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Environmental Protection through “Cap and Trade”

2009 December 18

As a kid growing up in the 1990’s I remember watching public service announcements and educational videos warning my generation of the dangers of pollution. The main focus of this effort was to educate people about acid rain. Stories consistently appeared in the news regarding damage to a local cityscape as a result of acid rain deposition.

This widespread concern eventually led to political action with the passage of the Clean Air Act Amendments in 1990. An important part of that legislation included the creation of a “cap and trade” system, started in 1995, that caps power plant emissions of SO2 (sulfur dioxide) and NOx (nitrogen oxide) – the primary contributors to acid rain. In accordance with the cap, allowances are distributed to the utilities and can be used to account for emissions, banked for future emissions, or sold to another utility that needs extra allowances to order to be in compliance.

As an intern here at the EPA’s Clean Air Markets Division, I have experienced first hand how, over the past couple of decades, “cap and trade” programs have played a vital role in the EPA’s efforts to lower harmful air emissions and their deposition.

The use of “cap and trade” programs has led to a decrease in wet deposition of the sulfate portion of acid rain by 40 percent through the Acid Rain Program (ARP). Another “cap and trade” program administered by the Clean Air Markets Division is the NOx Budget Trading Program (NPB). Emission reductions achieved under the NPB has led to improvements in air quality and resulted in 103 million Americans breathing cleaner air as well as 580 to 1,800 incidences of premature deaths avoided in 2008.

It is great to know that “cap and trade” systems are effective, but the urgency of the 1990’s regarding acid rain has faded. People are focused on so many other things that it is becoming difficult to keep acid rain at the forefront of people’s minds. The scientific community has voiced concern that many acid-sensitive ecological systems have still not been fully restored and they contend further emissions reductions are needed. Though we have come very far and found that “cap and trade” is a successful tool to reduce the harmful pollutants that cause acid rain, we still have a way to go. For more information.

About the author: Josh Stewart is the Communications Intern with the EPA’s Clean Air Markets Division. Josh is currently working on his Master’s Degree in Political Management at The George Washington University.

Editor's Note: The opinions expressed here are those of the author. They do not reflect EPA policy, endorsement, or action, and EPA does not verify the accuracy or science of the contents of the blog.

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10 Responses leave one →
  1. Jackenson Durand permalink
    December 18, 2009

    Today topic is bringing me to think about a parallel childhood analyze that I had, regarding rain water and ground water. Which would be healthier for human organism?
    My friends and I concluded without any scientific fact that rain water was healthier.
    I am talking for a clean air environment climate or no emission there.

  2. JStewfan permalink
    December 18, 2009

    Great article, but I have a question: Can and should we cap & trade skinny ties?

  3. Joseph Zummach permalink
    December 18, 2009

    I have a question do you think cap and trade would work with Co2, there is a huge controversy about this?

  4. Joseph Zummach permalink
    December 18, 2009

    I offer this excerpt from a letter to my senator I sent last month thank you for listening, and am sincerely interested in your perspective.

    As much as I see a crying need to address the issue of Co2 build up in the atmosphere I strongly recommend that you refuse to support this legislation(the cap and trade bills in congress). Giving the worst polluters rights to continue polluting, the global commons of the atmosphere by offering free leases to its ability to absorb green house gasses, is a fatally flawed approach. It sets the horrific precedent of privatizing the atmosphere. This I feel would be tantamount to entrenching the carbon intensive energy sector for the foreseeable future, at a time when we need to be seeking to reduce subsidies to this sector of the energy economy. If you haven’t read Carbon Trading: A Critical Conversion on Climate Change, Privatisation and Power, available online at no charge. I urge you to, it was produced by the Dag Hammarskjöld Foundation and written by author and researcher Larry Lohmann. This sets out clearly as possible the flaws and dangers of the carbon trading schemes proposed in the two versions of climate legislation being weighed in congress.

  5. Chris Striebeck permalink
    December 20, 2009

    The question is not so much whether cap and trade programs have accomplished some degree of success e.g. reduction in acid rain, but whether such programs are the most COST-EFFECTIVE approach to achieve the stated goal of reduced emissions. It is my understanding that more expansive C&T programs have not been successful as demonstrated in Europe compared to a more broadly based and market driven method employed by the Feed-in Tariff concept. I think it important to remember that energy is foundational to every aspect of a modern economy and these programs do not operate in a vacuum. Absent the political will to set a future date for a simple mandated reduction of emissions and letting entrepreneurs do their work- the most cost-effective approach – any lesser cost effective program should not favor one class of consumers for businesses over another. It should be simple, transparent, and minimal in transaction cost because ultimately the consumer pays the increase and that will be some measure of burden upon the poor and those living on fixed income. Establishing another entire level of transaction in the energy markets by the organization of monitoring systems and an exchange for carbon emissions debits and credits is simply an inefficient use of capital and will enrich a few at the expense of the whole. Please rethink your reasoning for support of C&T. Frankly, the basic logic for these programs is thin. Furthermore in a free society, it always better to lead by emulation than by the force.

  6. Michael E. Bailey permalink
    December 22, 2009

    It is very important for California to know that Cap and Trade really works and is an effective tool. Cap and Trade is, in fact, one of the components in the California Air Resources Board’s program to fight green house gas emissions under AB32. Final proposals are being readied. And they will be built around some of the Acid Rain Cap and trade policies. Electric and coal fired power plants are great generators of green house gas emissions. That is one of the problems with all electric powered vehicles, the vehicles themselves are zero emission; but power to recharge the electric batteries comes from the power plants. Cap and Trade will be critical in reducing power plant green house gas emissions. But if we want to generate emission free power we need to switch to alternatives like solar and wind. Best wishes, Michael E. Bailey.

  7. Al Bannet permalink
    December 22, 2009

    In my opinion, “Cap and Trade” will fail to stop the growth of pollution in the relentlessly growing industrial economies of China, the USA, Brazil and growing nations around the World. The problem is a growing economy on a shrinking planet has no future, but businessmen can’t face that terrible fact, so a cover story like “Cap and Trade” is concocted to allow them to keep on growing their businesses while pretending to take care of the environment. But the inevitable result will be a number of regional ecocidal collapses.
    Apparently, the human species, like other animals, is driven by its instincts to grow and dominate its environment, whatever the consequences.

  8. LWallace permalink
    December 30, 2009

    My question is this. On the new cap and trade they are referring to with CO emission, what is the “trade” part. What are the big companies actually trading and where are they getting the “credits” to trade them?

  9. LWallace permalink
    December 30, 2009

    Can you explain the “trade” part of this? What is it that the big companies have to trade and where are they getting it?

  10. Andrea Davis permalink
    January 14, 2010

    Well, but internationally, look what has developed for the Sumatra Region of Indonesia:

    This seems to actually have evolved a bit. This is good foreign policy. Maybe not “enforceable,” though. The problem is how do you turn forest poachers who burn forests into militant protectors of the forests they would otherwise burn for cash crops?

    Pay them.

    I’m sorry, but regulations need a way to enforce. It’s not just the corporations that need to buy into it. It’s the hungry and desperate who need incentive to stop pillaging for food.

    But at home, here IN the U.S., it’s a different story. We are trying to decide, here in Nebraska, how that will go. We have started a discussion here (please tell us where you are from if you join the discussion):

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