Discussion Paper

U.S. Emissions Trading Markets for SO2 and NOx

Oct 15, 2009 | Dallas Burtraw, Sarah Jo F Szambelan


The U.S. Clean Air Act Amendments of 1990 initiated the first large experiment in the use of market-based regulation to control environmental problems with the introduction of an emissions tradingprogram for sulfur dioxide emissions. Later that decade the second large trading program began for control of nitrogen oxide emissions. Although these programs are widely viewed as successful, their development and the emergence of associated environmental markets took various turns that provide lessons for the development of new markets, including markets for greenhouse gas emissions. This paperreviews the history of these programs and provides a glimpse of their future given the introduction of new regulations affecting multiple pollutants and given the expected implementation of climate policy.