Book contents
- Frontmatter
- Contents
- List of Illustrations
- List of Tables
- Preface
- Acknowledgments
- Part I Background
- Part II Compliance and Trading
- 5 Title IV Compliance and Emission Reductions, 1995–97
- 6 Emissions Trading: The Effect on Abatement Behavior
- 7 Emissions Trading: Development of the Allowance Market
- 8 Title IV's Voluntary Compliance Program
- 9 Cost of Compliance with Title IV in Phase I
- Part III Questions and Implications
- Appendix: Effect of Title IV on SO2 Emissions and Heat Input by Susanne M. Schennach
- Bibliography
- Index
9 - Cost of Compliance with Title IV in Phase I
Published online by Cambridge University Press: 10 December 2009
- Frontmatter
- Contents
- List of Illustrations
- List of Tables
- Preface
- Acknowledgments
- Part I Background
- Part II Compliance and Trading
- 5 Title IV Compliance and Emission Reductions, 1995–97
- 6 Emissions Trading: The Effect on Abatement Behavior
- 7 Emissions Trading: Development of the Allowance Market
- 8 Title IV's Voluntary Compliance Program
- 9 Cost of Compliance with Title IV in Phase I
- Part III Questions and Implications
- Appendix: Effect of Title IV on SO2 Emissions and Heat Input by Susanne M. Schennach
- Bibliography
- Index
Summary
CONFUSION ABOUT CONTROL COSTS
The initially low price of allowances in Phase I led to some misunderstanding and controversy about the cost of compliance with Title IV. Specifically, the initially low and declining allowance prices were interpreted as an indication that the costs of complying with Title IV were dramatically less than had been anticipated. For instance, prominent representatives of President Clinton's Administration asserted that:
during the 1990 debates on the Clean Air Act's Acid Rain Program, industry initially projected the costs of an emission allowance…to be approximately $1, 500.… Today those allowances are selling for less than $100.
and
We've reduced the emissions that cause acid rain for less than a tenth of the price that was predicted.…
These statements err both in the interpretation of allowance prices and in the recollection of what earlier studies had estimated Title IV's costs to be. Our interpretation of the low allowance prices early in Phase I and of the subsequent doubling of allowance prices in 1998 is provided in Chapter 11. In this chapter we develop an estimate of the cost of complying with Title IV in Phase I and compare it with the predictions of the same cost made in earlier studies of Title IV. The objective in this chapter is not to estimate the cost savings attributable to emissions trading when compared to some hypothetical alternative emissions control mechanism. That more difficult analytic task will be addressed in Chapter 10.
- Type
- Chapter
- Information
- Markets for Clean AirThe U.S. Acid Rain Program, pp. 221 - 250Publisher: Cambridge University PressPrint publication year: 2000