California has faced a host of environmental problems over the past couple of decades. Its monumental challenge of droughts causing a water shortage and lower crop yields have dominated news headlines as of late. However, it might not even be the state’s biggest environmental problem at hand, which is arguably air pollution.
Air pollution is not only a significant environmental health issue in California, but a global one. More than 3.2 million premature deaths per year are due to exposure to outdoor particulate matter known as PM2.5. These are particles less than 2.5 micrometers in diameter, which can penetrate deep into lungs, heart, and other vital organs, causing a wide range of diseases (Jerrett, 2015). Furthermore, California is notoriously known for high air pollution levels. In fact, eight out of ten Californians live in counties with unhealthy levels of air pollution during some time of the year (Los Angeles Times, 2016).

Los Angeles in smog due to air pollution. Link: http://blogs.edf.org/climatetalks/files/2017/07/Los-Angeles.jpg
As a result, California introduced a market based approach, known as a cap and trade system, on carbon emissions in the state in 2013 (Bushnell, 2017). The concept is straight-forward; competitors can purchase allowances through auctions from the state, permitting them to emit a certain amount of greenhouse gases. Furthermore, a market is created for allowances, as firms can purchase and sell shares based on their need to pollute (Hiltzik, 2018).
However, I believe that this program has too many risks that outweigh its benefits. Firstly, when introducing a cap and trade program, corporate consolidation may occur. For instance, catch shares, a cap and trade concept for the fishing industry, has experienced this both in the United States and internationally. Recently, Carlos Rafael pleaded guilty for fraud, which included falsifying catch shares. He is a prime example of corporate consolidation occurring due to catch shares. Carlos Rafael owned one of the largest commercial fishing fleets in the United States, and was able to obtain it through purchasing catch shares. Thus, as his fleet grew, he continued to purchase catch shares from smaller competitors, thus eliminating these entities from the market (Orlowski, 2017).
Additionally, there is growing unrest that firms in California are stocking up on the carbon emission allowances, and therefore not having to reduce their emissions. Since May 2017, every allowance that has been put up for auction has been bought. Moreover, the allowances do not expire, meaning that there is an incentive for firms to buy as many allowances as possible and store them for later use. Therefore, as the think tank Energy Innovation argues, there might be an oversupply of allowances, which in turn means that there might not be a reduction in greenhouse gas emissions in the future (Hiltzik, 2018).
However, there are clear arguments supporting the cap and trade program in California that should be addressed. Firstly, the program has incentivized firms to reduce carbon emissions in past few years. According to data published by the state officials, greenhouse gas emissions were reduced by 5 % in 2016. This is a significant improvement from previous years, which saw reductions between 0.7 % and 2 % (Megerian, 2017). Moreover, the program can generate revenue for the state that can be spent on other environmental issues. Energy Innovation projects that between 2017 and 2020, the program will raise at least 1.3 billion dollars in revenue. The money is earmarked for the state’s Greenhouse Gas Reduction Fund, which will invest the money in renewable energy and other greenhouse gas emission-reducing projects (Busch, 2017).
Despite these positive results, I believe that the program’s drawbacks are too large. However, we can either improve it, or replace it with a different policy that would be more effective. For instance, increasing monitoring of the cap and trade system could reduce or prevent corporate consolidation, and setting expiration dates on the allowances could combat the stockpiling of them. A regulatory approach could serve as an improved substitute to the current system, such as a carbon tax. Many economists favor a carbon tax due to the notion that it more stable and predictable (Bushnell, 2017).
In conclusion, I believe the cap and trade system in California is flawed. Threats such as corporate consolidation and stockpiling of allowances are risks that compromise the program, despite the improved reduction in carbon emissions and revenue generated. However, I believe that the solutions such as improving the program itself through increased monitoring or setting expiration dates on allowances, or replacing it with a carbon tax, can combat carbon emissions and reduce air pollution in California more effectively. Therefore, I urge you, the reader to spread awareness on this matter. It could entail telling your friends about it, organizing a local event encouraging the state the improve the policy, or even contacting a branch of the Government of California. In fact, a specific measure you can take is contacting the California Air Resources Board, which has a hotline specifically for the cap and trade program (California Air Resources Board, 2018). There, you can explain that we should improve or replace the cap and trade program. Overall, it is critical that we take immediate measures to combat air pollution in California, and improving or replacing the cap and trade program for carbon emissions should be our first step.
Sources:
Bushnell, J. (2017, December). (Overly) Great Expectations: Carbon Pricing and Great Revenue Uncertainty in California. National Tax Journal. 70 (4), 837-845. Retrieved April 22, 2018, from https://www.ntanet.org/NTJ/70/4/ntj-v70n04p837-854.html
Busch, C. (2017, July 12). California’s Cap-And-Trade Compromise Is A Big Step Forward, Not A Win For Polluters. Forbes. Retrieved April 22, 2018, from https://www.forbes.com/sites/energyinnovation/2017/07/12/californias-cap-and-trade-compromise-is-a-big-step-forward-not-a-win-for-polluters/
California Air Resources Board. (2018). Contact Us. Retrieved April 22, 2018, from https://ww2.arb.ca.gov/contact-us
Hiltzik, M. (2018, January 12). No longer termed a “failure,” California’s cap-and-trade program faces a new critique: Is it too successful?. Los Angeles Times. Retrieved April 22, 2018, from http://www.latimes.com/business/hiltzik/la-fi-hiltzik-captrade-20180111-story.html
Jerrett, M. (2015). Atmospheric science: The death toll from air-pollution sources. Nature, 525 (7569), 330–331. Retrieved April 21, 2018, from https://doi.org/10.1038/525330a
Los Angeles Times. (2016, April 20). Los Angeles and Bakersfield top list of worst air pollution in the nation. Los Angeles Times. Retrieved April 21, 2018, from http://www.latimes.com/local/lanow/la-me-air-pollution-report-20160420-story.html
Megerian, C. (2017, November 8). Emissions fall under California’s cap-and-trade program. Los Angeles Times. Retrieved April 22, 2018, from /politics/essential/la-pol-ca-essential-politics-updates-emissions-fall-under-california-s-1510182816-htmlstory.html
Orlowski, A. (2017, April 30). Did catch shares enable the Codfather’s fishing fraud?. SeafoodSource. Retrieved April 15, 2018, from https://www.seafoodsource.com/commentary/did-catch-shares-enable-the-codfather-s-fishing-fraud