Analysis of the Bush Proposal to Reduce the SO2 Cap

A. Denny Ellerman


This paper evaluates President Bush’s recent proposal to reduce the cap on total SO2 emissions using a model of emissions banking that fits the experience so far under Title IV. It provides a brief introduction to emissions banking and reports results concerning the effect of a the proposed reduction of the cap on emissions, abatement costs, and the value of the existing SO2¬†allowance endowment.