Can the Success of Carbon Emission Cap-and-Trade Market be Predicted Based on the EPA’s Acid Rain Program?

Parisa S. smith, Barry University

Abstract

Can the Success of Carbon Emission Cap-and-Trade Market be Predicted Based on the EPA’s Acid Rain Program?

This paper explores the carbon market policy solution to the global warming phenomenon. It analyses why the Acid Rain Program (ARP) cap-and-trade model implemented in the U.S., by itself, falls short in achieving similar results for carbon emission control objectives.

Toward that end, a comparison is made to analyze why the carbon market differs greatly from the acid rain market on certain essential elements, and how these differences can explain the expected differing outcomes of implementing the cap-and-trade scheme within the two problem domains. In the end, alernate solutions to the carbon emsission problem are also discussed.

Table of Contents I. Introduction II. Acid Rain versus Global Warming: Comparing Apples and Oranges? A. Differences in the Nature of Target Pollutants B. Differences in the Damages C. Differences in Political Atmosphere D. Are there enough incentives for the international community to be motivated to mount a global regulatory movement? E. Moral Status of Market-based Pollution Trading III. The Acid Rain Program: The Flagship of Cap-and-Trade Systems permit systems in the EU and several individual European countries. A. Cap-and-Trade Key Characteristics B. ARP’s Cap-and-Trade Mechanism C. ARP Implementation, Administration, Monitoring and Enforcement D. The Results of ARP’s Cap-and-Trade System E. Comparing ARP Cap-and-Trade with EU ETS F. Kyoto Protocol and EU ETS G. Implementation Challenges H. Monitoring, Verification and Enforcement Challenges I. Legislative Vehicle to Address GHGs J. Which Sectors Get Capped? K. Carbon Market Barriers L. Problem of Leakage M. Cap-and-Trade Does Not Promote Innovation N. Major Domestic and International Carbon Cap-and-Trade Programs IV. Alternative Carbon Emission Control Schemes V. Conclusion