California Environmental Justice Alliance (CEJA)

By Rachel Morello-Frosch, Manuel Pastor, James Sadd, Lara Cushing, Madeline Wander, and Allen Zhu - California Environmental Justice Alliance, September 2016

California’s cap-and-trade program is a key strategy for achieving reductions in greenhouse gas (GHG) emissions under AB32, the California Global Warming Solutions Act. For residents living near large industrial facilities, AB32 offered the possibility that along with reductions in GHGs, emissions of other harmful pollutants would also be decreased in their neighborhoods. Carbon dioxide (CO₂), the primary GHG, indirectly impacts health by causing climate change but is not directly harmful to health in the communities where it is emitted. However, GHG emissions are usually accompanied by releases of other pollutants such as particulate matter (PM₁₀) and air toxics that can directly harm the health of nearby residents.

In this brief, we assess inequalities in the location of GHG-emitting facilities and in the amount of GHGs and PM₁₀ emitted by facilities regulated under cap-and-trade. We also provide a preliminary evaluation of changes in localized GHG emissions from large point sources since the advent of the program in 2013. To do this, we combined pollutant emissions data from California’s mandatory GHG and criteria pollutant reporting systems, data on neighborhood demographics from the American Community Survey, cumulative environmental health impacts from the California Environmental Protection Agency’s CalEnviroScreen tool, and information from the California Air Resources Board (CARB) about how regulated companies fulfilled their obligations under the first compliance period (2013-14) of the cap-and-trade program. Our methodology is described in greater detail in the appendix to this report.

In this analysis, we focus primarily on what are called “emitter covered emissions,” which correspond to localized, in-state emissions (derived mostly from fossil fuels) from industries that are subject to regulation under cap-and-trade. The cap-and-trade program also regulates out-of-state emissions associated with electricity imported into the state and, beginning in 2015, began regulating distributed emissions that result from the burning of fuels such as gasoline and natural gas in off-site locations (e.g., in the engines of vehicles and in homes).

We found that regulated GHG-emitting facilities are located in neighborhoods with higher proportions of residents of color and residents living in poverty. In addition, facilities that emit the highest levels of both GHGs and PM₁₀ are also more likely to be located in communities with higher proportions of residents of color and residents living in poverty. This suggests that the public health and environmental equity co-benefits of California’s cap-and-trade program could be enhanced if there were more emissions reductions among the larger emitting facilities that are located in disadvantaged communities. In terms of GHG emission trends, in-state emissions have increased on average for several industry sectors since the advent of the cap-and-trade program, with many high emitting companies using offset projects located outside of California to meet their compliance obligations. Enhanced data collection and availability can strengthen efforts to track future changes in GHG and co-pollutant emissions and inform decision making in ways that incentivize deeper in-state reductions in GHGs and better maximize public health benefits and environmental equity goals.

Read the report (PDF).