The challenge
Sulphur dioxide from coal-fired power plants, many in the Ohio River Valley, was causing acid rain that damaged lakes, forests and health far downwind.
The case
The 1990 Clean Air Act Amendments created the Acid Rain Program, run by the US Environmental Protection Agency. It set a falling national cap on sulphur dioxide (SO₂) from power plants, now 8.95 million tons a year, and gave plants allowances that they could trade, so each could cut emissions by installing pollution controls, switching to lower-emitting fuels or buying allowances. EPA systematically collects emissions data from every plant and publishes it. By 2023, sources in the program had reduced SO₂ emissions by 15.1 million tons, or 96%, from 1990 levels, emitting 647,000 tons, well below the cap. Later rules and a shift from coal to gas also contributed to the falls.
Why it worked
A firm, falling cap with transparent emissions data delivered deep cuts while letting each plant choose how to comply, by installing controls or switching to lower-emitting fuels. EPA says transparency and data availability are a cornerstone of the program's success.
Sources
- US Environmental Protection Agency. Power Sector Programs Progress Report: Emissions Reductions.
- Schmalensee, R., & Stavins, R. N. (2013). The SO₂ allowance trading system: The ironic history of a grand policy experiment. Journal of Economic Perspectives, 27(1), 103–122.
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