Carbon Trading & Environmental Equity: Evidence from the Regional Greenhouse Gas Initiative (2000 - 2019)

Abstract

The Regional Greenhouse Gas Initiative (RGGI) was the first carbon cap-and-trade policy established in the U.S. The goal of RGGI was to mitigate climate change by regulating the emission of CO2 from fossil-fuel fired electric power plants located in the ten participating Northeast states. Given CO2 disperses globally, any reduction in emissions regardless of geographic location is beneficial in reducing the impacts of climate change, making CO2 an ideal pollutant for flexible market-based instruments. However, since CO2 emissions from fossil-fuel fired power plants are accompanied with co-pollutants that cause local harm to human health, market-based solutions create the potential for co-pollutant hotspots to form. This analysis examined whether RGGI has resulted in hotspots in locations where they could disproportionately impact communities color, low-income, low-educational attainment, and linguistic isolation. Temporal trends in emission of CO2 with respect to multiple measures of neighborhood demographics were evaluated using data from 2000 – 2019. The results of this research found that (1) neighborhoods near facilities regulated under RGGI have higher proportions of non-white residents, low educational attainment, poverty, and linguistic isolation than those further away; (2) twenty nine percent of facilities have continued to increase their emissions since the implementation of RGGI; and (3) the neighborhoods located near facilities with increasing emissions are found to have a statistically significant higher proportion of residents of color and households below the poverty line. These results raise environmental equity concerns regarding the health of communities of color and low-income located in RGGI states.