In 1990, Congress passed the Clean Air Act Amendments. The Acid Rain Program (ARP) was developed based on the specifications of Title IV of these amendments. EPA's Clean Air Markets Division (CAMD) developed and currently administers this program. Using experiences gained from operating the ARP, CAMD developed other cap and trade programs: The Ozone Transport Commission (OTC) NOx Trading Program, the NOx Budget Trading Program (NBP) and most recently, the Clean Air Interstate Rule (CAIR). CAMD continues to run these highly successful programs. In general, lessons learned demonstrate that cap and trade:
- Offers an alternative to traditional regulation and credit trading
- Provides greater environmental certainty that a specific emission level is achieved and maintained
- Provides greater regulatory certainty, compliance flexibility, and lower permitting and transaction costs for sources
- Requires fewer administrative resources from industry and government—if program is kept simple
- Creates incentives for innovation, early reductions, and high compliance
- Can be compatible with other mechanisms—source-specific requirements, taxes, voluntary measures
- Drives costs down below direct control approaches, making more air emissions reductions attainable
Below are the lessons that CAMD has learned in the context of developing and operating the ARP and NBP.
The Acid Rain Program
The paper, "The U.S. Acid Rain Program: Key Insights from the Design, Operation, and Assessment of a Cap-and-Trade Program," written and published by The Electricity Journal, Vol. 20 Issue 7, August-September 2007, pp. 47-58, details the Acid Rain Program since its inception in 1995.
- Read the article (PDF) (12 pp. 1.4 M, About PDF)
- Read an excerpt from the article detailing the lessons learned from the Acid Rain Program
The NOx Budget Trading Program
The paper, "The NOx Budget Trading Program: A Collaborative, Innovative Approach to Solving a Regional Air Pollution Problem," written and published by The Electricity Journal, Vol 20/9 pp. 65-76, Nov. 2007, details the NOx Budget Trading Program since its inception.