Evaluating Ozone Control Programs
in the Eastern United States:
Focus on the NOX Budget Trading Program, 2004
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United States Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Office of Atmospheric Programs
(6204J)
1200 Pennsylvania Ave, NW
Washington, DC 20460
www.epa.gov/airtrends
www.epa.gov/airmarkets
EPA454-K-05-001
August 2005
-------
Contents
EXECUTIVE SUM MARY ii
INTRODUCTION iv
CHAPTER 1: Ozone and Major Control Programs 1
Ozone Formation and Effects 1
Reducing Ozone Pollution: Major Control Programs for NOx and VOCs 2
- Mobile Sources 3
- Industrial Processes 3
- The Power Industry 4
CHAPTER 2: Control Program Effectiveness: Changes in Emissions 7
Annual NOxandVOC Emissions in the Eastern United States 7
Ozone Season NOX Emissions: Largest Reductions Occurred after 2002 7
Focus on the NOx SIP Call: Emissions under the NOx Budget Trading Program 8
- Ozone Season Emission Reductions Across the Region 8
Reductions in the OTC and Non-OTC States 9
- Reductions from Industrial Sources 10
- Reductions at the State Level 10
- Daily Emission Trends 11
Ozone Season Emission Reductions from All Sources 12
Location of Largest Emission Reductions 12
CHAPTER 3: Control Program Effectiveness: Changes in Ozone 15
General Trends: Changes in Ozone Concentrations since 1997 15
Role of Meteorology 16
Focus on the NOx SIP Call: Changes in Ozone 16
- Comparison of Power Industry NOX Emission Reductions and Ozone Changes 19
- Trends in Ambient NOx Concentrations 19
- Comparison of NOx SIP Call Results to Program Design 21
CHAPTER 4: NOx Budget Trading Program Compliance,
Market Activity, and Banking 23
2004 Compliance Results 23
NOX Allowance Trading in 2004 24
Banking in 2004 and Flow Control Next Season 25
Continuous Emissions Monitoring System (GEMS) Results 26
Compliance Options 27
Emission Reductions from Coal-fired Units since 2003 28
CHAPTER 5: Future NOx Reductions and Ozone Improvements 31
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Focus on the NOx Budget Trading Program, 2004
Executive Summary
Emission Reductions
EPA has developed more than a dozen programs since 1990 to limit ozone formation by reducing emissions of its
key precursors: nitrogen oxides (NOX) and volatile organic compounds (VOCs). These programs complement
state and local efforts to attain the National Ambient Air Quality Standards for ozone.
Emission trends reflect implementation of these control programs, which began in the mid-1990s. In the eastern
United States, NOX emissions decreased by 25 percent, and VOC emissions dropped by 21 percent, from 1997 to
2004.
Control programs successfully reduced NOX emissions during the warm summer months, generally referred to as
the ozone season. The most recent of those programs was the NOX SIP Call, EPA's regulation to reduce the
regional transport of NOX and ground-level ozone in the eastern United States.
- All affected states chose to comply with the NOX SIP Call by participating in the EPA-administered NOX
Budget Trading Program (NBP).
- In response to the NOX SIP Call, emissions of NOX from the power industry (one of the largest NOX sources
in the country) dropped significantly after 2002. Other sources did not show this significant drop in emissions.
- After implementation of the NOX SIP Call in 2004, ozone season power industry NOX emissions were about:
> 30 percent lower than in 2003, when a limited number of states were subject to NOX SIP Call requirements;
> 50 percent lower than in 2000, before the NOX SIP Call was implemented; and
> 70 percent lower than in 1990, before implementation of the Clean Air Act Amendments.
- These reductions occurred despite a shorter-than-normal control period for states participating in the NBP for
the first time in 2004 and despite the use of compliance supplement pool allowancesadditional allowances
issued to help states phase in compliance during the first two years of the NBP.
Changes in Ozone
In most of the eastern United States, reductions in ozone concentrations (adjusted for weather) more than dou-
bled after the NOX SIP Call was implemented, beginning in 2003.
Ozone concentrations declined where EPA expected they would. Areas with the greatest decline in ozone con-
centrations are near, and downwind of, areas with greatest reductions in NOX emissions.
Because weather conditions can vary from year to year, ozone levels could be higher in years when weather is con-
ducive to ozone formation-even when current emission control programs are working as expected. To get a truer
picture of ozone from year to year, EPA adjusts ozone levels to account for the influence of weather.
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Compliance with the NOx Budget Trading Program (NBP)
Sources choose from a variety of compliance options to meet the emission reduction targets of the NBP, including
reducing generation from certain units, modifying or optimizing the combustion process to reduce NOX forma-
tion, using add-on controls, or purchasing additional emission allowances from sources reducing below their
allocations.
In 2004, there was close to 100 percent compliance. Of the more than 2,500 units covered by the NBP in 2004,
nearly all held sufficient allowances to cover their emissions. Just two units at one facility were out of compliance
and subject to an automatic penalty deduction (three allowances for each excess ton of emissions).
Overall trading activity remained robust in 2004, and allowance prices were lower and more stable than in 2003.
The level of "banked" (i.e., saved) allowances increased significantly in 2004 as a result of additional sources par-
ticipating in the NBP and the addition of compliance supplement pool allowances to states' budgets.
Sources in the NBP are required to use consistent rigorous monitoring procedures to measure their emissions. In
2004, both electric generating units and industrial boilers passed more than 98 percent of their required quality
assurance tests.
