows that individuals would have incentives to control overexploitation of the resources and the pollution thereof if they were given a right to own the resources privately. It is important to bear in mind that tradable pollution rights came into implementation in the United States first and the idea was primarily to bring industry costs down as well as facilitate economic growth in areas that had high pollutions (Beder, 2001). Even with the adoption of this policy into environmental pollution control efforts, the initial idea of helping the firms seems to dominate over the solving of environmental problems and ensuring a sustainable world.
Among the few environmental benefits attributed to trading pollution rights the idea that since pollution permits are issued and given by regulatory authorities, it is possible to control pollution levels. This can be achieved by having the regulatory bodies limit the number of permits available to firms. Additionally, it is argued that since a company would incur more costs by buying pollution rights, introduction of the permits would eventually lead to reduced pollution as companies seek to reduce their costs. The argument here is that if a firm were to continue polluting the environment, then it would have to spend more on purchasing the permits otherwise it would choose to save the costs by ensuring reduced pollution. It is also proposed that even companies with the ability to purchase pollution rights, the free market in pollution rights is an incentive that persuades such companies to reduce pollution by giving them a choice to sell initial rights (Social Change, 2006).
The introduction of tradable pollution rights was also based on the argument that companies that exceeded their upper limit of pollution would get a chance to buy the permits and continue emitting pollutants. On the other hand, the firms would also choose to channel their finances into innovations that would clean up the environment (Bush, 2009). Even with such an idea, it is unfortunate that only the firms seem to be benefiting from reduced costs whereas environmentally, encouraging progress has not been made. Firms seem to be polluting with protection from the law with maximization of profits ignoring the protection of the environment. Regulatory bodies seem to fail to see the harm that the free trading of pollution credits can hamper innovation geared towards reducing pollution. This is mainly an influence of a prospective seller (Dana, 2005). To this extent the feasibility of ensuring that the world is sustainable through reduced environmental pollution is far from being attained.
It is appreciable that through trading of pollution rights, some areas have seen dramatic reductions in the amounts of waste emitted. Sulfur dioxide was for instance shown to have reduced dramatically due to the establishment of a cap-and trade initiative. There is failure however to see the danger of continued pollution resulting from the ability of some firms to buy any amount of pollution rights (Bush, 2009). The more the companies compete to buy the allowances, the more the likelihood of extending pollution levels to unmanageable levels. In fact, instead of the companies saving to invest in advanced methods of cleaning the environment, finances are turned into the rights market.
The market for pollution rights does not really encourage reduction of pollution and sustainable world. So far, some countries such as Russia and European countries have pollution rights worth billions of money and as such, they produce wastes in billion tons. There is much worry that if such countries were allowed to still hold to the rights even after the set deadline of 2012 would only add to further pollution. The countries would amass huge profits by selling the excess rights but the environment would still remain polluted more so pollution in those countries (Bowen, 2009). The idea here is that firms are getting a go ahead to pollute so long as they can afford it in terms of money.
Though it may seem appealing, the introduction of emission offset is a clever way of firms continuing to emit pollutants in a certain area. It does not work to reduce environmental pollution by having a heavy polluting firm to continue emitting its wastes just because it capably purchases the rights and convinces other firms to reduce their pollution. In this case, the effectiveness of trading pollution rights in controlling environmental pollution is unrealistic (Social Change, 2006). It is simply a shift of rights to pollute from one company to the other and not the real reduction of pollution. The same practice is propagated by the introduction of the bubble. The bubble policy argues that a firm can continue emitting a waste so long as another waste is reduced significantly by the activity (Social Change, 2006). Again the same phenomenon repeats itself whereby one pollutant is replaced by another.
Banking of emissions policy does not give hope to environmental sustainability either. Allowing firms to have credits permitting them to pollute beyond the maximum in the future is equivalent to postponing pollution. This puts more uncertainty on the sustainability of the environment even in the future. Not only is the future of the environment endangered by this policy but also the current time since the policy allows such firms to trade the credits to firms that would want to pollute above their limit.
The effectiveness of trading pollution rights cannot be underestimated bearing in mind that some firms have successfully reduced pollutant emissions. It is also acknowledgeable that if firms were to seriously implement this policy, the great incentive for developing advanced technologies to clean the environment would be worthwhile in sustaining the environment. It is however worrying that instead of focusing on maintaining a sustainable world through control of environmental pollution firms have gone after profits blindly. High polluting wealthy firms have used their financial capability to buy off polluting power and forgotten their environmental responsibility of ensuring a sustainable world. Pollution permits are being traded from one firm to the other in a free market and firms seem to be competing on who can pollute most. It is even more worrying on the future of a better environment now that some companies can secure rights to pollute beyond their limit in the future. In essence, pollution rights do not effectively control environmental problems.
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