New York State hands industry licence to pollute

In its efforts to attract new industries to set up shop within its borders, New York State has surely come up with the most novel - and politically controversial - incentive of them all: permission to pollute.

The strategy, details of which only surfaced this week, will be seen either as policy gone mad or as a masterstroke by a state government trying to balance the demands for economic growth and environmental responsibility.

It is made possible by the existence already of so-called pollution credits that are traded for many thousands of dollars on the open market. The credits are the progeny of the Federal Clean Air Act of 1990 that first set limits on how much noxious material industrial plants could pump into the air.

The Act created a system that works like this: any company or state agency that successfully stays below the limits imposed upon it by the law is granted pollution credits as a reward for its efforts. Those credits can then be traded. The buyers are firms who can then use them to stay within the law rather than investing in modifying their plants actually to reduce emissions.

Now the administration of George Pataki, the Governor of New York, is dangling these credits in front of companies contemplating coming to the state and handing them over free. A glass-making factory has already established itself in the state thanks to a huge hand-out of these credits.

The revelation is bound to provoke angry reactions from environmentalists. Activists argue that once credits have been accumulated, they should be retired instead of sold in order to ensure further protection of the atmosphere.

The United States itself has been widely criticised for being too soft in enacting global agreements on curbing so-called greenhouse gas emissions, the foundations of which were laid at the United Nations Rio summit five years ago.

The notion of pollution credits is, in fact, at the core of proposals recently made by the Clinton administration to the UN, in advance of a summit on greenhouse gases to be held later in Kyoto, Japan. In this instance, environmentalist activists may like the proposal. It suggests offering credits to companies that go beyond what is required of them in cutting emissions in new plants in emerging industrial giants like China. In return, they would be spared the obligation to make modifications to factories at home in the US, which are probably reasonably efficient already.

Among leading brokerages of pollution credits is Cantor Fitzgerald in New York. Last month, its Environmental Brokerage Services set up a web site for the trading of pollution credits. Moreover, the firm pledged that it would purchase - and retire - one credit for a ton of polluting emissions for every visit made to the site.

Attention was turned recently to an upstate New York school that initiated a project to raise money for purchasing pollution credits, which were then retired. The students raised $24,000 (pounds 15,000) which paid for credits equivalent to the emission of 300 tonnes of sulphur dioxide.

Defending New York state's new policy, a spokesperson for the Empire State Development Corporation told the New York Times: "It was a unique and innovative idea. We try to make it easier for manufacturers to move to New York."

But the group Environmental Advocates countered: "It's disturbing that the state would turn around and give away pollution credits it has accumulated by reducing its own pollution emission. The state should be retiring them for public health."