Allowance Trading and SO2 Hot Spots - Good News From the Acid Rain Program

This article, which originally appeared in the May 21, 2000, issue of Environment Reporter, examines data from the first four years of the Acid Rain Program as to the effects of trading on localized pollution levels. These indicate that the effects of trading have been minimal in regards to hot spots, and likely even positive. On a regional level, no significant trends can be discerned in the flow of trade allowances, and net interregional trades of allowances constitute only 3 percent of all allowances used. On a source-by-source basis, opportunity to trade has led many of the largest emitters of pollution to clean up the most, such that trading has had an effect of cooling potential hot spots, not creating them. Finally, the article points out that differences in regulatory methods, including trading, have far less relation to localized pollution levels than factors such as plant location, size and utilization.