A state pollution trading program aims to improve air quality, but critics worry about environmental justice
A little-known program for trading air pollution credits in Delaware will allow a facility on the Route 9 Corridor to expand its manufacturing capacity.
Delaware Public Media’s Sophia Schmidt reports some question whether the program benefits everyone.
Jeanette Waller Swain loves her garden, filled with neat beds of dusty miller, begonias and hostas that come back bigger every year.
“I did all that myself,” she said. “I get to say, this is what I created. And I think that's important. That's how you develop pride in your community.”
Swain, a retired insurance underwriter, lives in Collins Park, a residential neighborhood along the Route 9 Corridor near New Castle.
“Today it's a very diverse community,” she said. “It’s quiet. I know my neighbors. I'm very good friends with my neighbor next door, my neighbor across the street.”
But one thing Swain does not like about her neighborhood is how close it is to heavy industry—like the Croda and Fujifilm plants on Cherry Lane.
“You're talking about two, maybe two-and-a-half, three blocks that way and not even a block that way,” she said, standing in her backyard and pointing over a fence toward the facilities.
It’s a similar situation for many communities along the Route 9 Corridor, where residential-zoned land touches industrial. Residents and advocates have long argued these conflicting land uses hurt residents’ quality of life and health.
“I'm concerned about my health because I have an underlying lung condition as well as asthma,” Swain said. “So naturally, I'm concerned about breathing the air.”
Swain’s concerns have increased in recent months, due to an expansion project the printer ink manufacturer Fujifilm has planned for just a few blocks from her home—and a state emissions trading program that facilitated the project’s approval.
Fujifilm to bring part of its manufacturing process to Delaware from overseas
FujiFilm Imaging Colorants, Inc. secured a permit this summer to build and run a new plant where it will make locally a component of printer ink that it currently manufactures in Scotland. With the addition of two boilers and an HVAC system, emissions of several air pollutants from Fujifilm’s Cherry Lane site are expected to increase by an order of magnitude, but remain small.
Jeanette Swain appealed the permit, but the Delaware Coastal Zone Industrial Control Board voted to uphold it at a hearing in September, siding with state environmental regulators.
With the new plant, Fujifilm expects to emit 16 times its current emissions of carbon monoxide, volatile organic compounds (VOCs) and particulate matter (PM), which is linked to heart problems and asthma attacks. Annual emissions of those pollutants are projected to be 2.3 tons, 0.2 tons and 0.3 tons respectively with the new plant in operation. The site is expected to emit around 5 times its current amount of nitrogen oxides (NOx), for a total of 1.2 tons per year, as well as trace to small amounts of lead, nitrous oxide and methane.
The site’s emissions of planet-warming carbon dioxide are expected to increase 16-fold as well with the project, from around 300 to over 5,000 tons per year—roughly the equivalent of 1,000 passenger cars.
The closest home in Collins Park is just around 900 feet from Fujifilm’s property. DNREC’s assessment of the impacts of the project does not directly address whether any of the increased emissions could pose a health risk to nearby residents, but says the new project would cause “no interference with the public’s use of existing public or private recreational facilities or resources.”
Ali Mirzakhalili, administrator of the State of Oregon’s Division of Air Quality and former director of DNREC’s Division of Air Quality, says the projected emissions from Fujifilm’s plan are “really small.” He says several of the pollutants—NOx, VOCs and carbon dioxide—are mainly concerns at regional or global levels, and even the increased particulate matter, which can pose local health risks, is “miniscule.”
“Kudos to Delaware for assessing impacts at such low levels,” he wrote in an email. “Many states would not even require a permit for this level of emissions.”
Because it’s situated in Delaware’s protected coastal zone, Fujifilm is required to offset any negative environmental impact.
The company plans to do this in part by utilizing a little-known tool called the Delaware Emission Banking and Trading Program. The company has proposed buying two NOx credits, equivalent to two tons per year, and one VOCs credit, equivalent to one ton, from the Delaware Division of Small Business for a total of $5,000 plus a $500 application fee. Fujifilm has also promised an on-site reduction: replacing five propane-powered forklifts with equipment run on electricity, to offset most of the site’s annual carbon monoxide emissions.
Swain argued in her appeal that Fujifilm’s offset plan using the Emission Banking and Trading Program is insufficient, since it does not specifically address many of the pollutants that will increase with Fujifilm’s expansion.
Not everyone opposes the project. Martin Willis, a resident of New Castle and a union boilermaker, was the only member of the public to comment during Fujifilm’s permit hearing in May. He praised the company’s decision to move a manufacturing process from Scotland to Delaware and asked that the company hire a local contractor to build the plant.
Fujifilm estimates the project will bring up to $5 million in local spending for engineering and construction, as well as 21 new jobs associated with the plant.
A spokesperson for Fujifilm said in a statement that the company “met or exceeded all applicable environmental standards” set by the State and looks forward to continued engagement with the community.
Delaware’s system for trading air pollution
The Delaware Emission Banking and Trading Program has been around for nearly 25 years. It allows facilities to monetize their reductions in air pollution by getting them certified as credits.
“The banking rule is designed to encourage early reduction of emissions,” Mirzakhalili said. “By allowing banking and selling of those emissions, it puts value on these emissions and therefore encourages the existing sources that sometimes are more difficult to control, less cost-effective to control, [to] actually spend the resources to control those emissions below the regulatory requirements and gain a benefit for themselves and for the environment.”
