Argument: US cap-and-trade in sulfur dioxide was successful

Issue Report: Cap-and-trade versus carbon tax


Ronald Bailey, “Carbon Taxes Versus Carbon Markets: What’s the Best Way to Limit Emissions?”, 5/18/07 – “The United States currently maintains a robust cap-and-trade market in sulfur dioxide permits which advocates of a GHG market hold up as a shining example. Sulfur dioxide (SO2) is emitted by power producers when they burn coal that contains sulfur. Since SO2 is noxious to breathe and contributes to acid rain, Congress in 1990 enacted legislation requiring emissions from electric utilities to be reduced to 8.95 million tons by 2010 (emissions were 17.5 million tons in 1980). Each year, the Environmental Protection Agency issues permits that allow a smaller and smaller amount of SO2 emissions. So far, those emissions are down to about 10.5 million tons annually. According to one estimate by the EPA, by 2010, the annual cost of the reductions to electric utility companies, their customers, and shareholders will be about $3 billion, while the annual benefits—including lower mortality and fewer hospital admissions from respiratory illnesses; improved visibility; cleaner soil, lakes, and streams; and reduced damage to buildings—will exceed $100 billion. Even if these figures are exaggerated, the SO2 cap-and-trade system appears to be a major success.”

Emission Trading Education Initiative, “Case Study #1: Reducing Acid Rain in the United States”

US Environmental Protection Agency. “Cap-and-Trade: Acid Rain Program Results”. 2002