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
Cap
and Market
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