In a new article in the Indiana Law Journal, Professor David Adelman explores the relationship between greenhouse gas trading and toxic hotspots.  The cap-and-trade system of regulating greenhouse gas emissions has been touted as the cheapest, most efficient, and most politically salient means of addressing the climate change problem, having been adopted by prominent regulatory efforts, such as the EU’s Emissions Trading System and, more recently, California’s Global Warming Solutions Act. Despite its advantages, the cap-and-trade system has been criticized for its potential to exacerbate environmental inequalities, most notably by increasing the number of toxic “hotspots” - isolated areas where airborne toxics emissions are much higher than in the nation as a whole. Environmental justice activists are concerned that a cap-and-trade system will allow certain industrial polluters, notably steel and petroleum plants, to maintain their carbon and toxics emissions while other industrial sources reduce them, disproportionately increasing the concentration of toxic pollutants in minority and low-income communities.

Adelman addresses the major factors of trading regimes that would tend to produce toxic hotspots around industrial facilities in minority communities: the relative cost of reducing greenhouse gases at individual facilities, the geographic distribution of facilities, the correlation between greenhouse gas and toxics emissions, and the relative contribution of major greenhouse gas sources to collective toxics emissions. Using both EPA data and meta-analysis of other relevant studies, Adelman claims that, while some outliers will exist, cap-and-trade systems will generally not exacerbate toxic hotspots. The data, he says, clearly show that vehicles and small stationary sources emit a majority of the air toxics nationally, accounting for most of the cancer risks when compared to industrial sources affected by a cap-and-trade system. Furthermore, in the vast majority of counties and census tracts, industrial emissions are simply too low to contribute to toxic hotspots (compared to the relatively high emissions produced by cars and other non-point sources), while the few instances where disparities may occur can be targeted by localized policies that will not compromise market efficiency.

Professor Adelman’s conclusions are two-fold. While the cap-and-trade system will not contribute to the toxic-hotspot phenomenon, a greenhouse gas trading regime is not likely to contribute much to the reduction of toxics pollution generally. Cap-and-trade, it seems, may be a viable climate change solution, but the data suggests that airborne toxics, and the health risks they pose, will require a different set of solutions.