Editing Emissions trading (section)

==History==
The efficiency of what later was to be called the "cap-and-trade" approach to [[air pollution]] abatement was first demonstrated in a series of micro-economic computer simulation studies between 1967 and 1970 for the National Air Pollution Control Administration (predecessor to the [[United States Environmental Protection Agency]]'s Office of Air and Radiation) by Ellison Burton and [[William Sanjour]]. These studies used mathematical models of several cities and their emission sources in order to compare the cost and effectiveness of various control strategies.<ref>Burton, Ellison, and William Sanjour (1967) ''An Economic Analysis of the Control of Sulphur Oxides Air Pollution'' DHEW Program Analysis Report No. 1967-69 Washington, D.C.: Ernst and Ernst.</ref><ref>Burton, Ellison, and William Sanjour. (1968). ''A Cost-Effectiveness Study of Particulate and {{chem|SO|x}} Emission Control in the New York Metropolitan Area''. NTIS: PB-227 121/1. Contract Number: PH-86-68-37. Washington, D.C.: Ernst and Ernst.</ref><ref>Burton, Ellison, and William Sanjour. (1969). ''A Cost-Effectiveness Study of Air Pollution Abatement in the Greater Kansas City Area''. NTIS: PB-227 116/1. Washington, D.C.: Ernst and Ernst.</ref><ref>Burton, Ellison, and William Sanjour. (1969). ''A Cost-effectiveness Study of Air Pollution Abatement in the National Capital Area''. NAPCA Contract No. PH 86-68-37, NTIS: PB227110. Washington, D.C.: Ernst and Ernst.</ref><ref>Burton, Ellison, and William Sanjour. (1970). ''Applications of Cost-Effectiveness Analysis to Air Pollution Control''. DHEW Contract No. CPA 22-69-17. Washington, D.C.: Ernst and Ernst.</ref> Each abatement strategy was compared with the "least-cost solution" produced by a computer optimization program to identify the least-costly combination of source reductions in order to achieve a given abatement goal. In each case it was found that the least-cost solution was dramatically less costly than the same amount of pollution reduction produced by any conventional abatement strategy.<ref>{{cite journal | last1 = Burton | first1 = E. S. | last2 = Sanjour | first2 = William | year = 1970 | title = A Simulation Approach to Air Pollution Abatement Program Planning | journal = Socio-Economic Planning Sciences | volume = 4 | pages = 147–150 | doi=10.1016/0038-0121(70)90036-4}}</ref> Burton and later Sanjour along with Edward H. Pechan continued improving<ref>Burton, Ellison S., Edward H. Pechan III, and William Sanjour. (1973). ''A Survey of Air Pollution Control Models''. Rolf A. Deininger, ed. Ann Arbor: Ann Arbor Science Publishers.</ref> and advancing<ref>{{cite journal | last1 = Burton | first1 = Ellison S. | last2 = Edward | first2 = H. Pechan III | last3 = Sanjour | first3 = William | year = 1973 | title = Solving the Air Pollution Control Puzzle | journal = Environmental Science and Technology | volume = 7 | issue = 5| pages = 412–5 | doi=10.1021/es60077a011| pmid = 22283532 | bibcode = 1973EnST....7..412B }}</ref> these computer models at the newly created U.S. Environmental Protection Agency.  The agency introduced the concept of computer modeling with least-cost abatement strategies (i.e., emissions trading) in its 1972 annual report to Congress on the cost of clean air.<ref>U.S. Environmental Protection Agency. (1972). ''The Economics of Clean Air'', Annual Report of the Environmental Protection Agency to the Congress of the United States. Washington, D.C.: U.S. Government Printing Office.</ref> This led to the concept of "cap and trade" as a means of achieving the "least-cost solution" for a given level of abatement.

