Professor Susan Kask’s Environmental and Ecological Economics class takes on a significant project each year. This year the class raised money to bid in the SO2 market. Each year, utility companies purchase SO2 allowances in the EPA’s Acid Rain program. These allowances are pollution permits that let companies emit SO2 pollution; companies must own these allowances in order to pollute. The EPA auctions allowances for 125,000 tons of SO2 every year. Anyone can buy these allowances; Kask and class have made a bid for 500 tons using money they raised.
Entering the market does two things: it increases the demand for allowances, thus driving up the price, and lowers the level of SO2 that can be emitted this year. “The SO2 market in which we participated is very similar to, and was actually the basis for the design of, the European Cap and Trade system for CO2,” Kask said. This cap and trade system is used to reduce greenhouse gases. “Hopefully, the U.S. will develop such a program.”
So why buy SO2 permits? SO2 causes acid rain which is extremely harmful to the environment. It causes acidification of lakes and streams and contributes to the damage of trees and many sensitive forest soils. The more permits Kask and her class purchase, the fewer available for utility companies.
Stay tuned, results will be finalized soon. At the end of March we will know the amount we were able to purchase. A big thank you to all that helped Dr Kask and her class fundraise!