New Regulations, Additional Improvements
While ozone remains a significant problem in many areas of the United States, EPA anticipates additional
improvements, including emission reductions from:
- Continued implementation of the NOX SIP Call;
- Mobile source regulations (new passenger vehicles, heavy-duty diesel engines, and other mobile sources);
- EPA's Clean Air Interstate Rule (CAIR), which will build on the ozone season emission reductions from the
NOX SIP Call. In 2015, CAIR, the NOX SIP Call, and other programs in the CAIR region will reduce power
industry ozone season NOX emissions by about 50 percent and annual NOX emissions by about 60 percent
from 2003 levels. CAIR will ensure that Americans continue to breathe cleaner air by dramatically reducing
air pollution that moves across state boundaries in 28 eastern states and Washington, D.C.
- State Implementation Plans to address ozone nonattainment.
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Introduction
For more than three decades, the U.S. Environmental Protection Agency (EPA) has worked with state, local, and
tribal agencies to reduce emissions that contribute to the formation of ground-level ozone. This pervasive pollutant is
responsible for a number of serious health and ecological effects in many areas of the United States.
Early ozone management policies focused on reducing ozone by reducing emissions of one of its key precursors,
volatile organic compounds (VOCs). VOCs contribute to ground-level ozone formation by reacting with nitrogen
oxides (NOX) in the presence of sunlight.
While ozone levels have decreased substantially since 1980, the downward trend began to slow in the early 1990s.
About that time, emerging science indicated that NOX controls, in addition to VOC controls, would reduce ozone
levels more effectively across large regions of the United States.
EPA responded by developing programs to reduce NOX emissions, including the NOX State Implementation Plan
(SIP) Call, designed to reduce the regional transport of ozone and ozone-forming pollutants in the eastern half of the
United States. All states chose to meet mandatory NOX SIP Call reductions through participation in the NOX
Budget Trading Program (NBP), a market-based cap and trade program for electric generating and large industrial
units.
For this report, EPA analyzed the effectiveness of NOX and VOC control programs designed to reduce precursor
emissions and improve ozone air quality. This report focuses specifically on progress made in reducing emissions in
the eastern United States under the NOX SIP Call. Analyses of emissions in this report do not include emissions
from natural sources.
This report:
Briefly describes ozone formation and its health and environmental effects, and provides an overview of the major
programs designed to reduce ozone since 1990.
Evaluates the effectiveness of the major control programs by reviewing emission reductions and comparing
changes in emissions to changes in ozone concentrations.
Compares actual changes in NOX emissions and ozone concentrations to those predicted to occur under the NOX
SIP Call.
Examines progress and compliance under the NOX Budget Trading Program, including market activity, allowance
banking in 2004, and progressive flow control in 2005.
Looks at future NOX emission reductions under programs such as mobile source controls and the Clean Air
Interstate Rule (CAIR).
IV
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Chapter 1: Ozone and Major Control
Programs
Ozone Formation and Effects
Ground-level ozone pollution is common in many parts
of the United States. While ozone levels in urban areas
can be high because of concentrated local sources of
ozone-forming pollutants, ozone levels in both urban and
rural areas are affected by regional transportthe move-
ment of ozone and/or its precursors by the wind. Because
of transport, ozone levels can also be elevated in rural
areas with few local emission sources.
EPA revised its national air quality standards for ozone
in 1997, establishing an 8-hour standard to better protect
public health. The 8-hour standard is 0.08 parts per mil-
lion (ppm). An area meets the standard if the 3-year
average of the annual fourth highest daily maximum 8-
hour average concentration is less than or equal to 0.08
ppm.
In April 2004, EPA designated 126 areas in the United
States as nonattainment for the 8-hour ozone standard,
About Ground-Level Ozone
Location & Formation: Beneficial ozone occurs naturally in Earth's upper atmosphere (the stratosphere), where it shields
the planet from the sun's harmful ultraviolet rays. At ground level, harmful ozone pollution forms when emissions of NOX
and VOCs react in sunlight. Because ground-level ozone is highest when sunlight is most intense, the warm summer
months (May 1 to September 30) are generally referred to as the "ozone season."
Health Effects: Ozone can aggravate respiratory diseases, such as asthma, emphysema, and bronchitis, and can reduce
the respiratory system's ability to fight off bacterial infections. Even healthy people can have symptoms related to ozone
exposure. Over time, ozone reduces lung function. And recent research suggests that acute exposure to ozone likely con-
tributes to premature death.
Transport: Wind can affect both the location and concentration of ozone pollution. NOx and VOC emissions can travel
hundreds of miles on air currents, forming ozone far from the original emission sources. Ozone also can travel long dis-
tances, affecting areas far downwind. High winds tend to disperse pollutants and can dilute ozone concentrations. Light
winds, on the other hand, allow pollution levels to build up and become more concentrated.
Ecological Impacts: Ground-level ozone damages vegetation and ecosystems, leading to reduced agricultural crop and
commercial forest yields, and increased plant susceptibility to dis-
eases, pests, and other stresses, such as harsh weather. Ozone also
damages the foliage of trees and other plants, adversely affecting the
landscape of cities and national parks, forests, and recreation areas.
To learn more about ozone and its health impacts, please visit the
AIRNow Web site at . For information on the health
and ecological effects of ozone, go to . For more about the relationship
between emissions and ozone formation, visit
< www. epa. gov/ai rtrends>.
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based on ozone levels from 2001-2003 (see Figure 1).
