Date of Award

2016

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Coe, Richard

Keywords

United States Acid Rain Program, Economics, Cap-and-Trade, Pollution, Environmental Regulation

Area of Concentration

Economics

Abstract

The purpose of the United States Acid Rain Program (ARP) was to reduce sulfur dioxide emissions (SO2) produced by coal-fired electric utilities to 8.95 million tons per year by 2010. To reduce emissions, permits were distributed to participating coal-fired utilities. Each permit allowed a unit to emit one ton of sulfur dioxide. Utilities may save permits for future use or trade with other utilities. The ability to trade permits is key to creating the most cost-effective program, and is known as cap-and-trade. Cap-and-trade provides the flexibility to regulated utilities to reduce emissions by either switching to a low emissions fuel source such as lowsulfur coal or install scrubbers to reduce emissions from the smokestack. By 2010, sulfur dioxide emissions were at 5.12 million tons and are currently below 2 million tons. The benefits of the program have substantially outweighed the costs, where each year has a net value of +$235.3 to $562.3 billion.

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