Acid Rain Program

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The Acid Rain Program is a market-based initiative taken by the United States Environmental Protection Agency in an effort to reduce overall atmospheric levels of sulfur dioxide and nitrogen oxides, which cause acid rain [1]. The program is an implementation of emissions trading that primarily targets coal-burning power plants, allowing them to buy and sell emission permits (called "allowances") according to individual needs and costs.

[edit] History

Title IV of the 1990 Clean Air Act established the allowance market system we know today as the Acid Rain Program. Initially targeting only sulfur dioxide, Title IV set a decreasing cap on total SO₂ emissions for each of the following several years, aiming to reduce overall emissions to 50% of 1980 levels. The program did not begin immediately, but was implemented in two stages: Phase I (beginning January 1, 1995) and Phase II (starting January 1, 2000).

[edit] Success

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Most analysis shows that the Acid Rain Program has been and continues to be an overall success. Emissions levels have been greatly reduced (in some years well below the fixed cap). Moreover, these reductions have occurred at minimal cost to industry, thanks to the efficiency of market-based systems.