The vast majority of these are in the East (404 counties
or partial counties) and are home to more than one-
third of all Americans.
Reducing Ozone Pollution: Major
Control Programs for NOx and VOCs
The majority of NOX and VOC emissions in the eastern
United States come from three types of sources: mobile
sources, industrial processes, and the electric power
industry. Mobile sources and the electric power industry
were responsible for 78 percent of annual NOX emis-
sions in 2004 (see Figure 2). That same year, 99 percent
of VOC emissions came from industrial processes
(including solvents) and mobile sources. Emissions from
natural sources, such as trees, may comprise a significant
portion of total VOC emissions, especially during the
ozone season. Figure 2 does not include these emissions.
EPA has developed more than a dozen control programs
since 1990 to reduce ozone by decreasing emissions of
NOX and VOCs (see Table 1). These programs comple-
ment state and local efforts to improve ozone air quality
and meet national standards.
Figure 1:
8-hour Ozone Nonattainment Areas
CD Nonattainment areas
Source: EPA
Notes:
Map includes partial counties.
Nonattainment areas as of of April 2004
Figure 2:
Sources of NOx and VOC Annual Emissions
in the Eastern United States, 2004
NOv
Other
22%
Power Industry
23%
VOCs
Other Industrial Processes
25%
Solvents
31%
Mobile
Nonroad
19%
Mobile
Onroad
36%
Mobile
Onroad
27%
Source: EPA
Notes:
Emissions are from the following states: Minnesota, Iowa, Missouri, Arkansas, Louisiana, Wisconsin, Illinois,
Tennessee, Mississippi, Michigan, Indiana, Kentucky, Alabama, Florida, Georgia, South Carolina, North
Carolina, Virginia, West Virginia, Ohio, Pennsylvania, Delaware, Maryland, District of Columbia, New Jersey,
Connecticut, Rhode Island, Massachusetts, New Hampshire, New York, Vermont, and Maine.
The Other category for NOx emissions includes some industrial boilers and smaller sources such as residen-
tial fuel combustion.
Emissions are projected from EPA's preliminary 2002 National Emissions Inventory (NEI).
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Table 1:
Major EPA NOx and VOC Emission Control Programs since 1990
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Mobile Sources
Ti er 1 Emission Standards (Onroad)
Reformulated Gasoline
National Low Emission Vehicle Program (Onroad)
Inspection/Maintenance Programs (Onroad)
Gasonline Vapor Pressure Controls
Evaporative Controls (Onroad)
Heavy Duty T rucks (Onroad]
Ti er II Vehicle and Gasoline Sulfur Program (Onroad]
Clean Air Nonroad Diesel Rule (Nonroad)
Other Engine Standards (Nonroad)
-
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Industrial Processes
Synthetic Organic Chemical MACT (HON)
Reasonable Available Control Technology (RACT)
Solvent and Coating Controls
#
\ \
Power Industry
Acid Rain NOX Reduction Program
Ozone Transport Commission (OTC) NOX Budget Program
NOX State Implementation Plan (SIP) Call
\
\
TF
-U-
Q Controls that result in NDX Reductions
Q Controls that result in VOC Reductions
rce: EPA Q Controls that result in both NOx reductions and VOC reductions
s:
ars highlighted indicate implementation or compliance dates.
rly reductions occur prior to compliance date.
many cases, engine standards are phased in over multiple model years. In some cases the time periods overlap.
r fuel standards, year indicates when the fuel was made available.
Mobile Sources
Emission control programs established for mobile
sources in the 1990s include regulations for new vehi-
cles and for fuels. Benefits from vehicle engine standards
increase modestly each year as older, more-polluting
vehicles are replaced with newer, cleaner models. In
time, these programs yield substantial emission reduc-
tions. Benefits from fuel programs generally begin as
soon as a new fuel is available.
As Table 1 shows, many of the mobile source controls
required since the mid-1990s apply to onroad vehicles,
such as cars and trucks. EPA also has established pro-
grams to reduce emissions from nonroad mobile sources,
including the Clean Air Nonroad Diesel Rule of 2004.
This rule includes new engine standards that will reduce
NOX emissions and particle pollution by 90 percent
from nonroad diesel engines used to power equipment
such as backhoes, tractors, material heavy forklifts, and
airport service vehicles. The rule's particle pollution
controls will also yield VOC reductions.
Industrial Processes
Large VOC reductions from industrial processes during
the 1990s primarily resulted from solvent controls.
These emission reductions typically occur where and
when the solvent is used, such as during commercial
and residential painting. In some cases, states are
required to adopt Reasonably Available Control
Technology (RACT) for major industrial sources of
NOX and VOCs. Implemented in the late 1990s, RACT
is expected to achieve an average of 30 to 50 percent
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NOX reduction per major NOX emission source. EPA's
New Source Review Program (not shown in Table 1)
requires new industrial facilities or existing facilities
making major modifications to install Best Available
Control Technology to limit emissions.
In addition, EPA's rule that controls hazardous air pollu-
tants (commonly referred to as the "HON") is expected
to reduce emissions of VOCs generated by the synthetic
organic chemical manufacturing industry and several
other processes by 1 million tons per year from 1999
levels.
The Power Industry
The power industry is one of the largest emitters of NOX
in the United States. Power industry emission sources
include large electric generating units and some large
industrial boilers and turbines. There are three major
control programs that affect the power industry: EPA's
Acid Rain Program, the Ozone Transport Commission's
NOX Budget Program, and EPA's NOX SIP Call.
