Transferable Discharge Permits for Control of SO2 Emissions from Illinois Power Plants

A large scale simulation model was employed in evaluating various policy alternatives for reducing SO₂ emissions from Illinois electric power plants for a broad range of nuclear power capacity addition scenarios. A dynamic simulation of a transferable discharge permit (TDP) program suggests a market oriented management system can assure an acceptable level of environmental quality while achieving typical cost savings of 40-60 percent over a program based on uniform decreases in existing emission standards. This cost advantage can be realized without any major decline in the demand for coal generally or indigenous coals in particular. Several options for initiating the TDP market are evaluated. The analysis concludes that initiating the market by government sales may not constitute a major financial burden on the electric utilities or their customers.