Maryland's Economic Development and Community Administration has asked the General Assembly to consider a proposal that would allow businesses in the state to buy, sell and trade the right to pollute the air. If the plan is eventually adopted, it would likely make Maryland the first state to try out what amounts to a revolutionary idea in pollution control.
The plan has been largely developed by the federal Environmental Protection Agency in its search for ways to bring down the cost of pollution control -- which will otherwise inevitably rise as the economy grows. In industrialized, polluted areas, such as parts of Maryland, a way also had to be found to avoid an imminent choice between economic stagnation and unsafe air. Allowing industries to earn pollution credits should, EPA reasoned, help solve this problem in two crucial ways.
The ability to build up pollution credits would, for the first time, give industry an incentive to remove more pollution than the regulatory minimum. This would create a pool of clean air that could be used by a new plant or expansion of an existing business. It would mean that if one business could remove sulfur, for example, at a cost of a few cents per pound, it could sell the pollution it didn't release to another business whose sulfur removal might cost a dollar per pound. Under the proposed rules, which would require that every trade result in cleaner air, the first business could suddenly find itself transformed from an environmental polluter to a pollution controller, making a healthy profit in the process.
The new plan would also give industry a powerful profit motive to develop new pollution control technologies that could drastically reduce costs. There is an urgent need for such innovation, for although most of today's technologies are relatively primitive and expensive to run, little research -- except that paid for by the federal government -- is going on. The reason is simple: research costs a lot of money, and federal standards that tell a business exactly how much pollution it may emit, and how it should be controlled, remove most of the incentive to remove more or to do it more cheaply.
In considering the new proposal, the General Assembly will find itself wrestling with a lot of questions for which there are no tried and tested answers. Should the state be able to acquire and dispose of pollution rights? How should sales of pollution credits be taxed? How can the program be monitored to ensure that the air does in fact get cleaner? How, under this plan, would Maryland interact with its neighbors? And these are just a few.
But these admittedly formidable problems should not dissuade the legislators from giving the proposal a thorough hearing -- all truly new ideas, even the best, can look impossibly difficult at the beginning. Government regulations are generalizations -- designed to manage broad problems, not to fit specific situations. In theory at least, a free market in pollution rights offers a more flexible and economically sensible alternative yielding more pollution control at less cost. If Maryland can solve the many administrative problems, it seems a worthwhile experiment.