The Acid Rain NOX Reduction Program
Congress established the Acid Rain Program as part of
the Clean Air Act Amendments of 1990. This national
program reduces sulfur dioxide (SO2) and NOX emis-
sions from coal-fired electric generating units greater
than 25 megawatts (MW). The Acid Rain Program's
NOX Reduction Program is not a cap and trade pro-
gram. Instead, affected sources must meet certain NOX
emission rates established for different coal-fired boiler
types (emission rates are the amount of NOX emitted
per unit of heat input). Companies can develop emis-
sions averaging plans that provide compliance
flexibility. The program began in 1996 for the largest
NOX emitters among coal-fired electric generating
units; a second phase to reduce NOX emissions from the
remaining coal-fired generating units began in 2000.
The OTC NOX Reduction Programs
The Ozone Transport Commission (OTC) was estab-
lished under the Clean Air Act to help reduce
summertime ground-level ozone in the Northeast and
mid-Atlantic regions. In 1995, the OTC required existing
stationary sources to reduce NOX emissions to meet
RACT limits. From 1999 to 2002, most of the states in
the OTC region implemented the OTC NOX Budget
Program. This program achieved reductions in NOX from
fossil fuel-fired electric generating units and large indus-
trial boilers and turbines through an ozone season (May 1
through September 30) cap and trade program. The sec-
ond phase of the OTC NOX Budget Program was slated
to begin on May 1, 2003, but was superseded by EPA's
NOX SIP Call. The OTC states include: Connecticut,
Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Vermont, Virginia, and Washington, D.C.1
The NOX SIP Call
In 1995, EPA and the Environmental Council of the
States formed the Ozone Transport Assessment Group to
begin addressing the problem of ozone transport in the
eastern United States. In 1998, based on the group's
What Is Cap and Trade?
Cap and trade is a policy tool for reducing emissions
from a group of sources over a broad geographic region.
This approach first sets an overall cap, or maximum
amount of emissions per compliance period, for all
sources under the program. Authorizations to emit,
known as emission allowances, are then allocated to
affected sources. The total number of allowances allo-
cated cannot exceed the cap.
Under an emissions cap and trade program, sources
have flexibility to choose how to meet the emission
reduction requirements. A source may either limit emis-
sions to meet the number of allowances it receives
each compliance period, or it may purchase additional
allowances. Sources with emissions below their limits
may sell excess allowances or save ("bank") them for
future use.
Sources must accurately measure and routinely report
all emissions to guarantee that the overall emissions
cap is achieved. Rigorous emissions monitoring
ensures credibility of trading programs. For more on
emissions cap and trade programs, visit
.
1 Maine, Vermont, and Virginia did not join the OTC trading program. New Hampshire is not subject to requirements of the NOx SIP Call.
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Figure 3:
NOX SIP Call Region,
Program Implementation
Compliance Deadline
^m May 2003
May 2004
May 2007
Source: EPA
findings and other technical analyses, EPA issued a regu-
lation to reduce the regional transport of ground-level
ozone. This rule, commonly called the NOX SIP Call,
requires states to reduce ozone season NOX emissions
that contribute to ozone nonattainment in other states.
Compliance with the NOX SIP Call was scheduled to
begin in 2003. The OTC states adopted the original
compliance date of May 1, 2003, in transitioning to the
NOX SIP Call. In states outside the OTC region, how-
ever, litigation delayed the initial deadline until May
31, 2004. For those states, the first compliance period
(2004) was for a shorter-than-normal ozone season (see
Figure 3). In addition, litigation delayed the start date
for portions of Georgia and Missouri until 2007. EPA
has proposed to stay the NOX SIP Call requirements for
Georgia while it responds to a petition to reconsider
Georgia's inclusion in the NOX SIP Call.
The NOX SIP Call did not mandate which sources must
reduce emissions; rather, it required states to meet an
overall emissions budget and gave them flexibility to
develop control strategies to meet that budget. All
affected states chose to meet their NOX SIP Call
requirements by participating in the NOX Budget
Trading Program (NBP).
The NOX Budget Trading Program
More than 2,500 units were affected under the NBP in
2004. These include electric generating units, which are
large boilers, turbines, and combined cycle units used to
generate electricity for sale. As shown in Figure 4, elec-
tric generating units constitute more than 85 percent of
all regulated units. The program also applies to large
industrial units that produce electricity and/or steam,
primarily for internal use. Examples of these units are
boilers and turbines at heavy manufacturing facilities,
such as paper mills, petroleum refineries, and iron and
steel production facilities. These units also can include
steam plants at institutional settings, such as large uni-
Key Components of the NOx Budget
Trading Program
The NBP is a cap and trade program for electric gener-
ating units and large industrial boilers and turbines.
The emissions budget sets a cap on emissions at a level
chosen to help states meet their air quality goals.
The NOx emissions market allows sources to trade (buy
and sell) allowances throughout the year.
At the end of every ozone season, each source must sur-
render sufficient allowances (each allowance represents
one ton of emissions) to cover its ozone season NOx
emissions. This process is called annual reconciliation.
If a source does not have enough allowances to cover its
emissions, EPA will automatically deduct allowances
from the following year's allocation at a 3:1 ratio.
If a source has excess allowances because it reduced
emissions beyond required levels, it can sell the unused
allowances or "bank" (i.e., save) them for use in a future
ozone season.
