Working Paper

Companies and Regulators in Emissions Trading Programs

Feb 2, 2005 | Joseph A. Kruger


Much has been written about the economic and environmental performance of U.S. emissions tradingprograms for “acid rain” (sulfur dioxide) and nitrogen oxides. Less explored have been the unique rolesand interactions of environmental regulators and the companies they regulate. I first examine how theseroles change the way that regulators and companies operate within their own organizations and with eachother. Next, I use examples from U.S. trading programs to illustrate the design and administrative featuresthat allow program administrators and industry to best fulfill their respective roles. Finally, I examinebriefly whether these features are present in the EU Emissions Trading System and determine theimplications for its effectiveness.