Detailed Study Notes on Cap and Trade and Acid Rain Management

SO2 + O2 → 2SO3
- Sulfur Dioxide (SO2) and Oxygen (O2) produce Sulfur Trioxide (SO3).
SO3 + H2O → H2SO4
- Sulfur Trioxide (SO3) reacts with Water (H2O) to produce Sulfuric Acid (H2SO4).

100 km² around Sudbury was barren of vegetation.
350 km² supported only shrub and herbaceous cover.
Vegetation affected within a 1700 square mile area (approximately 4000 km²).

1966: Fisheries researcher Harold Harvey noted disappearance of 4000 pink salmon stocked in Lumsden Lake due to increased lake acidity.
1980: Environment Canada estimated that 600,000 lakes in Canada would be dead by 2005 without a significant reduction in Acid Deposition.

Significant damage to buildings was noted as a consequence of acid rain affecting infrastructure.

Estimated health impacts of SO2 and NO on human health exceed $100 billion USD in the USA.
Reference: Chestnut, L. and D. M. Mills. (2005). "A Fresh Look at the Benefits and Costs of the US Acid Rain Program." Journal of Environmental Management. Elsevier Science Ltd, New York, NY, 77: 252–266.

Figure A-7: A color-coded map illustrating SO2 emissions in Canada (2000) and the U.S. (2001).

In the 1970s, Inco's approach to pollution was primarily centered around dilution.
1972: A new 381 m tall "superstack" was constructed at the Sudbury smelter to disperse emissions.

1981: Formation of the Canadian Coalition on Acid Rain aimed to raise awareness and advocate for policy change regarding acid rain.
Achievements included successful lobbying for the amendments to the U.S. Clean Air Act in 1990.
The coalition disbanded upon the success of its mandate.

Public debate included questions about economic impacts of environmental regulations, with notable figures expressing skepticism regarding the benefits of reducing sulfur dioxide emissions.
Quotes reflect the tension between environmental policies and economic interests:
- "Million dollar problem – billion dollar solution?" (Nature, 1977)
- Pat Buchanan's concerns over job losses vs air quality gains (Los Angeles Times, 1990)
- Criticism of the necessity for sulfur dioxide emission cuts (Washington Times).

1985: Established a target load of 20 kg/ha/yr for sulfur deposition, totaling 2.3 million tonnes/year for Eastern Canada.
- This target was substantially above the critical load recommended by scientists.
The program surpassed its goals by 14% through intensive command and control regulations.
- Each province developed specific regulations and negotiated individually with producers.

1990: Clean Air Act Amendment aimed for a 50% reduction in emissions from electric generating plants.
1991: Establishment of the Canada-US Air Quality Agreement led to the creation of a tradable permits or Cap and Trade system involving more than 4000 producers in the USA.

Allocation of emissions permits based on historical emissions and monitoring equipment was installed at all production sites.
At year-end, companies must hold enough permits to cover their actual SO2 emissions (tradable and bankable).
Estimated costs for adopting the Canadian approach in the U.S. were about $7.4 billion, whereas the American model cost approximately $0.9 billion with comparable results.

Competitive incentives lead to innovative cost reduction strategies.
The ability to bank permits allows firms to invest in excess capacities for future benefits.
- Not all firms need to make adjustments; only those able to lower emissions efficiently will do so, while others can buy permits as needed.

Alberta’s Technology Innovation and Emissions Reduction Regulation (TIER) Program.
Carbon markets in Quebec, California, and Ontario.
Individual fishing quotas in various fisheries.
China’s newly implemented Cap and Trade system.

Industrial establishments emitting ≥ 25,000 metric tons of CO2 equivalent annually are included in the system (e.g., aluminum smelters, cement plants, etc.).
Electricity producers and fossil fuel distributors are also covered, with specific emissions thresholds.
As of 2019, smaller emitters (≥ 10,000 t CO2 eq. but < 25,000 t CO2 eq.) can voluntarily register.

Annual GHG emission caps set by the government are progressively lowered to reduce overall emissions.
Emission units are sold at auction quarterly, providing limited participation to emitters who are registered.
Industrial emitters facing competition are allocated the majority of their emission units for free, decreasing over time to encourage emissions cuts.

The impact of global carbon pricing initiatives is significant; only Canada among the world's top oil exporters has implemented such initiatives to maintain competitive pricing in international markets.

The use of Cap and Trade is both complex and costly but offers an effective tool in managing greenhouse gas emissions. Its implementation requires careful consideration of economic and ethical implications, including market dynamics and competitive equity.