To accurately monitor emissions, sources use continu-
ous emissions monitoring systems (OEMS) or other
approved monitoring methods under EPA's stringent
monitoring requirements (40 CFR Part 75).
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versities. Some states have included other types of units,
such as petroleum refinery process heaters and cement
kilns.
Two criteria are part of determining whether a unit is
affected under the NBP: the unit must be fossil fuel-fired
and must meet specific size thresholds. For electric gener-
ating units, the program generally applies to any unit
connected to a generator with a nameplate capacity (the
power output in MW that the machine is designed to
produce) greater than 25 MW. Some OTC states, how-
ever, include units connected to generators with at least
15 MW capacity. For industrial units, the NBP applies to
units with a maximum design heat input capacity greater
than 250 million British thermal units per hour (mmBtu
per hr).
Figure 4:
Number of Units in the NOx Budget
Trading Program by Type, 2004
340
(13%)
722
(28%)
1,048
[41%]
Source: EPA
Note: Total affected units in 2004 = 2,570
460
(18%)
State Trading Budgets, Allowance Allocations, and Compliance Supplement Pool (CSP)
Allowances
EPA provided broad discretion to states as to how they could allocate allowances from their trading budget to affected
sources. One option was to allocate allowances based on each source's share of statewide ozone season heat input (i.e.,
fuel use). Another option was based on each source's share of ozone season output (e.g., generation) to reward sources
that generate more energy with less fuel input. States could also set-aside allowances for new sources or as incentives
for energy efficiency and renewable energy programs.
In addition to their NOx budgets, states received additional allowances to distribute from the Compliance Supplement Pool
(CSP). EPA created the CSP allowances to address concerns that initial efforts to comply with the NOX emissions cap
could have too many primary electric generating units out of operation at the same time to install pollution control retro-
fits, which could have adversely affected electricity supply reliability. The CSP allowances help states to phase-in
compliance during the first two years of the trading program and allow sources to limit units out of service at critical times
during the year. States were allowed to distribute their CSP allowances based on early reductions in NOx emissions, on
the basis of demonstrated need, or on some combination of the two methods.
The CSP allocation was a one-time, up-front allocation. For the states that began to comply with the NOX SIP Call in 2003
(states that had been a part of the OTC trading program), all CSP allowances were distributed as vintage year 2003
allowances and replaced existing banked OTC allowances. The non-OTC states distributed CSP allowances as vintage year
2004 allowances. The vintage is the first year an allowance can be used for compliance (i.e., deducted to cover emissions).
For example, almost all 2004 vintage allowances may be used for compliance beginning in 2004, or for any year thereafter.
The only exception is the 2004 CSP allowances, which may only be used for compliance through the 2005 ozone season.
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Chapter 2: Control Program
Effectiveness: Changes in Emissions
EPA and state, local, and tribal agencies have imple-
mented several programs that reduce NOX and VOC
emissions. In order to assess the effectiveness of major
control programs, EPA examined trends in NOX and
VOC emissions since 1990, looked at when and where
the reductions occurred, and then focused on progress
made under the NOX SIP Call in 2004.
Annual NOx and VOC Emissions in the
Eastern United States
Figure 5 shows trends in annual NOX and VOC emis-
sions for two time periods: 1990 to 1995 and 1997 to
2004. In the first period, control programs for mobile
sources and industrial processes gradually reduced both
NOX and VOC emissions, with NOX emissions decreas-
ing by 9 percent and VOC emissions decreasing by 7
percent.
The second period reflects implementation of many
control programs mandated by the 1990 Clean Air Act
Amendments. The results of these programs are evident
in emission trends from 1997 to 2004: NOX emissions
decreased by 25 percent and VOC emissions decreased
by 21 percent.
It is important to note that a significant portion of total
VOC emissions can come from natural sources, such as
trees, especially during the ozone season. For example,
EPA estimates that nearly 60 percent of total ozone sea-
son VOC emissions in 2001 were from natural sources.
These emissions are not shown in Figure 5.
Ozone Season NOx Reductions,
2003 and 2004
Because ozone levels are highest during the summer
months, it is important to evaluate NOX and VOC
emission reductions during that time period. EPA com-
Figure 5:
Annual Emissions in the Eastern United
States, 1990-1995 and 1997-2004
20
18
16
14
12
10
B
6
2
4
0
NQ< down 9%
VOC down 7%
en
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en
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en
LLJ
NO, down 25%
VOC down 21%
91 92 93 94 95
>fear
97 98 99 DO O1 02 O3 04
fear
Source: EPA
Notes:
Emissions are from Minnesota, Iowa, Missouri, Arkansas, Louisiana,
and states east.
The emissions data used in this report are measured or estimated val-
ues from EPA's National Emissions Inventory (NEI). Starting in 1997,
the NEI incorporated power industry data measured by the Continuous
Emissions Monitoring System (CEMS). For 2002, the preliminary ver-
sion of the NEI was used, which includes the 2002 CEMS data, but
does not include 2002 data for other sources submitted by state, local,
and tribal air agencies. For this analysis, EPA used CEMS data for the
power industry for 2003 and 2004. Emissions for other sources for that
period were estimated by interpolating between the 2002 preliminary
NEI data and a projected 2010 emission inventory developed to sup-
port the Clean Air Interstate Rule.
