Acid Rain Program - Effectiveness

Effectiveness

Overall, the Program's cap and trade program has been hailed as successful by the EPA, industry, economists and certain environmental groups such as the Environmental Defense Fund, while skeptical environmentalists have argued that reduction in emissions occurred due to broad trends unconnected to the program. The EPA has used what is called the Integrated Planning Model (IPM) to estimate the effect of the Acid Rain Program (ARP). The output from the model says that annual emissions of sulfur dioxide were reduced by 8 million tons (from 17.3 to 9.3), nitrous oxide by 2.7 million tons (from 7.6 to 5), and mercury by 10 tons (from 52 to 42). However, it is difficult to estimate the emissions which would have occurred without the ARP. For example, the EPA updated its analysis to reflect the effect of low-sulfur coal becoming more economical due to reduced transportation, leading the EPA to reduce its estimate of the impact of ARP by sulfur dioxide emissions by one million tons.

Since the 1990s, SO₂ emissions have dropped 40%, and according to the Pacific Research Institute, acid rain levels have dropped 65% since 1976. However, although it reduced emissions by 40%, the US Acid Rain Program has not reduced SO₂ emissions as much as the conventional regulation applied in the European Union (EU), which reduced SO₂ emissions by more than 70%. Therefore, the effectiveness of the emissions trading element as a mechanism has been criticised, since the EPA also used regulations to achieve the reductions, as all areas of the country "had to meet national, health-based, air quality standards that are separate from the Acid Rain Program’s requirements".

In 2007, total SO₂ emissions were 8.9 million tons, achieving the program's long term goal ahead of the 2010 statutory deadline. In 2008, SO₂ emissions dropped even lower—to 7.6 million tons.

The EPA estimates that by 2010, the overall costs of complying with the program for businesses and consumers will be $1 billion to $2 billion a year, only one fourth of what was originally predicted.

A general issue with cap and trade programs has been overallocation, whereby the cap is high enough that sources of emissions do not need to reduce their emissions. ARP had "early overallocation" during Phase I, and this allowed emission sources to "bank" their allowances for future years. In Phase II, emission sources drew down their banked allowances. In 2006, emissions were again below the cap, leading to further banking.