What Can We Learn from the End of the Grand Policy Experiment? The Collapse of the National SO2 Trading Program and Implications for Tradable Permits as a Policy Instrument

Posted: 11 Oct 2013

See all articles by David A. Evans

David A. Evans

U.S. Environmental Protection Agency (EPA) - National Center for Environmental Economics

Richard T. Woodward

Texas A&M University - Department of Agricultural Economics

Date Written: June 2013

Abstract

The 1990 amendments to the Clean Air Act created a trading program in sulfur dioxide (SO2) emissions that has served as the seminal example of how an emissions trading program could be designed. Yet despite its success, the trading program was essentially brought to an end by a series of regulatory and judicial actions. We begin with a brief discussion of the theoretical and historical antecedents to the SO2 trading program. We then describe the events that led to the program’s effective end in 2011. We argue that the SO2 trading program had two key vulnerabilities: SO2 emissions cause multiple environmental impacts, some with local consequences, and internal conflicts within the Clean Air Act. Because of these vulnerabilities, in the end, the program was unsustainable. We close with a discussion of the lessons that can be drawn from this history for future emissions trading programs.

Suggested Citation

Evans, David A. and Woodward, Richard T., What Can We Learn from the End of the Grand Policy Experiment? The Collapse of the National SO2 Trading Program and Implications for Tradable Permits as a Policy Instrument (June 2013). Annual Review of Resource Economics, Vol. 5, Issue 1, pp. 325-348, 2013. Available at SSRN: https://ssrn.com/abstract=2339060 or http://dx.doi.org/10.1146/annurev-resource-091912-151835

David A. Evans (Contact Author)

U.S. Environmental Protection Agency (EPA) - National Center for Environmental Economics ( email )

Washington, DC 20460
United States

Richard T. Woodward

Texas A&M University - Department of Agricultural Economics ( email )

College Station, TX 77843-4218
United States
(409) 845-5864 (Phone)

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