1996 is not represented in the graphs because there was a change in
the method used to collect and estimate emissions, particularly for
NOX emissions from stationary sources such as the power industry.
pared annual and ozone season emission trends for all
NOX and VOC sources from 1997 through 2004. For all
emission categories, except power industry NOX, the
ozone season trend is similar to the annual trend. Figure
6 shows a comparison of annual and ozone season NOX
emissions from the power industry. From 1997 to 2002,
the trend in ozone season emissions is similar to the
annual trend. However, in 2003 and 2004, ozone season
NOX emissions show a greater reduction. These larger
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Figure 6:
Power Industry NOx Emissions in the
Eastern United States, Annual
and Ozone Season, 1997-2004
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1997 1998 1999 2000 2001 2002 2003 2004
1=1 Ozone Season ^ar
(May-September)
Source: EPA
Note: Emissions are from Minnesota, Iowa, Missouri,
Louisiana, and states east.
-* Annual
Arkansas,
reductions are attributable to NOX SIP Call controls
which were applied in the summers of 2003 and 2004.
(For details about the types of controls used, see
Chapter 4, Compliance and Market Activity, page 23.)
Focus on the NOx SIP Call: Emissions
under the NOx Budget Trading Program
This section assesses progress under the NOX Budget
Trading Program (NBP) by comparing NOX emission
levels in 2004 (the second year of the NBP) to levels in
1990, 2000 (baseline years), and 2003. Therefore, these
results include emissions from affected sources in states
included in the NOX SIP Call in 2004 (see figure 3).2
In 2003, all affected sources in the NBP region conducted
ozone season emissions monitoring, but only the states
previously in the OTC NOX Budget Program were subject
to the emission reduction requirements of the program.3
All sources subject to the NOX SIP Call in 2004 were
required to have enough allowances to cover emissions
during the 2004 ozone season. Sources in the OTC states
were required to comply for the full ozone season (May 1
to September 30) in 2004. The compliance period did not
begin until May 31 in the non-OTC states.
Ozone Season Emission Reductions
Across the Region
Figure 7 shows the total ozone season NOX emissions for
the NBP region in 2004 compared to 1990, 2000, and
2003. In 2004, NBP sources emitted about 593,000 tons
of NOX, reducing emissions by nearly 30 percent from
2003, 50 percent from 2000, and nearly 70 percent from
1990. Many of the NOX reductions since 1990 are a
result of programs implemented under the Clean Air Act
such as the Acid Rain NOX Reduction Program, and
other state, local, and federal programs. The significant
decrease in NOX emissions after 2000 reflects additional
reductions that show the impacts of the NOX SIP Call.
Figure 7:
Ozone Season Emissions under the
NOx Budget Trading Program
2.000,000
1 ,880,000
1 ,750,000
"CD 1 ,500,000 1
C
H
' ' 1 ,250,000 n
C
o
[§ 1 .000.000
£
LU
v 750,000
cT
z
500.000
250.000 J
Q J
1,222,000
819,000
593,000
1990 2000 2003 2004
Ozone Season
Source: EPA
2 For further information on estimating baseline emissions, refer to the NOx Budget Trading Program 2003 Progress Report at
www.epa.gov/airmarkets/fednox
3 In 2003, North Carolina sources were not required to monitor, although many sources did so voluntarily. The lack of 2003 data for certain North
Carolina sources has a negligible effect on the results in this report.
8
-------
Emission Reductions in the OTC and
Non-OTC States
In light of the different control periods in 2004, it is
useful to look at total NBP emissions as well as a break-
down of emissions by the two groups of states (OTC and
non-OTC states). States that began compliance for the
first time in 2004 (non-OTC states) received compli-
ance supplement pool (CSP) allowances. Figure 8
presents the sum of the 2004 trading budgets (OTC
states) and the trading budget with CSP allowances
(non-OTC states). The budgets also reflect some
allowances provided to opt-in4 units in New York, Ohio,
and West Virginia. For a more thorough description of
trading budgets and allowance allocations, see page 6.
As Figure 8 shows, the CSP allowances increase the
trading budget significantly in the non-OTC states. The
trading budget levels for the OTC states show no differ-
ence, because the OTC states received all of their CSP
allowances in 2003. Figure 8 also presents the 2004
ozone season results both for the full ozone season
(OTC states) and the shortened control period for the
non-OTC states.
Baseline Years for Measuring Progress
Under the NOx Budget Trading Program
One measure of progress under the NBP is whether
emissions under the program meet the emission budg-
ets established for the states. Also, it is helpful to
understand how emissions under the program compare
to emissions prior to the program. EPA has chosen two
baseline years for measuring progress under the NBP:
1990, which represents emission levels before the
implementation of the 1990 Clean Air Act
Amendments.
2000, because most of the reductions required
under the 1990 Clean Air Act Amendments had
already occurred by this time, but sources were not
yet implementing the NBP.
During the OTC NOX
Budget Program, emissions
were less than allocated
allowances in every year of
the program (1999 to 2002).
That trend has continued
under the NBP in both 2003
and 2004. In 2004, ozone sea-
son NOX emissions in the
OTC states were approxi-
mately 132,000 tons, about
10 percent less than the sum
of the 2004 trading budget
for those states, and more
than 30 percent less than
their 2002 emissions.
Figure 8:
NOX Budget Trading Program: 1990, 2000, 2003, and 2004
Ozone Season Emissions, and the 2004 Trading Budgets
2,000,000 -,
^ 1,800,000
C 1 ,600,000
t, 1,400,000
in
£ 1 ,200,000
.Q
M 1 ,000,000
[§ 800,000
cf 800,000
400,000
200,000
Q.
