NCPA - National Center for Policy Analysis


September 2, 2009

Acid rain is one success story referenced by liberal thinkers as they advocate a cap-and-trade solution to greenhouse-gas emissions.  But the issues of acid rain and greenhouse gases are fundamentally different, says author Fred Schwarz.

Acid rain has been causing trouble since the start of the Industrial Revolution -- killing plant and animal life, altering soil chemistry, eating away at buildings and monuments, and harming human health.  The biggest culprit is sulfur dioxide, an impurity present in coal and other fossil fuels; the other main acid-rain gases are nitrogen oxide and nitrogen dioxide, collectively known as NOx.

The acid-rain story seems so appealing because harmful industrial emissions were reduced through a cap-and-trade scheme similar to the one proposed in the current Waxman-Markey bill.

  • Companies were allocated permits (called "allowances") based on the amount of sulfur dioxide they were already emitting.
  • Over time, the tonnage corresponding to each allowance was reduced, which meant emissions had to be reduced.
  • Companies that cut down by more than the necessary amount (by installing scrubbers on smokestacks, shutting plants, etc.) could sell their extra allowances to companies that had not made sufficient reductions.

The result was a 40 percent decrease in sulfur dioxide emissions in the United States since 1990, with further reductions to come, says Schwarz.  However, reducing America's carbon dioxide output to any significant degree would be a much greater task. Consider:

  • Sulfur is an impurity, present in fossil fuels in small amounts (usually less than 1 percent).
  • But carbon is fossil fuels; it's what they're made of (usually 75 to 90 percent).

Basically, cap-and-trade for sulfur dioxide created an expense item in a company's budget.  However, cap-and-trade for carbon dioxide would create an entirely new, very expensive business model.

Acid rain reduction has turned out to cost American industry only $1 to $2 billion per year, much less than predicted, but according to a Heritage Foundation study, the cost of the Waxman-Markey bill would be easily 100 times as great.  Hence, the smooth success of acid rain reduction is not a valid analogy for carbon dioxide, says Schwarz.

Source: Fred Schwarz, "A Matter of Scale," National Review, September 7, 2009.

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