October 27, 2002 I have research the Emissions
Trading System of the U.S. in hopes of being able to adapt the program
to the Amazon. Everything will be with respect to emissions in the general
overview but the implementation
will be in terms of trees in the Amazon.
"Allowance Trading" or "Cap and Trade"
Approach
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First set an overal cap, or maximum amount of emissions.
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At the end of the compliance period, sources that have been authorized
allowances must hand in complete and accurate report of all emissions.
Effectiveness
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As economy grows, sources must find ways to keep emissions beneath the
cap.
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Complete and consisten emissions measurement guarantees that cap is not
exceeded.
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Design and operation is simple keeping compliance and costs low.
Successes/Current Uses
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Approach has been successful in the Acid Rain Program in which the emissions
have fallen significantly and the costs of implemenation were less than
expected. In fact, this program has achieved greater emissions reductions
in
such a short time than any other single program to control emissions.
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Used to lower SO2 and nitrogen oxide emissions in Los Angeles, Ca. and
in Northeast states of the U.S. Has resulted in reduced emissions in both
areas.
Reasons for Cost Savings
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EPA does not impose specific reductions on each source.
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Individuals decide how to reduce/purchase emissions.
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EPA does not need to review or approve sources' decisions on how they will
lower emissions, etc. so they can formulate their own strategies.
Appropriate When
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Problem occurs in large areas
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There are a significant number of sources
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Cost of controls varies
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Emission can be consistently and accurately measured
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Regulating agency must be able to receive large amounts of emissions and
allowance transfer data quality and assure the data, be able to fairly
and accurately define compliance, and strongly and consistently enfore
the rule
Selling/Buying Allowances
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EPA does not sell allowances. It merely keeps track of them.
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Anyone can buy the allowances, including NGO's, environmental groups, the
general public, etc.
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There are three ways to buy allowances: EPA annual auction, a broker, or
an environmental group that retires allowances.
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At auction, allowances are sold to the highest bidder.
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To be part of the auction, one must open a general allowance account and
submit a bid form and certified check or an EPA letter of Credit Form
The Acid Rain Program is one of the main programs that uses this emmisions
trading system. The allowance is 1 ton per year. There are three reserves
for allowances: additional allowances for installing environment friendly
technology
(which will decrease emissions by 90%), allowances as incentives for
units achieving SO2 emission reductions through customers. The program
has an id number for each account which holds information including issuance
of all
allowances, how many allowances are held in various reserves, how many
allowances an account holds, dedcution of allowances for compliance purposes,
and transfer of allowances between accounts. Finally, if a source exceeds
its
allowances, it pays a penalty and surrenders allowances for the following
year.
In my opinion, this Allowance Trading can be modified to fit the preservation
needs of the Amazon Rain Forest. Instead of the EPA, the IBAMA would be
in charge of implementing this large-scale project, but would of course
require help in the enforcement aspect. Instead of buying and selling
emissions allowances, one could buy and sell tree-cutting allowances. IBAMA
would set a cap of the maximum amount of trees that could be cut in a year
and would define compliance. Since it is the job of the companies to make
sure they don't cut more trees than allowed and individuals decide how
to purchase/reduce tree-cutting, the cost of implementing this project
will be relatively small. Also, since these allowances are for sale to
the general public, anyone can buy the allowance and tear it up if he/she
so chooses. Also, each year, IBAMA can lower the cap as it sees fit. The
allowances can still be in reserves for an auction and additional
allowances to those who use environment-friendly technology.
(For more information please feel free to go to the EPA website at www.epa.gov
and search the site for emissions trading)