Initially offsets occurred within companies. Firms that wanted to expand had to reduce the emissions from their existing facilities so that the total amount of emissions when they built their new plant was no more than they had previously been discharging. This then spread to external offsets. For example, in Oklahoma City, oil companies were persuaded by the local chamber of commerce to reduce their hydrocarbon emissions enough to allow a new General Motors car manufacturing factory to be established in the area. In other cases, government facilities reduced their emissions to offset the effect of new private industries moving into their areas. In another situation, an oil company planning to build a petroleum processing plant that would discharge sulphur dioxide and hydrocarbons arranged to pay for the pollution control equipment for a dry cleaning business; to buy and close down a chemical factory; and to buy low-sulphur fuel for some ships in San Francisco Bay (Senecca & Taussig 1984, p. 233). Such arrangements have now been formalised into a market for offsets&emdash;in fact, offsets are mandatory for major new sources of pollution in non-attainment areas. Trading in pollution quotas means that firms already in an overpolluted area can voluntarily reduce their emissions; in return they get 'emission reduction credits'. These credits could be sold to firms wanting to move into the area. New firms have to buy 1.2 emission reduction credits for each unit of emission that will come from their plant. However, most offsets still occur within companies rather than between companies. In 1990, T. H. Tietenberg, a professor of economics in the USA, estimated that 2000 to 2500 offset transactions had taken place. He argued that not only did this policy allow new firms to move into polluted cities but, because of the 1.2 to 1 ratio of the offset, they were actually causing pollution to be reduced. He said that 'economic growth facilitated, rather than blocked, air quality improvement' (1990, p. 44). However, Tietenberg's claims that environmental improvements have occurred have not been substantiated by the relevant studies.  |
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