Sulfur dioxide emissions are regulated by a cap and trade system in the U.S.  If cap and trade is working properly, allowance prices and emissions should smoothly adjust to demand side effects (recession?) and supply side (new regulations?).  Like this (from Reuters):

U.S. power plant emissions of sulfur dioxide dropped sharply in the first half of the year as the electricity industry prepared for tighter regulation in 2010, Genscape said Monday.

Sulfur dioxide emissions were down 24 percent compared to the first half of 2008, much more than would be expected due to the recession and lower electricity demand, the power industry data provider said in its quarterly review of energy trends.

"The industry is clearly going through a dress rehearsal for the implementation of the Clean Air Interstate Rule (CAIR) in 2010, and judging by allowance prices as well as the fundamental data, it is a stellar performance," Genscape said.

...

But the decline in SO2 is largely because of the new rules coming in 2010 and an allowance scheme that favors early implementation, the power data provider said.

"Most of the decline in sulfur emissions is not due to the recession or even to the switch from high-sulfur coal to lower sulfur grades and to gas," Genscape said, noting many plants have installed equipment to remove SO2 from emissions.

"It makes sense to start cutting emissions early if the equipment is in place since pre-CAIR vintage allowances will retain their full face value of a ton of SO2, while from 2010 onward, each permit will be worth only half a ton," Genscape said.


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