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Market
Incentives
Emissions Trading Programs vs. Emission Charge
Systems or Subsidies
| Issue: |
The marketplace should determine best approach
to reduce emissions and improve air quality. |
What WSPA Says:
WSPA supports market incentives based on emissions
trading programs, which allow emitters to meet certain
emission reduction obligations by making reductions
at units other than those targeted by specific rules
or by meeting facility-wide emission caps. Trading can
result in equal or greater air quality improvements,
and is more expedient, more efficient, and less costly
than source specific emissions reduction requirements.
WSPA does not support market incentives that are based
on emission charge systems or subsidies. Emission charge
systems require polluters to pay a fee or tax based
on the level of the emissions. Subsidies involve offering
a financial inducement to encourage otherwise uneconomical
behavior.
Background:
Market-based or incentive environmental programs are
regulatory approaches that rely on economic incentives
to encourage or discourage certain activities. Marketable
credits or market incentive programs may supplement
or replace command and control programs. The use of
market incentives is encouraged and in some cases mandated
in the 1990 Amendments to the U.S. Clean Air Act.
Emissions trading is a regulatory program that allows
facilities the flexibility to select individual solutions
to achieve established environmental goals. Facilities
can meet established emission goals by reducing emission
from a discrete emissions unit or by reducing equivalent
emissions from another unit within that facility or
another facility. Under this system, credits garnered
by a facility that reduces emissions more than required
by regulation may sell these credits to facilities that
have not yet reached attainment.
Key Points:
- Emissions trading encourages adoption of more
cost-effective emission reduction strategies, which
ultimately benefits the public.
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