Environmental adders and emissions trading: Oil and water?

This article presents the case that in practice it may be better for commissions not to attempt to set adders by calculating damages due to SO2 released in its jurisdiction, and guessing where the emissions might otherwise have taken place, and what damages would then have occurred. In the best case, the adoption by states of incorrect and inconsistent adders would simply lead to a redistribution of emissions, yielding higher compliance costs but little or no environmental benefit. The worst case would occur if such adders were widely applied not just to resource acquisition decisions, but also generation dispatch. This could render allowances worthless and thus destroy the allowance system that Congress created. Such an outcome would contradict the will of Congress, which desired to see an effective market mechanism established for SO2 control. Further, that outcome would also make it less likely that Congress would choose to adopt allowance systems to address other pollution problems - which would make achievement of environmental goals more difficult and costly