What Can We Learn from the End of the Grand Policy Experiment? The Collapse of the National SO 2 Trading Program and Implications for Tradable Permits as a Policy Instrument

David Evans and Richard Woodward

Annual Review of Resource Economics, 2013, vol. 5, issue 1, 325-348

Abstract: The 1990 amendments to the Clean Air Act created a trading program in sulfur dioxide (SO2) emissions that has served as the seminal example of how an emissions trading program could be designed. Yet despite its success, the trading program was essentially brought to an end by a series of regulatory and judicial actions. We begin with a brief discussion of the theoretical and historical antecedents to the SO2 trading program. We then describe the events that led to the program’s effective end in 2011. We argue that the SO2 trading program had two key vulnerabilities: SO2 emissions cause multiple environmental impacts, some with local consequences, and internal conflicts within the Clean Air Act. Because of these vulnerabilities, in the end, the program was unsustainable. We close with a discussion of the lessons that can be drawn from this history for future emissions trading programs.

Keywords: sulfur dioxide; Title IV; emissions trading; NAAQS; cap and trade (search for similar items in EconPapers)
JEL-codes: Q40 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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