Smog Market: Early Jitters : But innovative plan for reducing pollution is well worth trying

Southern California’s largest smog-control agency has sailed through the easy part of a high-stakes test of free-market theory as a new tool for cleaning up the region’s air.

Now it starts grinding away at nuts-and-bolts questions that will determine whether a concept that is valid on paper can work in real life.

If it finds the answers, the region may be able to save billions of dollars and still get its air clean by the turn of the century. If not, Los Angeles, Orange, Riverside and parts of San Bernardino counties probably would actually lose ground to smog.

The easy part was a signal from the policy board of the South Coast Air Quality Management District that asked agency staff, business and environmentalists to work together to translate theory into hard and fast rules.

The new rules would cover the 2,800 factories and other facilities that account for more than three-fourths of the most active elements of smog.

The heart of the plan would be a “smog exchange” where companies that can quite easily cut emissions would sell pollution permits to companies that need more time to come up with new pollution-control technology.

Now come the questions. How would cheating be detected? What would stop a company from selling its smog credits and moving out with the money?

Another involves how much credit a company deserves for what it has already spent to tamp down pollution. ARCO, for example, reckons it has already cut emissions by 80% through its cleaner gasoline formula and refinery controls. There is debate within industry whether such past effort should qualify for full credit.

These are formidable challenges, but earlier doubts that the venture would even get this far seem reason enough to hope that nobody will rest until the last question is answered.