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Federal Air Emissions Regulations |
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In 2005, the EPA finalized two regulations, CAIR and CAMR, that would reduce emissions from coal-fired power plants in the United States. Both CAIR and CAMR are included in the AEO2006 reference case. The EPA has received 11 petitions for reconsideration of CAIR and has provided an opportunity for public comment on reconsidering certain aspects of CAIR. Public comments were accepted until January 13, 2006. The EPA has also received 14 petitions for reconsideration of CAMR and is willing to reconsider certain aspects of the rule. Public comments were accepted for 45 days after publication of the reconsideration notice in the Federal Register. Several States and organizations have filed lawsuits against CAMR. The ultimate decision of the courts will have a significant impact on the implementation of CAMR.
Clean Air Interstate Rule The final CAIR was promulgated by the EPA in March 2005 and published in the Federal Register as a final rule in May 2005 [11]. The rule is intended to reduce the atmospheric interstate transport of fine particulate matter (PM2.5) and ozone [12]. Both SO2 and NOx are precursors of PM2.5. NOx is also a precursor to the formation of ground-level ozone. CAIR would require 28 States and the District of Columbia to reduce SO2 and/or NOx emissions in a two-phase program. The Phase I cap for NOx becomes effective in 2009, and the Phase I cap for SO2 starts in 2010 [13]. The Phase II limits for both NOx and SO2 start in 2015. The rule would apply to all fossil-fuel-fired boilers and turbines serving electrical generators with capacity greater than 25 megawatts that provide electricity for sale. It would also apply to CHP units larger than 25 megawatts that sell at least one-third of their potential electrical output and supply more than 219,000 megawatthours of electricity to the grid. Table 8 shows EPA estimates of CAIR’s impacts on SO2 and NOx emissions. The AEO2006 reference case projections for SO2 and NOx emissions are very close to the EPA numbers. Under CAIR, the States would be responsible for allocating NOx emissions allowances and taking the lead in pursuing enforcement actions, and they would have flexibility in choosing the sources to be controlled. They could meet the emissions reduction requirements either by joining the EPA-managed cap and trade program for power plants or by achieving reductions through emissions control measures on sources in other sectors (industrial, transportation, residential, or commercial) or on a combination of electricity generating units and sources in other sectors. The 28 CAIR States are required to submit State Implementation Plans (SIPs) to the EPA by September 2006, showing how they intend to meet their respective caps. In order to participate in the cap and trade program, States would be required to regulate power plant emissions within their boundaries. The EPA would be responsible for assigning State emissions budgets, reviewing and approving State plans, and administering the emissions and allowance tracking systems. Sources currently subject to the CAAA90 Title IV rules and to the NOx SIP Call trading program can use allowances banked from those programs before 2010 for compliance with CAIR. CAIR would require additional reductions in NOx emissions for States affected by the NOx SIP Call. State NOx emissions caps are based on each State’s share of region-wide heat input. The EPA plans to meet the SO2 emission reduction requirements by implementing a progressively more stringent retirement ratio on SO2 allowances for electricity generating units of different vintages under the CAAA90 Title IV Acid Rain Program. New SO2 allowances would not be issued under CAIR; power plants would instead use the current pool of SO2 allowances issued under Title IV. Allowances issued for vintage years 2004 through 2009 could be retired on a 1-to-1 basis, but allowances issued for vintage years 2010 through 2014 would have to be retired on a 2-to-1 basis, requiring two Title IV allowances to be retired for each ton of SO2 emissions. Allowances issued for vintage years 2015 and later would be retired on a basis of approximately 2.9 to 1. This retirement procedure is designed to integrate the CAIR rules with the existing Title IV SO2 emissions reduction program. Clean Air Mercury Rule CAMR (proposed as the Utility Mercury Reduction Rule) for controlling mercury emissions from new and existing coal-fired power plants was promulgated by the EPA in March 2005 and published as a final rule in the Federal Register in May 2005 [14]. Power plants with capacity greater than 25 megawatts and CHP units larger than 25 megawatts that sell at least one-third of their electricity would be subject to CAMR. Under CAMR, Section 112 of the CAAA90 would be modified to allow regulation of mercury emissions under a cap and trade program. The EPA estimates that CAMR, using the cap and trade approach, would reduce mercury emissions by nearly 70 percent when fully implemented. The program would be implemented in two phases with a banking provision. The Phase I cap, to be met in 2010, would be 38 short tons; the Phase II cap, to be met in 2018, would be 15 short tons. In addition to these national caps, new power plants would be subject to output-based limits on mercury emissions. Under the cap and trade approach, States would submit plans to the EPA to demonstrate that they would meet their assigned State-wide mercury emissions budgets. With EPA approval, the States could then participate in the cap and trade program. Allowances would be allocated by the States to power companies, which could either sell or bank any excess allowances. The final rule does not include a safety valve mechanism for allowance prices.
Contact: Robert Smith |
