October 10, 2010

The Mixed History of EPA Management of Banked Emissions Allowances

by Arthur G. Fraas, Nathan Richardson

- The history of emissions-trading markets in the United States is marked by change. Since cap-and-trade programs were first implemented on a large scale after the 1990 Amendments to the Clean Air Act, the U.S. Environmental Protection Agency (EPA) has repeatedly revised and replaced emissions trading markets for nitrous oxides and sulfur dioxide. In each transition, the agency has had to decide what to do with emissions allowances banked in the earlier program. The paper discusses EPA’s mixed record regarding these transitions and implications for the future of cap and trade as a policy tool.

Fraas, A.G. and N. Richardson (2010). "The Mixed History of EPA Management of Banked Emissions Allowances." RFF Discussion Paper 10-42, Sept 2010.