Emissions market not the final solution

This month, the Chicago Climate Exchange (CCX) began operations, and Tufts is the first private university to sign on to the initiative. According to its website, the CCX "is a self-regulatory exchange that administers the world's first multi-national and multi-sector marketplace for reducing and trading greenhouse gas emissions." Essentially, it is a market-based incentive for member corporations and organizations to reduce their pollution levels by allowing them to trade unused pollution permits at market-determined prices.

Supporters of such market-based incentives -- including the Bush administration -- purport that the market-derived value of these credits will be a reflection of the societal value placed on pollution-reduction. They claim that such market-driven measures ultimately will lead to real reduction in greenhouse gas emissions. Unfortunately, a purely voluntary solution such as the CCX will never yield significant reductions, and government intervention is unavoidable if the environment is really at issue here.

Consider for a moment the variety of corporations and organizations likely to join a voluntary pollution reduction initiative, or more precisely, consider their motives. The companies and organizations most likely to participate are those for whom it will cost the least and who stand to gain the most, either directly through the sale of pollution credits or indirectly through improved public image. Ultimately, the most egregious polluters, namely parts of the energy sector -- particularly coal burning plants, one of the most environmentally harmful methods of producing electricity -- will likely never be lured in by the market-based incentives offered by the CCX and any other voluntary pollution-credits exchange that may develop.

Two things must happen to achieve significant reduction in greenhouse gas emissions, neither of which excludes the use of market-based incentives -- indeed they could make active use of such methods. First, there must be an increase in stringent and rigorous federal regulations of overall emissions levels. Some of the worst polluters will never change when offered market-based "carrots" for environmental responsibility; they will only respond to regulatory "sticks." Second, the US must sign on to multilateral agreements such as the Kyoto Protocol, because global warming is a global problem. Environmental issues such as global warming affect everyone, and no state can afford to go it alone.