The Temporal Efficiency of SO2 Emissions Trading

The Temporal Efficiency of SO2 Emissions Tradin

The efficiency and robustness of allowance banking in the U.S. Acid Rain Program

This paper provides an empirical evaluation of the efficiency of allowance banking (i.e., abating more in early periods in order to abate less in later periods) in the nationwide market for sulfur dioxide (SO2) emission allowances that was created by the U.S. Acid Rain Program. We develop a model of efficient banking, select appropriate parameter values, and evaluate the efficiency of observed temporal pattern of abatement based on aggregate data from the first eight years of the Acid Rain Program. Contrary to the general opinion that banking in this program has been excessive, we find that it has been reasonably efficient. We also show that this optimal banking program is robust to the errors in expectation that characterized the early years of this program; however, this property is due to design features that are unique to the U.S. Acid Rain Program.Supported by the MIT Center for Energy and Environmental Policy Research

Why are allowance prices so low? : an analysis of the SO2 emissions trading program

This paper presents an analysis of the reduction in SO2 emissions by electric utilities between 1985 and 1993. We find that emissions have been reduced for reasons largely unrelated to the emission reduction mandate incorporated in Title IV of the 1990 Clean Air Act Amendments. The principal reason appears to be the change in the economics of coal choice that has resulted from the remarkable decline in rail rates for low sulfur western coal delivered to higher sulfur coal-fired plants in the Midwest. We conclude that allowance prices are lower than expected because less sulfur must be removed to meet the Title IV caps on aggregate SO2 emissions.Supported by a grant from the National Acidic Precipitation Assessment Program of the US Government, and the Catholic University of Chile

Explaining low sulfur dioxide allowance prices : the effect of expectation errors and irreversibility

The low price of allowances has been a frequently noted featured of the implementation of the sulfur dioxide emissions market of the U.S. Acid Rain Program. This paper presents theoretical and numerical analyses that explain the gap between expected and observed allowance prices. The main contributing factors appear to be expectation errors augmented by the presence of irreversible investments.Supported by the MIT Center for Energy and Environmental Policy Research

The temporal efficiency of SO₂ emissions trading

This paper provides an empirical evaluation of the temporal efficiency of the U.S. Acid Rain Program, which implemented a nationwide market for trading and banking sulfur dioxide (SO2) emission allowances. We first develop a model of efficient banking and select appropriate parameter values. Then, we use aggregate data from the first seven years of the Acid Rain Program, to assess the temporal efficiency of the observed banking behavior. We find that banking has been surprisingly efficient and we discuss why this finding disagrees with the common perception of excessive banking in this program

Tgfβ2 and 3 are coexpressed with their extracellular regulator Ltbp1 in the early limb bud and modulate mesodermal outgrowth and BMP signaling in chicken embryos

<p>Abstract</p> <p>Background</p> <p>Transforming growth factor β proteins (Tgfβs) are secreted cytokines with well-defined functions in the differentiation of the musculoskeletal system of the developing limb. Here we have studied in chicken embryos, whether these cytokines are implicated in the development of the embryonic limb bud at stages preceding tissue differentiation.</p> <p>Results</p> <p>Immunohistochemical detection of phosphorylated Smad2 and Smad3 indicates that signaling by this pathway is active in the undifferentiated mesoderm and AER. Gene expression analysis shows that transcripts of <it>tgfβ2 </it>and <it>tgfβ3 </it>but not <it>tgfβ1 </it>are abundant in the growing undifferentiated limb mesoderm. Transcripts of <it>tgfβ2 </it>are also found in the AER, which is the signaling center responsible for limb outgrowth. Furthermore, we show that Latent Tgfβ Binding protein 1 (LTBP1), which is a key extracellular modulator of Tgfβ ligand bioavailability, is coexpressed with <it>Tgfβs </it>in the early limb bud. Administration of exogenous Tgfβs to limb buds growing in explant cultures provides evidence of these cytokines playing a role in the regulation of mesodermal limb proliferation. In addition, analysis of gene regulation in these experiments revealed that Tgfβ signaling has no effect on the expression of master genes of musculoskeletal tissue differentiation but negatively regulates the expression of the BMP-antagonist Gremlin.</p> <p>Conclusion</p> <p>We propose the occurrence of an interplay between Tgfβ and BMP signaling functionally associated with the regulation of early limb outgrowth by modulating limb mesenchymal cell proliferation.</p