Purpose:　The　efficiency　of　the　emission　trading　system　(ETS)　may　help　to　control　the　total　emission　amount.　The　purpose　of　this　paper　is　to　investigate　the　generating　cost　issue　in　environmental/economic　power　dispatch,　under　the　premise　that　the　ETS　has　already　been　established.　Design/methodology/approach:　The　emission　benefit　and　price　level　factors　are　introduced　for　transforming　the　bi-objective　optimization　problem　with　the　fuel　cost　and　emission　cost　minimization　into　a　single　objective.　In　the　developed　mathematical　model,　both　the　total　emission　amount　from　all　units　and　the　permitted　emission　amount　from　each　generating　unit　are　taken　into　account.　The　successive　linear　programming　method　is　employed　to　solve　the　optimization　problem.　Findings:　Simulation　results　of　the　IEEE　30-bus　test　system　show　that　a　proper　trading　mechanism　of　emission　permits　is　very　important　for　generation　companies　to　control　the　total　emission　amount　and　to　reduce　the　overall　generation　cost.　Research　limitations/implications:　Further　research　is　needed　to　find　out　the　impact　on　the　generating　cost　caused　by　trading　price　fluctuation　and　the　coping　strategies.　Originality/value:　The　results　can　help　to　meet　the　requirements　of　current　generating　optimal　dispatch.　©　Emerald　Group　Publishing　Limited.