Source: EPA
I I 1 990 Emissions
~l
rm
-
1
m
\m
m
I I 200O Emissions
I | 2003 Emissions
li
I I 2004 Trading Budgets
i | | 2004 CSP Allowances
_ ~~] I I 2004 Emissons
m [May 1- September 30]
'/A.
'A ^ 2004 Control Period
"ffi Emissions [beginning
OTC States Non-OTC States Total "la^"
Note: 2004 allowances include 2004 Trading Budgets and 2004 Compliance Supplement Pool (CSP) allowances.
1 An opt-in unit is a unit not covered by the applicability provisions of a program that requests to voluntarily enter the program and, because it meets spe-
cific program requirements (e.g., continuous emission monitoring capability), is approved to participate.
9
-------
Figure 9:
Comparison of Average Monthly NOx
Emission Rates, OTC and Non-OTC
States, 2004
0.35
0.30
0.25
cr
CO
c
g
'en
0.20
0.15
0.10
0.05
0.00-
May June
I I Non-OTC Units
July August September
I | OTC Units
Source: EPA
Note: Average monthly emission rates are based on total reported NOx
mass emissions and heat input for each applicable month for all partici-
pating units.
EPA anticipated that the states outside the OTC region
would achieve only modest reductions in 2004, because
of the shorter control period and the CSP allowances
distributed that year. However, the sum of emissions in
these states for the full ozone season were more than 30
percent below 2003 levels. In addition, emissions for the
2004 control period (May 31 to September 30) were
below the sum of their 2004 trading budgets (the budgets
without CSP allowances).
Figure 9 shows that, on average, the non-OTC states
reduced their NOX emission rates to nearly the same
level as the OTC states. Their average emissions rate in
May (prior to the control period) was considerably high-
er. These results indicate that the non-OTC states made
significant progress toward installing adequate controls
to meet their trading budget levels in 2005.
Emission Reductions from Industrial Sources
Collectively, affected NBP industrial units reduced emis-
sions approximately 25 percent from 2003 to 2004,
despite the shorter 2004 control period. Emissions from
these sources in the full 2004 ozone season were about
40,000 tons, compared to 53,000 tons for the same peri-
od in 2003.
Although industrial units have achieved reductions,
they are much less likely than electric generating units
to use add-on control devices, such as selective catalytic
reduction (SCR). As a result, these units tended to have
higher ozone season NOX emission rates in 2004 than
the full population of affected units (about 0.25 Ib per
mmBtu compared to 0.21 Ib per mmBtu). However, the
2004 average ozone season NOX emissions rate (0.25 Ib
per mmBtu) among industrial units decreased from the
2003 rate of approximately 0.38 Ib per mmBtu.
Emission Reductions at the State Level
Two non-OTC statesAlabama and Michigan-
-had
control period emissions that exceeded their trading
budgets in 2004. However, all non-OTC states had 2004
control period emissions below their 2004 trading budg-
ets when CSP allowances were included (see Figure 10).
Although the ozone season emissions in most of the indi-
vidual OTC states were below their trading budgets in
2004 (see Figure 10), emissions in Pennsylvania and
Maryland were higher. For Pennsylvania (emissions
exceeded allocations by 1,300 tons), the amount reflects
about 3 percent of the state's total budget. This type of
variability can be expected in a regional trading program
and can reflect a number of different factors, including
company-specific compliance decisions.
Emissions in Maryland exceeded allocations by 4,500
tons (about 30 percent greater than budget levels) and
increased slightly from 2003 to 2004. These results indi-
cate a clear decision to purchase a significant number of
allowances in 2004 as opposed to controlling emissions
close to budget levels. In future years, the situation in
Maryland likely will change as the result of a federal
consent decree.5
5 By 2008, under a federal consent decree, one of the companies with affected units in Maryland will be required to cap emissions from three Maryland
plants and one Virginia plant to 6,000 tons per ozone season. The three Maryland plants alone emitted more than 13,000 tons in the 2004 ozone season.
The emissions cap in this consent decree should reduce emissions from existing plants in Maryland well below budget levels.
10
-------
Figure 10:
Ozone Season NOX Emissions: 1990, 2000, and 2004 Emissions
and Trading Budgets
Source: EPA
120,000 tons
1990 Emissions
2000 Emissions
2004 Trading Budget
2004 Trading Budget plus CSP Allowances (non-OTC states only)
2004 Control Period Emissions (non-OTC states only)
2004 Ozone Season Emissions
Notes:
The Non-OTC states are shaded.
In 2004, the control period for non-OTC States was from May 31 through September 30.
Daily Emission Trends
Studies indicate that many of the health effects associat-
ed with ozone are linked to daily exposures. The 8-hour
ozone standard was developed to protect against such
exposures. Although the NBP ensures significant
regional NOX reductions throughout the course of the
ozone season, there have been concerns that a seasonal
cap would not sufficiently reduce short-term, peak NOX
emissions that can occur on hot, high electricity
demand days when ozone formation is often a concern.
Figure 11 compares daily NOX emissions for 2003 versus
2004 for the NBP region. The results show that the
NBP significantly reduced both the average and highest
daily emission levels. Average emissions during the con-
trol period in 2004 (May 31 to September 30),
decreased nearly 35 percent from the same period in
2003. The highest daily emissions in the 2004 control
I
en
.
