IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v5y1995i2p115-129.html
   My bibliography  Save this article

The U.S. allowance trading system for sulfur dioxide: An update on market experience

Author

Listed:
  • Renee Rico

Abstract

In 1990, the U.S. Congress passed legislation that amended the Clean Air Act to create a new program to mitigate the effects of acid deposition in the U.S. through emission reductions of sulfur dioxide (SO 2 ) and nitrogen oxides (NO x ) at electric utility plants across the country. The SO 2 reductions, totalling a 40% reduction nationally from 1980 levels or a 10 million ton reduction annually, are achieved largely through an emission trading system, the largest program of its kind designed to date. This trading system has the potential to save up to half of the compliance costs associated with more traditional source-by-source emission limit programs. This paper briefly discusses background on the acid rain issue in the United States, and the principal features of the program, including: a permanent cap on utility emissions of SO 2 beginning in 2010, decision to grant up-front allocation of emission credits to reduce individual approvals of trades, the use of continuous emission monitors and automatic penalties to ensure compliance, and integration of the Acid Rain program requirements with other Clean Air Act programs. The paper also discusses the development of the allowance trading market to date, including the types of compliance options chosen and quantity and type of emissions trading being conducted. Copyright Kluwer Academic Publishers 1995

Suggested Citation

  • Renee Rico, 1995. "The U.S. allowance trading system for sulfur dioxide: An update on market experience," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(2), pages 115-129, March.
    • Handle: RePEc:kap:enreec:v:5:y:1995:i:2:p:115-129
    DOI: 10.1007/BF00693019
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF00693019
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF00693019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Labandeira-Villot, Xavier, 1996. "Market instruments and the control of acid rain damage : Effects of a sulphur tax on the Spanish electricity generating industry," Energy Policy, Elsevier, vol. 24(9), pages 841-854, September.
    2. Hong, Zhaofu & Chu, Chengbin & Yu, Yugang, 2016. "Dual-mode production planning for manufacturing with emission constraints," European Journal of Operational Research, Elsevier, vol. 251(1), pages 96-106.
    3. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from air pollution in Santiago, Chile," Working Papers in Economics 326, University of Gothenburg, Department of Economics.
    4. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    5. Requate, Till & Camacho-Cuena, Eva & Kean Siang, Ch'ng & Waichman, Israel, 2019. "Tell the truth or not? The montero mechanism for emissions control at work," Journal of Environmental Economics and Management, Elsevier, vol. 95(C), pages 133-152.
    6. Milt, Austin W. & Armsworth, Paul R., 2017. "Performance of a cap and trade system for managing environmental impacts of shale gas surface infrastructure," Ecological Economics, Elsevier, vol. 131(C), pages 399-406.
    7. Richard Schmalensee & Robert N. Stavins, 2019. "Policy Evolution under the Clean Air Act," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 27-50, Fall.
    8. Richard Schmalensee & Robert N. Stavins, 2017. "Lessons Learned from Three Decades of Experience with Cap and Trade," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 59-79.
    9. Olivier Godard & Christine Cros, 1998. "The economic design of a potential tradable permit system for SO2 emissions in the European Union," Post-Print hal-00622840, HAL.
    10. Lile, Ronald D. & Burtraw, Dallas, 1998. "State-Level Policies and Regulatory Guidance for Compliance in the Early Years of the SO2 Emission Allowance Trading Program," Discussion Papers 10828, Resources for the Future.
    11. 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.
    12. Brookshire, David S & Burness, H Stuart, 2001. "The Informational Role of the EPA SO2 Permit Auction," Journal of Regulatory Economics, Springer, vol. 20(1), pages 43-60, July.
    13. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
    14. Kopsch, Fredrik, 2012. "Aviation and the EU Emissions Trading Scheme—Lessons learned from previous emissions trading schemes," Energy Policy, Elsevier, vol. 49(C), pages 770-773.
    15. Stronzik, Marcus & Dette, Birgit & Herold, Anke, 2000. "Early crediting als klimapolitisches Instrument: Eine ökonomische und rechtliche Analyse," ZEW Dokumentationen 00-13, ZEW - Leibniz Centre for European Economic Research.
    16. G T Svendsen, 1998. "The US Acid Rain Program: Design, Performance, and Assessment," Environment and Planning C, , vol. 16(6), pages 723-734, December.
    17. J. Diltz, 2002. "U.S. Equity Markets and Environmental Policy. The Case of Electric Utility Investor Behavior During the Passage of the Clean Air Act Amendments of 1990," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 379-401, December.
    18. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    19. Sandoff, Anders & Schaad, Gabriela, 2009. "Does EU ETS lead to emission reductions through trade? The case of the Swedish emissions trading sector participants," Energy Policy, Elsevier, vol. 37(10), pages 3967-3977, October.
    20. Panagiotis Koromilas & Angeliki Mathioudaki & Sotirios Dimos & Dimitris Fotakis, 2023. "Modeling Intertemporal Trading of Emission Permits Under Market Power," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(1), pages 241-278, January.
    21. Fullerton, Don & McDermott, Shaun P. & Caulkins, Jonathan P., 1997. "Sulfur Dioxide Compliance of a Regulated Utility," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 32-53, September.
    22. B Hansjürgens, 1998. "The Sulfur Dioxide Allowance-Trading Program in the USA: Recent Developments and Lessons to be Learned," Environment and Planning C, , vol. 16(3), pages 341-361, June.
    23. Ellerman, A. Denny & Montero, Juan-Pablo, 1998. "The Declining Trend in Sulfur Dioxide Emissions: Implications for Allowance Prices," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 26-45, July.
    24. Pearce, David, 1997. "Replicating innovative national financing mechanisms for sustainable development," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34308, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:5:y:1995:i:2:p:115-129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.