The direct sale of emission allowances by auction is an emerging characteristic of cap-and-trade programs. This study is motivated by the observation that all of the major implementations of cap-and-trade regulations for the control of air pollution have started with a generous allocation of...

On November 8, 1996, various Environmental Protection Agency (EPA) officials, scholars and industry representatives gathered at Resources for the Future (RFF) to examine the EPA's method for classifying private SO2 allowance transactions by the Allowance Tracking System (ATS). The one-day...

The universal theme of deregulation of the electricity industry is the dismantling of the exclusive franchise, opening up some segments of the industry to competition. Technological changes in generation have helped eliminate the perception that generation is a natural monopoly, but this change...

A number of state public utility commissions are using "social costing" methods to consider externalities in electricity resource planning. The most comprehensive and formal method is the use of monetary place-holders in the financial evaluation of new investments and potentially in system...

Title IV of the 1990 amendments to the Clean Air Act initiated a historic experiment in incentive-based environmental regulation through the use of tradable allowances for emission of sulfur dioxide by electric generating facilities. To date, relatively little allowance trading has taken place;...

For years economists have urged policymakers to use market-based approaches such as cap-and-trade programs or emission taxes to control pollution. The SO2 allowance market created by Title IV of the 1990 U.S. Clean Air Act Amendments (CAAA) presents the first real test of the wisdom of...

Cap-and-trade programs for air emissions have become the widely accepted, preferred approach to cost-effective pollution reduction. One of the important design questions in a trading program is how to initially distribute the emissions allowances. Under the Acid Rain program created by Title IV...

The Regional Greenhouse Gas Initiative is an effort by nine states to constrain carbon dioxide emissions from the electric power sector using a cap-and-trade program. This paper assesses the importance of long-term electricity contracts under the program. We find that 12.2% of generation will be...

We look at the effects of restructuring on three issues: (a) economic surplus and environmental quality, (b) the cost of NOx control policies and who bears the costs, and (c) the cost-effectiveness of a seasonal and an annual NOx cap in the SIP Call region. We find that without the NOx cap,...

We investigate the cost-effectiveness and distributional effects of a revenue-raising auction, grandfathering, and a generation performance standard as alternative approaches for distributing carbon emission allowances in the electricity sector. We solve a detailed national electricity market...