The previous lecture discussed sulfur dioxide emissions trading policies under the 1990 Clean Air Act amendments. Emissions trading policies are most feasible when pollutants are localized rather than widely dispersed across large regions. In fact, localized controls may actually generate regional problems. For example, local SO2 emissions controls initially induced firms to build tall smokestacks so that SO2 emissions are carried beyond the zone of control. This created acid deposition far downwind. The Acid Rain Program involved highly controversial compromises between the high-sulfur coal industry and their utility customers in the "Rust Belt," and forestry, aesthetics and outdoor recreation in the Northeast. Midwest electricity rates have risen as utilities installed "scrubbers" to reduce SO2 emissions and/or purchase emissions permits.
Mobile-source air pollution
Mobile-source pollutants include nitrogen oxides and ground-level ozone, primarily produced by cars and trucks. CAA regulations created the EPA's vehicle emission control program, which has dramatically reduced both nitrogen oxide and hydrocarbon emissions. Some of this improvment is attributable to Corporate Average Fuel Economy (CAFE) standards for new automobiles, which require that manufacturers' fleets meet a specified mile/gallon efficiency. (CAFE standards originated as an energy conservation policy following the 1974 oil embargo.) Today's new cars emit 70% fewer nitrogen oxides and about 90% fewer hydrocarbons than cars of the 1960s. EPA regulations require new cars to have catalytic converters and vapor controls. Unfortunately, the efficiency of these emissions-control technologies tends to diminish with vehicle age, so that older cars tend to emit significantly more pollutants than new cars.
The EPA has experimented with programs to retire older high-emission vehicles, but these are expensive (if people are paid to retire their cars) or politically unpopular (high-emission cars are basically confiscated, mostly from low-income people who can't afford better cars).
Unfortunately, since 1970 both the number of cars on the road and miles traveled by each car have about doubled. While nitrogen oxides have been brought under control, ground-level ozone remains a problem in nearly 100 cities which regularly exceed the EPA NAAQS for ozone, defined as the highest tolerable ozone exposure for "sensitive" persons. "Severe" non-attainment zones include most of the Northeast corridor (Boston to D.C.) and coastal southern California. Nine cities with a combined population of about 60 million people have ground-level ozone pollution with peak levels 50% or more above the NAAQS.
The quadrupling of total road miles driven is dramatic evidence of Americans' love of cars. Manufacturers understand that cars represent far more than simple transportation: they are mobile privacy pods, entertainment centers, toys, status symbols, symbols of freedom, expressions of ourselves. So getting people to carpool or ride the bus or train isn't just a matter of convincing them that it's cheaper or more eco-friendly. Many Americans have a deep distaste for public transportation, perhaps learned from years of unpleasant school bus rides.
US highway system capacity is failing to keep up with this increased demand for automobile miles, and traffic jams are significant sources of unnecessary air pollution. One potential solution to traffic jams is to ration road use with tolls. Today's highway tolls are only meant to finance road maintenance and repairs. A congesion-management toll would vary with time of day, increasing during rush hours and falling during low-demand periods. The EZ-Pass system being adopted in Delaware, Pennsylvania, New Jersey and New York would facilitate such a toll system.
In the mean time, 10- and 20-mile holiday weekend backups are regular occurrences on major highways in our region, and slow toll collection is a major cause of this. Although the maximum toll on the New Jersey Turnpike is only $4.60 per car, the Turnpike Authority is willing to make people wait upwards of two hours to pay it. This is grossly inefficient under any plausible valuation of motorists' time wasted. A Federal law could require toll authorities to cease collecting tolls and simply wave cars through whenever backups exceed, say, 15 minutes; this would improve air quality, reduce unnecessary congestion and give toll authorities a clear incentive to open more toll booths at high-demand times.
Global air pollution
Some pollutants are dispersed globally, and require international controls. For example, CFC's are blamed for ozone depletion (ground-level ozone is a pollutant, but ozone in the stratosphere filters out harmful solar UV radiation). 59 countries have signed a 1990 treaty agreeing to phase out CFC's entirely by 2000, and established a fund to subsidize LDC phase-outs of these chemicals. The US is using a marketable permit system for CFC's: permits will be phased out gradually. Windfall profits accruing to permit-holders are captured by an excise tax on CFC's.
Greenhouse gases (e.g., CO2, methane) supposedly trap excess solar heat in the earth's atmosphere, causing global warming and climatic disruptions. There is a lot of scientific controversy about whether we are actually experiencing global warming or not, and about how much warming (if any) is due to human causes.
Various solutions are under discussion: UN-administered taxes on all industries which generate greenhouse gases, so that industries internalize the full environmental cost of their emissions; international subsidies for reforestation and rainforest protection to absorb more CO2 in vegetation; the development of an international market in greenhouse gas emissions permits. An international permit market can only succeed if emissions permits are accepted as permanent, quantifiable and enforceable worldwide.
Although uncertainty about global warming is very high, the risks of being wrong about it are asymmetric: excess control of greenhouse gases will retard global economic growth, while too little control could result in global disaster. Note that the very long time horizons of the global warming problem make conventional benefit-cost analyses unreliable. For example, the PV of world GNP 100 years from now at prevailing interest rates is less than 10 million! We need to factor in a little more atruism for future generations. At the very least, we need to eliminate market distortions that actually promote the generation of greenhouse gases.
Solving these global pollution problems will require unprecedented international cooperation. One major problem is convincing less-developed countries (LDC's) that they cannot simply mimic the same industrial development paths that brought wealth to today's developed nations.