CONTENTS Foreword ix Prefacexiii Part 1 : INCENTIVE-BASED ENVIRONMENTAL QUALITY CONTROL 1 1. Emissions Trading Emerges from the Shadows Richard F. Kosobud PART 2 : APPRAISING ENVIRONMENTAL POLICY'S NEW APPROACH47 2. What Do We Really Know about Market-Based Approaches to Environmental Policy? Lessons from Twenty-Five Years of Experience 49 Robert N. Stavins 3. From Porcopolis to Carbopolis The Evolution from Pork Bellies to Emissions Trading 61 William D. Nordhaus 4. Some Observations on the Evolution of the International Greenhouse Gas Emissions Trading Market74 Richard L. Sandor & Michael J. Walsh PART 3 : VIEWS FROM THE MARKET DESIGNERS AND ADMINISTRATORS 89 5. Emissions Trading Designs in the OTAG Process91 Mary A. Gade & Roger A. Kanerva 6. A Tale of Two Revolutions Administration of the SO2 Trading Program 115 Joseph A. Kruger, Brian J. Mclean, and Rayenne Chen PART 4 : AN APPLICATION AT CENTER STAGE THE PIONEERING NATIONAL CAP-AND-TRADE MARKET TO REDUCE ACID RAIN 131 7. Appraisal of the SO2 Cap-and-Trade Market 133 Dallas Burtraw PANEL COMMENTARY AND DISCUSSION OF THE BURTRAW STUDY Development and Maturing of Environmental Control Technologies in the Power Industry168 William Depriest More Clean Air for the Buck : Lessons from the U.S. Acid Rain Emissions Trading Program 186 Sarah Wade 8. From Autarkic to Market-Based Compliance Learning from Our Mistakes 190 A. Denny Ellerman PANEL COMMENTARY AND DISCUSSION OF THE ELLERMAN STUDY Southern Company's BUBA Strategy in the SO2 Allowance Market 204 Gary R. Hart Electric Industry Restructuring and the SO2 Emissions Trading Program : A Look Ahead by Looking Back 209 Kenneth J. Rose Jr. PART 5 : AN APPLICATION AT CENTER STAGE: THE PIONEERING REGIONAL CAP-AND-TRADE MARKET TO REDUCE URBAN SMOG 217 9. The RECLAIM Program (Los Angeles' Market-Based) Emissions Reduction Program) at Three Years219 James M. Lents PANEL COMMENTARY AND DISCUSSION OF THE LENTS STUDY Assessing Market Performance and Firm Trading Behavior in the NOx RECLAIM Program 241 Thomas H. Klier Environmental Justice : Time Boundaries and the Nature of Pollution Markets 253 Kevin F. Snape PAART 6 : AN APPLICATION AT CENTER STAGE: VOLUNTARY DISCRETE EMISSION REDUCTIONS259 10. Discrete Emission Reductions Trading: Practical Application in the Connecticut Regulatory Environment 261 Joseph A. Belanger PANEL COMMENTARY AND DISCUSSION OF THE BELANGER STUDY Costs of NOx Emissions Control Technologies283 Vincent M. Albanese Emissions Trading in Michigan289 Louis L. Jager VOC Emissions Trading from an Industrial Perspective : Past, Present and Future 295 Thomas W. Zosel PART 7 : A PERSPECTIVE ON EMISSIONS TRADING301 11. The Significance of Incentive-Based Regulation 303 Michael Moskow Acronyms 307 Contributors 311 Index 321