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Sulfur Allowance Trading and the Regional Clean Air Incentives Market: A Comparative Design Analysis of two Major Cap-and-Trade Permit Programs?

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  • Reimund Schwarze

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  • Peter Zapfel

Abstract

This paper investigates in detail the design parameters of the two mostprominent US cap-and-trade permit program – the US EPA Sulfur AllowanceTrading Program and the South Californian Regional Clean Air IncentivesMarket (RECLAIM). In contrast to expectations the two programs turn out to be rather different in several important design parameter choices.Common elements emerge primarily in the existence of an ambitious, quantifiedenvironmental target, mandatory use of stringent emission monitoring methodsand stiff penalties for non-compliance, coexisting command-and-controlregulations, the creation of a competitive permit market structure, andsome distributional concessions in the initial permit allocation. Generalizing from these common features we find that provisions to assurepolitical acceptance, functional interdependencies and overlapping regulation are the most important influences on the design of applied cap-and-trade permit programs. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Reimund Schwarze & Peter Zapfel, 2000. "Sulfur Allowance Trading and the Regional Clean Air Incentives Market: A Comparative Design Analysis of two Major Cap-and-Trade Permit Programs?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 279-298, November.
  • Handle: RePEc:kap:enreec:v:17:y:2000:i:3:p:279-298 DOI: 10.1023/A:1026406931199
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    References listed on IDEAS

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    Cited by:

    1. Lozano, S. & Villa, G. & Brännlund, R., 2009. "Centralised reallocation of emission permits using DEA," European Journal of Operational Research, Elsevier, vol. 193(3), pages 752-760, March.
    2. Tisdell, John, 2007. "Bringing biophysical models into the economic laboratory: An experimental analysis of sediment trading in Australia," Ecological Economics, Elsevier, vol. 60(3), pages 584-595, January.
    3. Asproudis, Elias & Weyman-Jones, Tom, 2011. "Third parties �participation in tradable permits market. Do we need them?," MPRA Paper 28766, University Library of Munich, Germany.
    4. Rousse, Olivier, 2008. "Environmental and economic benefits resulting from citizens' participation in CO2 emissions trading: An efficient alternative solution to the voluntary compensation of CO2 emissions," Energy Policy, Elsevier, vol. 36(1), pages 388-397, January.
    5. Stephen P. Holland & Michael R. Moore, 2012. "When to Pollute, When to Abate? Intertemporal Permit Use in the Los Angeles NOx Market," Land Economics, University of Wisconsin Press, vol. 88(2), pages 275-299.
    6. Sumaia A. Al-Kohlani & Heather E. Campbell, 2016. "Rank-order implications of social construction theory: Does air quality depend on social constructions?," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(4), pages 467-488, December.
    7. Knut Rosendahl & Halvor Storrøsten, 2011. "Emissions Trading with Updated Allocation: Effects on Entry/Exit and Distribution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(2), pages 243-261, June.
    8. Meredith Fowlie & Jeffrey M. Perloff, 2013. "Distributing Pollution Rights in Cap-and-Trade Programs: Are Outcomes Independent of Allocation?," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1640-1652, December.
    9. Katrin Rehdanz & Richard S.J. Tol, 2004. "On Multi-Period Allocation Of Tradable Emission Permits," Working Papers FNU-43, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
    10. Cattaneo, Andrea, 2001. "Environmental Quality Incentives Program: Why Are So Many Contracts Being Cancelled?," 2001 Annual meeting, August 5-8, Chicago, IL 20597, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Shaheen, Susan A. & Bejamin-Chung, Jade & Allen, Denise & Howe-Steiger, Linda, 2009. "Achieving California’s Land Use and Transportation Greenhouse Gas Emission Targets Under AB 32: An Exploration of Potential Policy Processes and Mechanisms," Institute of Transportation Studies, Working Paper Series qt8bm4t7w5, Institute of Transportation Studies, UC Davis.
    12. Gautier Kohler & Benoit Lefèvre;, 2011. "A comparative analysis of city-based emission trading schemes: key design and management factors for environmental cost effectiveness," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 35(2/3/4), pages 215-241.

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