Control of Acid Rain

Congress established the Acid Rain Program under Title IV of the 1990 Clean Air Act Amendments. The program called for major reductions in electric-generating facilities emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) - the key components of acid rain - while establishing a new approach to environmental protection through the use of market incentives.

The amendments encourage this approach as a way to reduce the costs of compliance with air pollution standards. For example, the act includes a system of emission allowances for SO2 emissions. Industries that produce emissions below the standard for SO2 can build up a supply of allowances, or credits, which can be sold to other companies. This creates a market where industries can trade or "bank" their emissions, thereby establishing a market-based approach to encouraging companies to reduce air pollution.