A resource-based perspective on information technology, policy, and environmental performance

Title IV of the Clean Air Act (CAA) amendment of 1990 required electric utilities to install continuous emissions monitoring systems (CEMS) -- technology that provides continuous information on the emission of certain hazardous pollutants like sulfur dioxide (SO2) and nitrous oxide (NOX) that cause acid rain - in their power plants. The information gained from CEMS in power plants was used in an emissions trading program to curb the emission of these hazardous pollutants. This paper investigates whether the use of Information System (IS) technology such as the CEMS are helpful in changing a plant's emission levels. Results suggest that the interaction of cap-and-trade policy with CEMS is crucial to reduce emission of hazardous pollutants thereby improving environmental performance. At the same time, installation of CEMS also provided complementary benefits to power plants in curbing carbon dioxide (CO2) emissions not regulated under Title IV of the 1990 amendment of the CAA.