How did the 1990 Clean Air Act use emissions trading to reduce sulfur dioxide pollution?

The 1990 amendments to the Clean Air Act utilized a cap-and-trade mechanism to address sulfur dioxide (SO₂) emissions, which are a primary cause of acid rain.1

Under this program, the Environmental Protection Agency established a nationwide limit, or "cap," on total SO₂ emissions, significantly reducing the allowable tonnage compared to 1980 levels. Power plants were issued annual emission allowances consistent with this cap.1

This system provided flexibility:
* Compliance: Plants could either reduce their own emissions to match their allowances or purchase extra allowances from other facilities that had successfully reduced their emissions below their allotted limits.1
* Efficiency: By creating a market price for emissions, the program allowed companies to determine the most cost-effective way to meet reduction targets, avoiding the rigid requirements of traditional "command-and-control" regulations.1

This market-based approach proved highly successful, with SO₂ emissions falling well below the program's cap by 2010, effectively bringing North America's acid rain problem under control.1