Regulatory aspects of emissions trading: Conflicts between economic and environmental goals

Journal Article · Fri Nov 30 23:00:00 EST 1990 · Electricity Journal; (USA)

DOI:https://doi.org/10.1016/1040-6190(90)90040-G· OSTI ID:6005785

Bohi, D; Burtraw, D ^[1]

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1. Resources for the Future, Washington, DC (USA)

Emission allowances will be distributed to electric utilities that will allow them to emit specified amounts of sulfur dioxide, while the total number of allowances to be issued each year will conform to the national environmental objective to halve total emissions. Utilities will be allowed to buy and sell allowances to cover their emissions. This approach is intended to establish incentives that will encourage the industry to undertake the least-cost approach to meeting the environmental objective. Skeptics of emissions trading argue that the market for allowances is not likely to work efficiently and that the intended cost-minimizing feature of the program may not be realized. One of the principal reasons for skepticism is that the utility industry is already subject to extensive economic regulation and that those regulations are likely to interfere with the incentives that make emissions trading work. This article describes how the emissions trading program is intended to work and how public utility regulation could undermine the effectiveness of that program. The paper concludes with recommended policies that public utility regulators should adopt to improve the effectiveness of allowance trading. 1 tab.

• OSTI ID: 6005785
• Journal Information: Electricity Journal; (USA), Journal Name: Electricity Journal; (USA) Vol. 3:10; ISSN ELEJE; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290300 -- Energy Planning & Policy-- Environment
Health
& Safety
296000* -- Energy Planning & Policy-- Electric Power
AIR POLLUTION ABATEMENT
CHARGES
COST
ELECTRIC UTILITIES
LEGAL INCENTIVES
POLLUTION ABATEMENT
POLLUTION REGULATIONS
PUBLIC UTILITIES
REGULATIONS