Under the Clean Air Act, what market-based program was introduced in 1990 to reduce sulfur dioxide emissions?

Under the Clean Air Act, what market-based program was introduced in 1990 to reduce sulfur dioxide emissions?

• A. Emission tax on sulfur dioxide
• B. Cap-and-trade program for SO2
• C. Strict technology-based standards for coal plants
• D. Ban on sulfur-containing fuels

Answer: (B)

Cap-and-trade for sulfur dioxide is a market-based approach that creates a cap on total SO2 emissions and issues emissions allowances up to that limit. Each power plant must hold enough allowances to cover its emissions, and any surplus allowances can be sold or bought by others. This system drives reductions where they’re cheapest and over time lowers the overall cap, achieving large environmental gains with cost-effective reductions. The 1990 amendments to the Clean Air Act established the Acid Rain Program, the first major U.S. market-based emissions program, specifically targeting SO2 from fossil-fuel power plants and using tradable allowances to reduce emissions nationwide. Other options describe instruments that aren’t based on tradable permits (a tax), prescriptive technology requirements, or outright bans, which do not reflect the market-based trading framework introduced in 1990.

Cap-and-trade for sulfur dioxide is a market-based approach that creates a cap on total SO2 emissions and issues emissions allowances up to that limit. Each power plant must hold enough allowances to cover its emissions, and any surplus allowances can be sold or bought by others. This system drives reductions where they’re cheapest and over time lowers the overall cap, achieving large environmental gains with cost-effective reductions. The 1990 amendments to the Clean Air Act established the Acid Rain Program, the first major U.S. market-based emissions program, specifically targeting SO2 from fossil-fuel power plants and using tradable allowances to reduce emissions nationwide. Other options describe instruments that aren’t based on tradable permits (a tax), prescriptive technology requirements, or outright bans, which do not reflect the market-based trading framework introduced in 1990.