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Air Pollution Trading Programs

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					Air Pollution Trading Programs
Ira Domsky Arizona Department of Environmental Quality Pollution Trading as a Tool for Meeting TMDLs Scottsdale, Arizona March 14, 2001

Overview
Purpose of trading programs  Types of trading programs  History of air pollution trading programs  Examples


Acid Rain  WRAP Backstop Cap-and-Trade


Hypothethical Cost of Control
(all things being equal)

Dollars/Ton

Marginal Cost

Average Cost

0%

20%

40%

60%

80%

100%

Control Level

Types of Trading Programs
 Command

and Market

 Cap

and Trade

History of Air Pollution Trading Programs
Phase-out of Lead from Gasoline  Southern California RECLAIM  Clean Air Act Amendments of 1990


Acid Rain  Economic Incentives




Other State and Local Programs

Issues in Air Pollution Trading
Meeting emissions reduction goals  Measurement  Record keeping and reporting  Allocating new property  Emissions equivalence


Volatile Organic Compounds  Hazardous Air Pollutants


Inter-pollutant trading  Compliance and enforcement


The Federal Acid Rain Program
Setting the baseline  Distribution of credits  Measurement issues  Performance


Emissions reduced nearly 50% from 1985  Greatest impact in East  Active market for credits  Compliance costs less than predicted


Annex to the Grand Canyon Visibility Transport Commission Report
October 1, 2000

Western Regional Air Partnership
Arizona*, California*, Colorado*, Idaho*, Montana, New Mexico*, North Dakota, Oregon*, South Dakota, Utah*, Washington Wyoming*  EPA, U.S. Forest Service, National Park Service

*Grand Canyon Visibility Transport Commission states, excluding Nevada

Western Regional Air Partnership


Pueblo of Acoma, Campo Band of Kumeyaay Indians, Cortina Indian Rancheria, Hopi Tribe, Hualapai Nation of the Grand Canyon, Jicarilla Apache Tribe, Northern Cheyenne Tribe, Salish and Kootenai Confederated Tribes, Pueblo of San Felipe, and Shoshone-Bannock Tribes of Fort Hall

www.wrapair.org

WRAP Backstop Cap & Trade


Principles:
Emissions targets met through other means  Equity – All participants get what they need initially to operate if program is triggered  No impediment to new, clean sources  Achieve steady and continuing emissions reductions  Provide flexibility “up-front” for greater “back-end” reductions


WRAP Backstop Cap & Trade


Allocations:
Based on actual emissions 1996 - 1999  “Floor” defined by modern emissions limitations  Rest of allocation reduced based on targets  New source set-aside  Tribal set-aside


Compliance with Milestones
(hypothetical case)
1 yr Check

GCVTC Regionwide Annual SO2 Tons (000)

750

2 yr average 2013 Avg.Milestone

700

2014 Avg.Milestone
650

600

550

1 yr Check
500

2003

2005

2007 Milestone

2009

2011 Emissions

2013

2015

2017

2019

3yr Avg. Emissions

WRAP Backstop Cap & Trade


Remaining Issues
EPA review and approval  State and Tribal option to participate  Viability of the market – “critical mass”  Resolving the electricity shortage



				
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