Moreover, because allowances trade at substantial prices, the drive for profits would spur innovations to cut emissions. In contrast, hierarchical regulation provides neither flexibility nor incentives for green innovation. Yet, the entire cap-and-trade program is run by fewer than fifty people at EPA. The success of cap and trade on acid rain has helped produce a broad consensus in the United States for making it, or another network approach, such as a tax on greenhouse gas emissions, the centerpiece of any regulatory program to deal with climate change.
Europe has already adopted a cap-and-trade approach despite initial skepticism. In the United States, the House of Representatives in passed a bill that includes a cap-and-trade program for regulating greenhouse gases, although it also contains strong hierarchical controls as well. A market-based network approach is necessary for climate change because it is an especially complex and costly problem.
Because of the diversity among us and the dynamic character of our economy and society, cutting greenhouse gases will require innovations not only in how electricity is generated but also in how transportation and much else is fueled, the design and operation of homes and workplaces, the distances between them, how agriculture and forestry are carried out and still more arrangements. The changes cannot come through the one-size-fits-all rules that hierarchical regulatory systems tend to use. Cap and trade and other economic incentive systems are powerful but efficient tools because they send a price signal to every consumer of energy that says "cut your contribution to greenhouse gases or pay.
The same logic that supports market-based network approaches for acid rain and climate change should lead to their application to other complex environmental problems. Federal statutes, however, still mandate the cumbersome hierarchical approaches that Congress adopted in the early s, when modern environmental protection was in its infancy. Congress, of course, did not set out to lumber agencies with impossible jobs.
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In , when it enacted what still remains the basic structure of the Clean Air Act, little thought had been given to cap and trade or other network approaches. Meanwhile, the hierarchical approach achieved some substantial progress at first. At the outset, regulators went after obvious ways to cut pollution, such as requiring large factories to install affordable technology on smokestacks. Since then, however, the regulatory job has gotten much more complicated. With the low-hanging fruit having been picked, additional reductions require regulatory measures that are more far reaching, complex, and difficult.
They require more expensive control technologies, altering the internal operation of industrial processes, and going after smaller sources. Moreover, the number of pollutants has grown from a handful to hundreds, and the number of pollution sources that need to be regulated to achieve environmental goals has mushroomed as well.
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Also, concern has broadened from pollutants released into the air and water to include those released into the ground and contained in products. The EPA has dealt with this growing complexity the only way it could—by bureaucratic means.
The upper levels of the environmental chain of command lay on orders in copious detail, not only through regulations but through lengthy "guidance documents," as illustrated above. These federal documents, however, represent only the tip of the regulatory iceberg.
Additional layers below include state plans, statutes, regulations, and permits, all orchestrated by federal law. But not all decisions come from on high.
Plant operators are allowed to make proposals and can litigate. State regulators and federal regional offices have a degree of discretion on some issues. The system is, however, essentially top-down. This bureaucratic system tends to mandate uniform solutions when there are smarter ways to approach local conditions that would bring more environmental gain for less economic pain.
So narrow is the focus on regulating even small emissions from a plant in highly specific terms that much larger emissions from the same plant are sometimes missed altogether. This hierarchical system also breeds litigation.
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Environmentalists frustrated by delay and lack of progress bring suits to force EPA to act faster. Industry, burdened by a plethora of complex and often dysfunctional controls, sue EPA to obtain some relief. The hierarchy-heavy approach has come close to reaching its limits on some environmental problems. It is widely understood that we cannot achieve our increasingly ambitious goals with the old statutes. Pollution, wastes, and chemical hazards are not the only environmental problems that hierarchical regulation has failed to solve. Take the depletion of ocean fish. Regulators responsible for some fisheries in federally controlled parts of the oceans announce that, once the total catch of a particular fish by commercial boats reaches a certain limit for the year, they will ban fishing for the rest of the year.
In response, boats race to catch a lot in a hurry before the limit is reached. During the resulting derby, boats may fish around the clock and regardless of weather.
Nathaniel O. Parker MacDonald Shipton.
Breaking the Logjam: Environmental Protection That Will Work
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Why Congress must revise the Clean Air Act
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