[GRRN] Emissions Trading

Mon, 12 Jul 1999 16:01:31 EDT

Thanks to all who responded to my request for price information on sulfur
dioxide emissions trading. As promised, here is the information on sources
and a summary of what I found. I apologize for taking so long to publish this

US EPA's acid rain website <www.epa.gov/acidrain> provides a table and chart
of monthly average prices for SO2 allowances, based on reports from brokerage
firms and the Fieldston Publications' market survey. The site also has a fact
sheet on EPA's SO2 allowance trading program. Monthly average prices for
emissions allowances during the period 1/95 thru 5/99 have varied between
about $70 and $215 per ton of SO2. The lower prices were during 1996 and
1997; prices have trended up since early 1998.

The EPA's annual auction of reserve/supplemental allowances through the
Chicago Board of Trade has yielded prices between $66 and $201 per ton SO2,
with the low price occurring in 1996 and the high price in 1999. A
facility's penalty for exceeding its SO2 allowance in any year is $2000 per

Market trading in other types of emissions is also happening -- e.g., nitrous
oxides, VOC's, particulates and even greenhouse gases. For example, Michigan
DEQ's website has information at
<www.deq.state.mi.us/aqd/eval/e-trade/etbank.html>. Or a brokerage service
such as Cantor Fitzgerald at <www.emissionstrading.com> will provide price
information on NOX and SO2 allowances, but only to registered clients when I
last checked their site. Environmental Financial Products in Chicago is a
firm involved in trading greenhouse gas credits.

I was interested in these market prices because recycling reduces emissions
into air and water and onto land for most pollutants, as well as reducing
emissions of greenhouse gases. These reductions occur when recycled
materials, rather than virgin raw materials, are used in manufacturing

If we can develop a market-based mechanism through which local recycling
programs can get monetary credit for some of these emissions reductions, the
economics of local recycling programs will improve substantially. For
example, a ton of the materials typically recycled through residential
curbside programs is worth between $10 and $20 when greenhouse gas emissions
are priced between $8 and $13 per ton of carbon dioxide equivalents. ($8 is
the cost of reforestation to grow enough trees to absorb a ton of CO2,
according to the California Energy Commission in 1990. $13 is an estimate by
Pearce of the value of less greenhouse gas emissions in terms of reduced
coastal damage from sea level rise.)

Dr. Jeffrey Morris
Sound Resource Management
1477 Elliott Avenue West
Seattle, WA 98119


Visit our website at <www.soundresource.com> for downloadable research
reports and The Monthly UnEconomist newsletter, covering current research on
the environmental benefits and everyday economics of recycling. Also
downloadable recycling market price history and forecast charts and tables
for mixed paper, newspaper, cardboard, glass, aluminum cans, steel cans, PET
bottles and HDPE bottles for the Northwest and Northeast, as well as
comparisons of historical prices for recycled versus virgin materials.