Emissions trading has become the dominant mechanism to control air emissions in the United States.Experience over the past decades has shown that a well-designed and well-implemented cap-and-trade program can achieve air emission reduction targets at lower costs than the traditional com-mand-and-control approach.1 Under a cap-and-trade program,total emissions are capped and sources are given the flexibility to trade emissions allowances,resulting in incentives to find and apply the lowest-cost methods for reducing emissions.Moreover,because total emissions are capped,there is greater certainty that emissions targets will be achieved.The flexibility of banking emission allowances and the ability to avoid increased emissions from certain plants where installing the required controls is infeasible also provide environmental advantages compared to a less flexible com-mand-and-control approach.
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