Energy & Environment

Trading Off Summer Smog

Northeastern states are off to a promising start with an emissions- trading program they've jointly designed to curb summertime smog pollution. Things are still up in the air, however, on whether they'll persuade upwind neighbors in the Midwest to join them in the effort.
by | June 2000
 

Northeastern states are off to a promising start with an emissions- trading program they've jointly designed to curb summertime smog pollution. Things are still up in the air, however, on whether they'll persuade upwind neighbors in the Midwest to join them in the effort.

Eight New England and Mid-Atlantic states launched the trading plan last year. It is part of the region's long struggle to clean up ground-level ozone concentrations that create smog surpassing healthy levels. Last summer, the effort helped state regulators hold smog- forming industrial emissions of nitrogen oxide to half their 1990 levels. "This achievement shows that utilities and industrial sources can take steps to reduce their contributions to air pollution reasonably and within a competitive market," Pennsylvania Environmental Protection Secretary James M. Seif commented.

The 12-state Ozone Transport Commission devised the trading plan six years ago. State governments agreed to a regional NOx budget to cut emissions from sources within each state to bring them well below previous levels. States allocate their shares among power plants and factory boilers, and companies that operate those facilities are rewarded with credits if they hold actual emissions below their targets. They're free to buy and sell credits--or bank them for future use--on an integrated regional market.

For the 1999 start-up, eight states that had finished writing NOx trading rules took part. The OTC budget allowed 218,000 tons of NOx emissions by 912 combustion units in those states during the five- month smog-control period from May through September. According to U.S. Environmental Protection Agency calculations released this March, those sources actually gave off fewer than 175,000 tons, more than 20 percent below the 1999 allowances.

OTC officials note that an emissions market began developing in 1998, even before the trading program got under way. OTC reports that NOx control costs last year ran between 25 and 50 percent below levels that U.S. EPA considers economically justified.

"You've got a real bargain here," OTC Executive Director Bruce S. Carhart says. The OTC common budget already calls for further nitrogen-oxide cutbacks by 2003.

Emissions trading has been used since 1995 for curbing sulfur-dioxide emissions that cause acid rain, but the concept remains controversial. This spring, the New York legislature passed a law forbidding the state's utilities from selling any SO2 credits they've accumulated to plants in 14 upwind states that are blamed for New York's continuing acid-rain problem.

Now, EPA and the Northeast states have stepped up pressure on the Midwest states to tighten their own industrial smokestack controls. They want to keep NOx from drifting eastward with prevailing winds to create smog over eastern cities.

Last year, Michigan, Ohio and other Midwest states went to court, challenging EPA's proposal to require them to make steep cuts in nitrogen-oxide emissions. This March, however, the U.S. Court of Appeals upheld the federal agency's authority to order 19 states to control NOx that drifts across their borders. The ruling allows EPA to compel 19 states, including the Midwest and South, to force major sources of pollution to install new control equipment to reduce NOx transport throughout the region east of the Mississippi River.

EPA proposes to hold costs down by allowing emissions trading throughout the region. Midwest states have held tentative discussions about establishing a trading system among themselves, but combining with the program that OTC already has up and running could turn out to be more efficient. As Carhart points out, "This is not something that's theoretical. We've done it."

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