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EPA Press Advisory: EPA Report: Eastern States Cut Air Pollution with NOx Cap-and-Trade Program

Release Date: 09/02/2004
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(Washington, D.C. - September 2, 2004) EPA is releasing its first annual NOx Budget Trading Program 2003 Progress and Compliance Report. The 2003 report assesses the NOx Budget Trading Program, a market-based cap and trade program created to reduce nitrogen oxide (NOx) emissions from power plants and other large combustion sources in the eastern United States. The report demonstrates that the program is successful in reducing summertime NOx, a prime ingredient in the formation of ground-level ozone (smog) in the eight participating states. The Bush Administration is pursuing significant additional reductions in NOx and other emissions through its Clean Air Rules - - rules similar to the President's Clear Skies legislation.

Under the NOx Budget Trading Program, total ozone season NOx emissions from power plants and other large combustion sources were 30 percent below 2002 levels in eight northeastern states and the District of Columbia. NOx Budget Trading Program cuts, when combined with other NOx control programs have reduced ozone season NOx emissions from sources in these states 70 percent below 1990 levels. Emissions reductions occurred despite power generation increases by the affected sources in 2003. Reductions also have occurred for both average emissions and short-term peak NOx emissions that are a concern on hot, high electricity demand days conducive to ozone formation. More than 99 percent of the affected units were in full compliance in 2003. Units that were out of compliance received penalties requiring deeper emissions cuts in the future.

EPA administers the NOx Budget Trading Program -- which in 2004 includes 19 states and the District of Columbia. Two more states will join in 2007. When fully implemented, the program will reduce a projected one million tons of NOx and improve air quality for more than 100 million people. The NOx trading program was established by EPA under the 1998 Nitrogen Oxides State Implementation Plan (SIP) Call, or "NOx SIP Call," which required reductions in NOx emissions from power plants and other sources in eastern states that were demonstrated to impair air quality in downwind states.

Building on prior efforts to reduce summertime NOx emissions in the Northeast, eight northeastern states and the District of Columbia began implementing the NOx Budget Trading Program in 2003. Sources in 11 additional states across the East and Midwest joined in May 2004. The 11 states that did not participate in the program until 2004 have also made progress in reducing NOx emissions in anticipation of entering the program, and in response to other NOx control programs, particularly annual NOx reductions under the Acid Rain Program. NOx emissions in these states were approximately 50 percent below 1990 levels. In addition, sources in these states successfully monitored and reported emissions for the first time starting in 2003. Rigorous emissions monitoring and reporting protocols are essential to the success of cap-and-trade programs.

The report shows that the cap and trade mechanism is an effective and efficient way to control pollutants over broad regions in the United States. The cap levels established for the NOx Budget Program alone, however, will not bring all areas in affected states into attainment with the 8-hour ozone standard. Therefore, the Bush Administration is pursuing significant additional reductions in NOx and other emissions through its Clean Air Rules. The Clean Air Nonroad Diesel Rule, finalized earlier this year, requires reductions from nonroad engines and low sulfur fuel, and the Clean Air Interstate Rule, which will be finalized later this year, will require additional annual NOx reductions from power plants through a cap and trade approach. These rules achieve significant improvement in air quality and the associated benefits of improved health, longevity and quality of life.

The NOx Budget Trading Program 2003 Progress and Compliance Report is available at: https://www.epa.gov/airmarkets . Information and background the NOx SIP Call is available at: https://www.epa.gov/airlinks/airlinks2.html .