Accountability and Emissions Allowance Trading: Lessons Learned from the U.S. Electric Utility Industry (original) (raw)

Proceedings of the International Association for Business and Society, 2007

Abstract

ABSTRACT This research concerns accountability by companies in the U.S. electric utility industry for the financial impacts of cap‐and‐trade emissions allowance activity. We report findings from an extensive examination of disclosure practices for more than 100 facilities that were required to curb pollutant discharges and participate in a government‐mandated emission permits distribution and trading program. We can report conclusions from this empirical analysis in two domains of interest. With respect to the actual focus of the cap‐and‐trade program, this study shows that sulfur dioxide emissions have been reduced (whether the replaced command‐and‐control system would have been as effective in this connection is not possible to determine) and that firms have been able to delay implementation of costly pollution‐control technology by acquiring allowances. As regards the financial accounting and reporting for this activity, it is not known what the real cost to the firms was for using allowances since little disclosure regarding these costs has been made available publicly. It appears that there is little or no accountability concerning a key element of the cap‐and‐trade program.

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