The geography of So{sub 2} emissions trading
- Environmental Protection Agency, Washington, DC (United States)
Interstate trading of SO{sub 2} emission allowances under the Clean Air Act Amendments of 1990 represents the largest-scale application of market principles to environmental protection. some opponents have hypothesized that high emitting electric power plants in the Midwestern states will buy additional allowances and thereby sustain SO{sub 2} emissions at unacceptable high levels. Much of these emissions would then continue to return downwind as sulfates in the Northeast, damaging critical ecosystems such as lakes and forests in the Adirondacks. A competing hypothesis is that in an increasingly competitive utility industry, a power plant will choose the least-cost compliance option for its SO{sub 2} emission requirements, which for many large and dirty Midwestern plants will be to retrofit with scrubbers. This paper will provide the first comprehensive empirical analysis of the geographic pattern of SO{sub 2} allowance trading for the first three years (early 1992 to early 1995) to determine the validity of the first hypothesis. It will be shown that with the exception of one electric utility in Illinois, the Midwestern states have not used allowance trading to sustain high emission levels. A Congressionally-mandated subsidy for scrubber retrofits at Phase I affected-units, however, has allowed two of these states (Ohio and Indiana) plus three additional Appalachian states (Tennessee, West Virginia and Pennsylvania) to acquire large quantities of bonus allowances. Most of these additional allowances may be banked for future use at other affected units by the acquiring utilities, since the newly scrubbed plants will have much lower SO{sub 2} emissions because of the scrubber retrofits. The good news is that the trading program is projected to save a lot of money, over $2 billion out of a possible $3 billion in annual compliance costs by the time of Phase II.
- Research Organization:
- National Association of Environmental Professionals, Washington, DC (United States)
- OSTI ID:
- 126011
- Report Number(s):
- CONF-9506115-; TRN: 95:006735-0106
- Resource Relation:
- Conference: 20. National Association of Environmental Professionals annual conference and exposition: environmental challenges - the next twenty years, Washington, DC (United States), 10-13 Jun 1995; Other Information: PBD: 1995; Related Information: Is Part Of Environmental challenges: The next 20 years. Proceedings; PB: 932 p.
- Country of Publication:
- United States
- Language:
- English
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