Does cap-and-trade work?
As part of the Clean Air Act Amendments of 1990, a cap-and-trade program was designed, tested, and proven as a successful tool for controlling Acid Rain (Sulfur dioxide) air pollution. The Economist magazine called the Acid Rain cap-and-trade program “probably the greatest green success story of the past decade”. (July 6, 2002) Outcomes of the Acid Rain cap-and-trade program included: • The expected market price for SO2 allowances was $579-$1,935 per ton of SO2; the actual market price as of January 2003 was $150 per ton. • In the 1990s, the U.S. acid rain cap-and-trade program achieved 100% compliance in reducing sulfur dioxide emissions. In fact, power plants participating in the program reduced SO2 emission 22% – 7.3 million tons – below mandated levels. • Before the launch of the program, cost estimates had ranged from $3-$25 billion per year. After the first two years of the program, the costs were around $0.8 billion per year. The long-term costs of the program are expected to be
