For sale: Sulfur emissions

The allowance trading market has started a slow march to maturity. Competitive developers should understand the risks and opportunities now presented. The marketplace for sulfur dioxide (SO2) emissions allowances - the centerpiece of Title 4's acid rain reduction program - remains enigmatic 19 months after the Clean Air Act amendments of 1990 were passed. Yet it is increasingly clear that the emission allowance market will likely confound the gloom and doom of its doubters. The recently-announced $10 million dollar Wisconsin Power and Light allowance sales to Duquesne Light and the Tennessee Valley Authority are among the latest indications of momentum toward a stabilizing market. This trend puts additional pressure on independent developers to finalize their allowance strategies. Developers who understand what the allowance trading program is and what it is not, know the key players, and grasp the unresolved regulatory issues will have a new competitive advantage. The topics addressed in this article include the allowance marketplace, marketplace characteristics, the regulatory front, forward-looking strategies, and increasing marketplace activity