Environmental Policy

List Of The Committee Members Of Research Panel_List of the committee members_Reference 2

Reference 2: Examples of tradable or marketable discharge permits in the US

2. Measuring Acid Fallout, (Clean Air Act, 1990)

Outline
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Pollution from all the power plants in the USA excluding Hawaii and Alaska being as subject, it was introduced to reduce 10 million tons of sulfur dioxide emission by 2000 to 8.9 million tons with 1980 as standard. A certain emission permit, allowance, was allocated to each power unit to reduce emission in two stages of Phase I and Phase II.
  • [1] Phase I (1995 to 1999): To reduce 5 million tons
    » 110 large scale power plants of 100 MW or discharging 2.5 lbs/106Btu (about 265 pollution sources as subject)
  • [2] Phase II (2000 and after): To reduce additional 5 million tons
    » All the power plants with capacity of more than 25 MW and all the new power plants
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The amount which is obtained by multiplying average fuel consumption of each power unit in three years between 1985 and 1987 by emission control value (Phase I: 2.5 lbs/106 Btu and Phase II: 1.2 lbs/106 Btu) is allocated initially for free as allowance.
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Security measure of effectiveness
Businesses which emissioned more than their allowances are imposed a fine of $2000 per 1 ton of violation and are obliged to reduce equivalent of violation amount in the next business year or to offset violation by purchasing allowance.
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Other characteristics
By way of increasing allotment of emission permit or allowance, a special measure was implemented to the power plants in the eastern and mid western regions which use high sulfurous coal.
Brokers, coal mining companies and environmental protection organizations can participate in dealings.
Continuous emission monitoring system is introduced.
Material to be treaded

Sulfur dioxide
- Dealing unit and name
Allowance: in tons per year

- Permission validity
One year

Subject for control All the power plants in the USA excluding Hawaii and Alaska
Actual state trading
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Each business contributes to EPA 2.8% of allowance allocated as allowance reserve.
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EPA offers it to a dealing. There are two ways for it: One is the direct sales system of allowance. (Sold at a fixed price of $1500 per allowance ) The other is the market sales system of allowance. (Auction at Chicago Board of Trade)
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Businesses can offer their market.
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Dealing instances
The first market sales was held in March 1993. 50,100 allowances to be effective in 1995 were sold at the average of $156 and 100,000 allowances to be effective in 2000 at the average of $136.
Wisconsin Electric Power sold TVA 10,000 tons at about $250 to 300 per allowance. Wisconsin Electric Power sold Dukeson Light 15,000 tons at about $300 per allowance.
Alcore Generating sold Ohio Edison 25,000 tons, 5,000 tons each year for five years, at about $300 per allowance.
Central Illinois Power Service sold Illinois Power 80,000 tons, 16,000 tons each year for five years, at about $200 per allowance.
Pacificorp sold Illinois Power 50,000 tons, 10,000 tons each year for five years, at about $200 per allowance.
Pointed out problems, etc.
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There have been no adequate dealings with the problems such as anti-competitive results caused by existing facilities' corner in the emission permit / allowance and overprotection of vested emission permit of existing facilities.
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Geographic concentration of pollutant sources through trading.
For the goal of total emission amount of sulfur dioxide, there is no institutional problem if there are changes of density of sulfur dioxide in the air around the power plants after dealings of allowances between distant power plants. Local air pollution is supposed to be kept by other programs of the Clean Air Act.
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