Cap-and-trade’s surprising fans

Some surprising tidbits about the U.S. government’s cap-and-trade system for getting rid of acid-rain-producing sulphur dioxide in the 1990s. The idea is you set a national limit on emissions, allocate the right to emit to companies according to how much they’ve been putting out, then squeeze them and let the polluters pay the less-polluting companies for their spare credits.

Cost savings – The acid rain cap and trade program passed by Congress in 1990 achieved reductions at two-thirds the cost of achieving the same reductions under a command-and-control system. This program reduced more pollution in the last decade than all other Clean Air Act command-and-control programs combined during the same period.

Regional Effect – The acid rain program resulted in emission reductions well below the cap in the areas that contribute most of the sulfur in acid rain. Comparing emissions from the 263 power plants regulated in the first phase of the program in 1999 with those in 1990, the North Central, Southeast and Mid-Atlantic regions achieved 49 percent, 48 percent and 43 percent reductions in SO2 respectively. Several analyses of trading under the acid rain program have concluded that the program did not result in local areas with higher emission levels (“hot spots”).

Guaranteed Results – The Acid Rain program enjoys nearly 100 percent compliance and only takes 75 EPA employees to run – a track record no command-and-control program can meet. Reductions in the early years averaged 25 percent below the required cap. Emission cuts resulted in air quality improvements over a broad area of the U.S. and significant reductions in acid rain.

Source? George W. Bush’s White House, 2002. If cap-and-trade works for the Bushies on acid rain, it really ought to work for Stephen Harper on carbon dioxide.

(Via Maria Surma Manka at GreenOptions.) 

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