When a plant shuts down and gets the resulting emissions reduction certified as credits, a quarter of those credits are immediately retired. The company keeps half, which it can sell to other companies that need to offset their emissions to meet state and federal requirements. The last quarter go to the state Division of Small Business, to sell as well.
“[DNREC] behaves in their planning as if these [banked] emissions were real, being emitted,” said Mirzakhalili, referring to Delaware’s ozone attainment plan to meet National Ambient Air Quality Standards. “So it doesn't create room for somebody else to emit. It keeps the airshed constrained still, but allows early actual reduction to benefit the environment.”
The two air pollutants explicitly addressed by the credits are NOx and VOCs.
“What we're really looking at is strictly NOx and VOCs because of their role in generating ozone,” says Angela Marconi, current director of the Delaware Division of Air Quality.
Ozone is good up in the stratosphere, but when NOx and VOCs react with sunlight to form ozone at the ground level, it can make symptoms worse for people with respiratory conditions like asthma. Both New Castle and Sussex counties are in nonattainment for some EPA ozone standards, but much of the ozone pollution in Delaware’s air comes from upwind states.
DNREC officials say the credits can also represent a reduction in other pollutants.
“When you're shutting down a NOx source, you're typically shutting down a fuel-burning source, like a boiler, a generator,” Marconi said. “That source is also generating other emissions. That source is going to generate carbon monoxide, it's going to generate some amount of particulate matter, carbon dioxide.”
Marconi says the program is not used often, because regulations steer companies toward lowering emissions in other ways before turning to offsets. The most recent uses of offsets through the program were by Agrorefiner in 2020 and Croda in 2018, according to DNREC. The agency said late last month there were between 166 and 261 total VOCs credits available in the bank statewide, depending on the time of year, and between 473 and 552 banked credits for NOx.
Mirzakhalili, who led Delaware’s Division of Air Quality from 2000 to 2018, says even during his tenure, the program was used “sporadically.”
“By developing the program, we followed the mantra, ‘If you build it, they will come,’” he said. “We did build it, and not a whole lot of people came.”
A primary goal of the emission banking and trading program is to encourage companies to reduce their air emissions and improve air quality. The program aims to do this through several mechanisms: a financial incentive for emissions reductions; the automatic retirement of a portion of certified credits; and a requirement that companies purchase slightly more offsets than the pollution they actually release, at ratios such as 1.1 to 1 or 1.3 to 1. The program has no cap on total credits.
DNREC has not collected data that quantifies the impact of the program on air quality, but considers its benefits self-evident.
“By the nature of it, it definitely does lead to a decrease in emissions,” Marconi said. “Every four tons that are certified, one of them gets retired.”
Does pollution trading perpetuate environmental injustice?
Emissions trading programs have gotten criticism from some environmental justice advocates, who worry they can contribute to environmental inequities on a local level.
“The general concept is that a facility in one location, that's able to reduce their pollution below permitted levels, is then able to trade with a facility in another location that is not able to do that, or chooses not to do that,” said Caroline Farrell, executive director of the California-based nonprofit Center on Race, Poverty & the Environment. “Often the areas where the pollution is allowed to continue to be emitted at higher levels are in low-income communities and communities of color.”
As of the 2020 census, over 38% of residents in the census tract around Collins Park are Hispanic or Latino, more than three times the state average. Roughly 45% of residents there are white alone—fewer than statewide—and 19% are Black or African American alone—similar to the statewide average.
Widener environmental law professor Kenneth Kristl has concerns about the local impacts of Delaware’s trading program. He heads the school’s Environmental and Natural Resources Law Clinic and represented Swain in her appeal.
“If we sort of go up to a high enough level and look across the whole state, we'd say, well, there's a reduction. But there's actually an increase in the place where the credits are being used,” he said. “It's not entirely clear that because we've got less NOx down in southern Delaware, that the people in New Castle County are breathing cleaner air as a result.”
Farrell says one solution is to have “no-trade zones,” which would ban the use of emissions offsets in areas already disproportionately exposed to pollution.
Mirzakhalili says environmental justice is a “real concern” for offset programs in general, but not in the case of Fujifilm—because of the low levels of projected emissions associated with the project.
“You’ve got to consider the local impacts of emissions if there are any trades that are done,” he said. “In this instance, ... they're not sizable [enough] to make any discernible local impact. But I think it's an important consideration in the context of program design.”
DNREC’s Marconi says she does not see Delaware’s pollution trading program contributing to environmental inequities, in part because emissions credits tend to be both used and generated in industrial areas. She also points to the types of pollutants the program covers.
“The nature of ozone being a regional pollutant,” she said. “It's not as much of a localized issue as some other issues like dust could be.”
But that’s not how Jeanette Swain sees it. In fact, she sees the ability for a company to buy credits to pollute more near neighborhoods like hers as environmental racism.
“Administratively—on paper—they're offsetting pollution. But what does that do for the actual emissions that go into the atmosphere?” she said. “They're talking about eliminating pollution that's going to come down on this community by buying credits. That's absurd.”
Fujifilm expects to start operating its new plant, facilitated by the state’s emissions trading program, in spring 2022.