Does EPA mandate how sulfur dioxide reductions must be achieved?
No. Utilities have considerable flexibility in deciding how to reduce these emission. To provide this flexibility, Congress set up an “allowance trading system.” Starting in 1995, EPA will allocate a limited number of “allowances” to power plants. Each allowance permits a utility to emit one ton of sulfur dioxide during a specified year. By law, utilities may not emit more tons of sulfur dioxide than the allowances they hold. Because an average utility will be allocated half the number of allowances that it emitted in 1980, it will need to reduce sulfur dioxide emissions substantially. Allowances may be bought, sold, or traded among utilities, industrial plants, or anyone else interested in purchasing them. As the following hypothetical example illustrates, the tradeability of allowances offers utilities considerable flexibility in choosing the most cost-effective method to reduce sulfur dioxide emissions, thus offering potential for customer savings. The options listed below are just
