number and severity of emission excursions and “the particular circumstances at the source” that resulted in the excursions (62 Fed. Reg. 54900 ). Although operationally efficient, this approach has some negative aspects. If a facility is allowed an unknown number of emission excursions of unknown magnitude, how can the citizens living and working in the vicinity of the plant be assured that their health is being adequately protected? Likewise, how can the operators of the plant determine when an excursion is sufficiently severe to warrant radical corrective action?
Starting in the 1980s, air quality managers began exploring the use of market-based approaches to pollution control. This shift was motivated in part by the belief that market-based approaches would help level out the marginal costs of emission reductions among the affected facilities, dramatically reducing the overall costs of control. It was also believed that market-based approaches would provide greater incentive to innovate, which could in turn contribute to further cost savings and perhaps even greater emission reductions. Another distinct advantage of many market-based approaches is that they place a definite limit, or cap, on the aggregate emissions from a particular type of source or even from all sources of a pollutant. As a result, target emission levels are maintained even while economic and population growth continues.
The most commonly known market-based approach is a cap-and-trade program in which discrete emission quantities, such as a ton of a pollutant, are traded among sources. Trading takes place under an aggregate emission cap set by the regulating agency, presumably based on a determination of the maximum level of emissions consistent with protecting human health and welfare. Cap-and-trade programs have been shown to be effective at achieving emission reductions at much less cost to the regulated facilities than traditional technology-based or performance-oriented standards. However, there are potential disadvantages, some of which are discussed in more detail at the end of this section.
Emissions trading programs were first used in the United States during the 1980s (see Box 5-5); however, the best-known program is that involving the trading of SO2 emissions from electric utilities in the Acid Rain Program (Title IV) of the 1990 CAA Amendments. As discussed in Chapter 2, the goal of this program was to cap nationwide SO2 emissions from electric utilities at 8.9 million tons beginning in 2000.