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Phase I Completed: An Empirical Assessment of the 1990 CAAA

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  • John Swinton

Abstract

With the conclusion of Phase I trading of SO 2 allowances, the EPA declared the allowance trading policy to be a success. The time had come to include cap-and-trade programs in the arsenal of effective policy tools. In terms of reducing atmospheric emissions of sulfur dioxide, the program appears to be successful. It is not clear, however, whether or not the program has minimized the cost of achieving the emission reductions. The measure of the true success of a market-based incentive program, however, has yetto be quantified: Has the program resulted in converging marginalabatement costs across participant plants? In this study I report theshadow prices of Phase I power plants from 1994 to 1998 anddetermine that there are more costs to be saved within theambitious public policy experiment. Copyright Kluwer Academic Publishers 2004

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  • John Swinton, 2004. "Phase I Completed: An Empirical Assessment of the 1990 CAAA," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(3), pages 227-246, March.
    • Handle: RePEc:kap:enreec:v:27:y:2004:i:3:p:227-246
    DOI: 10.1023/B:EARE.0000017662.36573.2c
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    Cited by:

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    2. Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    3. Kosnik, Lea & Lange, Ian, 2011. "Contract renegotiation and rent re-distribution: Who gets raked over the coals?," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 155-165, September.
    4. Färe, Rolf & Pasurka, Carl & Vardanyan, Michael, 2017. "On endogenizing direction vectors in parametric directional distance function-based models," European Journal of Operational Research, Elsevier, vol. 262(1), pages 361-369.
    5. Kumar, Surender & Managi, Shunsuke, 2010. "Sulfur dioxide allowances: Trading and technological progress," Ecological Economics, Elsevier, vol. 69(3), pages 623-631, January.
    6. Lee, Sang-choon & Oh, Dong-hyun & Lee, Jeong-dong, 2014. "A new approach to measuring shadow price: Reconciling engineering and economic perspectives," Energy Economics, Elsevier, vol. 46(C), pages 66-77.
    7. Kumar, Surender & Gupta, Sreekant, 2004. "Resource use efficiency of US electricity generating plants during the SO2 trading regime: A distance function approach," Working Papers 04/17, National Institute of Public Finance and Policy.
    8. He, Xiaoping, 2015. "Regional differences in China's CO2 abatement cost," Energy Policy, Elsevier, vol. 80(C), pages 145-152.
    9. Chan, H. Ron & Chupp, B. Andrew & Cropper, Maureen L. & Muller, Nicholas Z., 2018. "The impact of trading on the costs and benefits of the Acid Rain Program," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 180-209.
    10. Zhou, P. & Zhou, X. & Fan, L.W., 2014. "On estimating shadow prices of undesirable outputs with efficiency models: A literature review," Applied Energy, Elsevier, vol. 130(C), pages 799-806.
    11. Hampf, Benjamin & Rødseth, Kenneth Løvold, 2019. "Environmental efficiency measurement with heterogeneous input quality: A nonparametric analysis of U.S. power plants," Energy Economics, Elsevier, vol. 81(C), pages 610-625.

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