What Modern Latinas Need to Know about Cap-and-Trade


by Perlita Dicochea

Pitbull encourages us to party to the hypnotic melodies of Global Warming, but modern eco-Latinas should also feel this moment to keep informed of our Golden State’s opportunity to address climate change while investing in the economic and environmental needs of disadvantaged communities. Yes, the California Global Warming Solutions Act—or Assembly Bill 32—is designed to do all of that.

AB 32 imposes a “cap” on total allowable emissions of greenhouse gasses (GHGs)—which trap heat in the atmosphere and accelerate climate change—and creates a market through which the largest polluters may purchase and sell GHG emissions, or allowances.

Cap-and-trade diagram courtesy of Earthly Issues.


One allowance equals one permit per metric ton of GHGs emitted. One metric ton of CO2, an element of GHGs, fills a twenty-seven foot cube. “Cubes” of GHGs are traded in an auction regulated by the State’s Air Resources Control Board (ARB).


CO2 cube courtesy of Verus Carbon Neutral.


According to 2010 data gathered by the ARB, the Bay Area’s top air polluters include Chevron in Richmond, Shell Oil and Tesoro in Martinez, Valero in Benicia, Mirant Potrero in San Francisco, Cardinal Cogen in Stanford, Lehigh SW Cement in Cupertino, and Calpine/Metcalf Energy Center in San Jose.

Air pollution emissions data suggest that Pitbull’s hotness is not the cause of global warming.

Additionally, mounting data indicate negative impacts from climate change such as extreme weather (droughts, severe storms, heat waves) and increased food prices. The Bay Area is already on the map for predicted hazardous impacts due to the rising sea.

“We have to get it right here,” said Ryan Young, legal counsel at The Greenlining Institute, “Climate change poses the greatest threat to underserved minority communities and Greenhouse Reduction Fund investments could improve children’s health and create jobs.”

What is the Greenhouse Reduction Fund?

AB 32 employs an environmental justice mechanism to address disproportionate impacts experienced by disadvantaged communities through Senate Bill 535, introduced by Senator Kevin De Leon (D-LA), which requires that:

a) The California Environmental Protection Agency identify disadvantaged communities for investment opportunities

b) The Department of Finance allocate 25% of the revenues from the auction to projects that benefit disadvantaged communities

c) A minimum of 10% of the auction revenues go toward projects within disadvantaged communities

Investments in disadvantaged communities may take the form of economic development, job creation and training, transportation infrastructure, and other public health and climate adaptation measures for communities that experience disproportionate negative environmental impacts and unequal access to resources and opportunities due in part to the practices of private industries and government agencies.

As an example of the connections between various issues, cleaner air improves the health and school success of children of color.

Pollution impacts infograph courtesy of The Greenlining Institute.

Thus, the Greenhouse Reduction Fund could potentially internalize various externalities.

What is an externality and what does it mean to internalize one?

Externalities include social and environmental problems and additional inequities that often result when free markets to do what they do best—maximize profit. Industries might pollute the air or water, maintain hazardous workplaces, disinvest in low-income and communities of color, or contribute to race and gender discrimination through discrepancies in wages or hiring and promotion practices. Such market failures are usually someone else’s problems.

Instead of hechando social ills pa’lla, California’s cap-and-trade policy directs private and government institutions to take some responsibility for crafting legacies of socioeconomic and environmental inequalities throughout our State.

Don’t Start the Party!

If SB 535 is to signify an initial effort toward systematic accountability, it needs to be funded.

“We can’t run the victory lap, yet,” said Jorge Madrid, Climate and Air Fellow at the Environmental Defense Fund. “This is an opportunity to create meaningful community investment. Until that investment materializes, [SB 535] is not real.”

Despite recent attempts by the Joint Budget Conference Committee to harness some of the 25% mandated by the Greenhouse Gas Reduction Fund, the budget-ship ultimately sailed elsewhere—possibly along with the public’s trust.

Suggestions for Mr. Worldwide

Pitbull’s party-to-global-warming platform could be a ruse to advocate for environmental justice. While performing in California, Armando Perez will inform his fans that a) global warming is, in fact, a bad thing, b) his hotness is not the cause of it, and c) climate change will most significantly impact our underserved communities. Pitbull will then recite provocative lyrics that inspire our Governor to demonstrate more courage with the budget next time.

Perlita Dicochea earned her Ph.D. in Ethnic Studies with an affiliated discipline in Environmental Economics and Policy at U.C. Berkeley. Her current research focuses on non-profit efforts to integrate environmental justice approaches within climate change research and policy. Send Perlita comments and suggestions for future stories at perlita@cal.berkeley.edu and follow her on Twitter: @dr_perlita