Carbon trading, co-pollutants, and environmental equity: Evidence from California's cap-and-trade program (2011-2015)

Policies to mitigate climate change by reducing greenhouse gas (GHG) emissions can yield public health benefits by also reducing emissions of hazardous co-pollutants, such as air toxics and particulate matter. Socioeconomically disadvantaged communities are typically disproportionately exposed to air pollutants, and therefore climate policy could also potentially reduce these environmental inequities. We sought to explore potential social disparities in GHG and co-pollutant emissions under an existing carbon trading program-the dominant approach to GHG regulation in the US and globally.

We examined the relationship between multiple measures of neighborhood disadvantage and the location of GHG and co-pollutant emissions from facilities regulated under California's cap-and-trade program-the world's fourth largest operational carbon trading program. We examined temporal patterns in annual average emissions of GHGs, particulate matter (PM2.5), nitrogen oxides, sulfur oxides, volatile organic compounds, and air toxics before (January 1, 2011-December 31, 2012) and after (January 1, 2013-December 31, 2015) the initiation of carbon trading. We found that facilities regulated under California's cap-and-trade program are disproportionately located in economically disadvantaged neighborhoods with higher proportions of residents of color, and that the quantities of co-pollutant emissions from these facilities were correlated with GHG emissions through time. Moreover, the majority (52%) of regulated facilities reported higher annual average local (in-state) GHG emissions since the initiation of trading. Neighborhoods that experienced increases in annual average GHG and co-pollutant emissions from regulated facilities nearby after trading began had higher proportions of people of color and poor, less educated, and linguistically isolated residents, compared to neighborhoods that experienced decreases in GHGs. These study results reflect preliminary emissions and social equity patterns of the first 3 years of California's cap-and-trade program for which data are available. Due to data limitations, this analysis did not assess the emissions and equity implications of GHG reductions from transportation-related emission sources. Future emission patterns may shift, due to changes in industrial production decisions and policy initiatives that further incentivize local GHG and co-pollutant reductions in disadvantaged communities.

To our knowledge, this is the first study to examine social disparities in GHG and co-pollutant emissions under an existing carbon trading program. Our results indicate that, thus far, California's cap-and-trade program has not yielded improvements in environmental equity with respect to health-damaging co-pollutant emissions. This could change, however, as the cap on GHG emissions is gradually lowered in the future. The incorporation of additional policy and regulatory elements that incentivize more local emission reductions in disadvantaged communities could enhance the local air quality and environmental equity benefits of California's climate change mitigation efforts.