The behavior of the allowance market: Theory and evidence

Journal Article · Tue Mar 01 04:00:00 EST 1994 · Electricity Journal; (United States)

DOI:https://doi.org/10.1016/1040-6190(94)90009-4· OSTI ID:7022874

Hahn, R W; May, C A

Emission allowance prices are likely to be linked between Phase I and Phase II in a way that is predictable and broadly consistent with economic theory. Data suggest that allowance prices have declined over time, and that actual and predicted prices are converging. The most innovative feature of the 1990 Clean Air Act amendments was the market-based approach to reduce annual sulfur dioxide emissions by over eight million tons, cutting their total emissions in half by the year 2000. The [open quotes]allowance[close quotes] market created by the act places an overall cap on emissions while giving individual emissions sources complete flexibility in the methods selected to achieve the desired emissions reductions. One generating plant may use a scrubber, while another switches to a cleaner fuel and still another purchases allowances. The only requirement is that a utility or business must have allowances that cover its emissions.

• OSTI ID: 7022874
• Journal Information: Electricity Journal; (United States), Journal Name: Electricity Journal; (United States) Vol. 7:2; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290201* -- Energy Planning & Policy-- Economics-- (1992-)
290300 -- Energy Planning & Policy-- Environment
Health
& Safety
AIR POLLUTION
ALLOCATIONS
CHALCOGENIDES
CLEAN AIR ACTS
COMPLIANCE
COST
ELECTRIC UTILITIES
LAWS
OXIDES
OXYGEN COMPOUNDS
POLLUTION
POLLUTION LAWS
PUBLIC UTILITIES
SULFUR COMPOUNDS
SULFUR DIOXIDE
SULFUR OXIDES