A slow start for emissions trading

Because of differences in state regulations, plant efficiencies, electrical demand, and the costs of labor, equipment, and fuels, the annual cost of cleaning up emissions from power plants varies significantly from utility to utility in the United States. In a system in which allowances can be traded utilities that can significantly clean up their plants´ emissions at relatively low cost can do so, retaining allowances they may then sell to utilities whose clean-up costs are much higher. Both groups thereby reduce the cost of complying with sulfur dioxide restrictions. However, several years after unveiling in US legislation, emission-allowance trading seems to be floundering. Regulators and utilities are blaming each other-and both may be partially right. The author discusses the reasons why there are problems and how they can be solved.<>