Tradable pollution permits

Consider a rather simple example acid rain, which results in large part from burning coal. Environmental engineers and scientists worked hard on technologies to curb the pollution, but it was economists who developed the cap and trade permit program - which, through tradable pollution permits, has allowed market forces to create incentives for companies to cut pollution and reduce acid rain in the... 

Tradable or marketable permits, which enable pollution (or resource consumption) control to be concentrated amongst those who can do it economically without increasing total emissions. Trading can be internal within a company for different company sites, as well as between companies. Tradable market permits have been used for SO2 emissions in the United States in the 1990s and were introduced in Europe for CO2 emissions in 2005. 

Amendment to Clean Air Act EPA required to establish technology-based emission (National Ambient Air Quality) standards (based on MACTs) for almost 200 pollutants. Including lead introduced specific volume targets for SO2 emissions from power plants and provided for tradable emission permits between sources. 

CAC instruments use to be compared with MB instruments that are characterized by a private administration and enforcement system and stimulate indirectly the behavior of the firm. There are essentially two different types of those instruments taxes that are fees imposed on emitters proportionate to the total amount of emissions released into the environment (they could be divided into emission charges, product charges, and user charges) and marketable (or tradable) permit systems that provide a fixed number of permits equal to the allowed total emissions, distributing them among polluting firms in a specific area. 

---