The development of emissions trading over the course of its history can be divided into four phases:<ref>{{cite journal | last1 = Voss | first1 = Jan-Peter | year = 2007 | title = Innovation processes in governance: the development of ''emissions trading'' as a new policy instrument | journal = Science and Public Policy | volume = 34 | issue = 5| pages = 329–343 | doi=10.3152/030234207x228584}}</ref>

# Gestation: Theoretical articulation of the instrument (by [[Ronald Coase|Coase]],<ref>{{cite journal |last=Coase |first=Ronald H. |year=1960 |title=The Problem of Social Cost |journal=[[Journal of Law and Economics]] |volume=3 |issue=1 |pages=1–44 |doi=10.1086/466560 |title-link=The Problem of Social Cost |s2cid=222331226 }}</ref> Crocker,<ref>Crocker, T. D. (1966). The Structuring of Atmospheric Pollution Control Systems. The Economics of Air Pollution. H. Wolozin. New York, W. W. Norton & Co.: 61–86.</ref> Dales,<ref>{{cite journal | last1 = Dales | first1 = John H | year = 1968 | title = Land, Water, and Ownership | journal = The Canadian Journal of Economics | volume = 1 | issue = 4| pages = 791–804 | jstor=133706| doi = 10.2307/133706 }}</ref> Montgomery<ref name="Montgomery1972">{{cite journal|last=Montgomery|first=W.D|date=December 1972|title=Markets in Licenses and Efficient Pollution Control Programs|journal=Journal of Economic Theory|volume=5|issue=3|pages=395–418|doi=10.1016/0022-0531(72)90049-X}}</ref> etc.) and, independent of the former, tinkering with "flexible regulation" at the US Environmental Protection Agency.
# Proof of Principle: First developments towards trading of emission certificates based on the "offset-mechanism" taken up in Clean Air Act in 1977. A company could get allowance from the Act on a greater amount of emission when it paid another company to reduce the same pollutant.<ref>{{cite web|title=The Clean Development Mechanism: A Review of the First International Offset Program|date=March 2011|url=http://www.c2es.org/docUploads/clean-development-mechanism-review-of-first-international-offset-program.pdf|last1=Gillenwater|first1=Michael|last2=Seres|first2=Stephen|publisher=Pew Center on Global Climate Change|page=6|access-date=26 November 2016|archive-url=https://web.archive.org/web/20160831125313/http://www.c2es.org/docUploads/clean-development-mechanism-review-of-first-international-offset-program.pdf|archive-date=31 August 2016|url-status=dead}}</ref>
# Prototype: Launching of a first "cap-and-trade" system as part of the US [[Acid Rain Program]] in Title IV of the [[1990 Clean Air Act]], officially announced as a paradigm shift in environmental policy, as prepared by "Project 88", a network-building effort to bring together environmental and industrial interests in the US.
# Regime formation: branching out from the [[The Center for Clean Air Policy|US clean air policy]] to [[Climate change policy of the United States|global climate policy]], and from there to the European Union, along with the expectation of an emerging global [[carbon]] market and the formation of the "carbon industry".

In the United States, the [[acid rain]] related emission trading system was principally conceived by [[C. Boyden Gray]], a [[George H. W. Bush|G.H.W. Bush]] administration attorney. Gray worked with the [[Environmental Defense Fund]] (EDF), who worked with the EPA to write the bill that became law as part of the Clean Air Act of 1990. The new emissions cap on NO<sub>x</sub> and {{SO2|link=yes}} gases took effect in 1995, and according to ''[[Smithsonian (magazine)|Smithsonian]]'' magazine, those acid rain emissions dropped 3 million tons that year.<ref>Coniff, Richard (Aug. 2009). [http://www.smithsonianmag.com/science-nature/Presence-of-Mind-Blue-Sky-Thinking.html?c=y&page=3 "The Political History of Cap and Trade"] {{Webarchive|url=https://web.archive.org/web/20101113171213/http://www.smithsonianmag.com/science-nature/Presence-of-Mind-Blue-Sky-Thinking.html?c=y&page=3 |date=2010-11-13 }}. ''Smithsonian Magazine.'' Retrieved 1-13-2011</ref>