LJJ
Figure 11:
Daily Emissions Under the NOx Budget
Trading Program, 2003 and 2004
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
5/1
Source: EPA
B/1
9/1
7/1 B/1
Date
2003 Daily NOx Tons 2004 Daily NOx Tons
11
-------
period were more than 30 percent lower than the high-
est daily emissions during the same period in 2003.
The NBP has had a significant impact on daily emis-
sions (see Figure 11). The highest total daily emissions
in 2004 rarely exceeded the lowest total daily emissions
in 2003 except from May 1 to May 30, when the 2004
control period was not in effect for non-OTC states.
These results show that, while reducing total emissions
in 2004, the trading program also reduced peak daily
emission levels.
Ozone Season Emission Reductions
from All Sources
In response to the NOX SIP Call, the power industry
dramatically reduced ozone season NOX emissions after
2002. Other major NOX and VOC source categories do
not show this significant drop in emissions.
As Figure 12 shows, ozone season NOX emissions from
the power industry dropped 6 percent per ozone season,
on average, from 1997 to 2002. Reductions were much
greater after 2002an average of 19 percent per ozone
season from 2002 to 2004. Onroad mobile and other
categories show continuing NOX emission reductions;
however, those reductions are not as dramatic after 2002
as the reductions from power industry sources.
Similarly, VOC emissions dropped somewhat between
1997 and 2002, but there were few additional reductions
after 2002 (Figure 13). VOC emissions from onroad
mobile sources, for example, dropped an average of 5
percent per ozone season for both time periods.
Location of Largest Emission
Reductions
Knowing the location of NOX and VOC emission
reductions also helps EPA understand the effectiveness
of emission control programs. Figure 14 shows ozone
season NOX emission reductions between 1997 and
2004. The largest reductions occurred in the central
portion of the eastern United States.
Within this region, Illinois, Kentucky, North Carolina,
Ohio, Pennsylvania, and Tennessee each experienced
NOX emission reductions greater than 110,000 tons.
Following close behind were Alabama, Indiana,
Michigan, New York, and West Virginiaall of which
had reductions greater than 73,000 tons.
Figure 12:
Ozone Season NOx Emissions in the
Eastern United States by Category,
1997, 2002, 2004
Figure 13:
Ozone Season VOC Emissions in the
Eastern United States by Category,
1997, 2002, 2004
-
£ 2.5OO-
-o
£ 2,000-
[fl
° no_
-c 1 500-
S 1,000-
1
i 5D°-
6% per
Ozone Season
i
I Iw, nar I
-l| 19% per
Ozone Season
J
[Ozone Season
5%PBr
Ozone Season
1
H
nn
i i
1997 SODS 2004 1997 2002 2004 1997 2002 2004
Power Industry Onroad Mobile Other
Source: EPA
Note: Other includes emissions from nonroad, industrial processes, and small
power industry sources.
"ra 3,000-i
o
5 2,500-
3
i 2,000-
CO
D
[1 1.500-
co
o 1.OOO-
I 500-
5% per
Ozone Season
4%per
Dzone Season
| Ozone Seat
j-
on
1
Onraad Mobile
Source: EPA
1%per
Ozone Season
Solvents Other
Note: Other includes emissions from nonroad, power industry, and nonsolvent
industrial processes.
12
-------
Figure 15 shows the location of ozone season NOX
reductions for the power industry and onroad mobile
sources. Overall, power industry sources accounted for
larger NOX emission reductions than did onroad mobile
sources. Note the following:
States along the Ohio River Valley from Pennsylvania
to Tennessee generally experienced the largest reduc-
tions in power industry NOX emissions. Emissions
dropped the most in Ohio (153,000 tons), Illinois
(111,000 tons), and Kentucky (104,000 tons).
Pennsylvania achieved similar reductions by imple-
menting control measures prior to 1997.
Emission reductions from onroad mobile sources
were smaller than from the power industry and
occurred primarily in states with large urban areas.
No state realized reductions greater than 42,000 tons
from onroad mobile sources.
Figure 14:
Ozone Season NOx Emissions Reduced,
1997 vs. 2004
Tons Reduced
I I <0
I I 0-27,000
I I 27,001 - 73,000
73,001 -11D.OOO
110,001 -190,000
Source: EPA
Note: Darker states show larger NOx reductions.
Figure 15:
Ozone Season NOx Emissions Reduced, Power Industry
and Mobile Sources, 1997 vs. 2004
Power Industry Sources
Onroad Mobile Sources
Ozone Season Tons Reduced
I I
-------
Figure 16 shows where reductions in ozone season VOC
emissions occurred between 1997 and 2004. Reductions
in VOC emissions were neither as large (in tons) as
reductions in NOX emissions between the two years, nor
were they concentrated in the same states (see Figure
14). The largest reductions occurred in New York
(99,000 tons), Illinois (97,000 tons), and Ohio (88,000
tons).
Figure 16:
Ozone Season VOC Emissions Reduced,
1997 vs. 2004
Tons Reduced
I I
-------
Chapter 3: Control Program
Effectiveness: Changes in Ozone
To better understand how major control programs affect
ozone, EPA looked at overall changes since 1997, and
then focused on ozone improvements after 2002 (after
implementation of the NOX SIP Call). These analyses
also consider the impact of weather, because variations
in weather conditions play an important role in deter-
mining ozone levels. This chapter examines the results
of these analyses in relation to the original NOX SIP
Call program design by comparing the anticipated
changes in emissions and ozone to actual changes.
Ozone Monitoring Networks
For this report, EPA assembled data for 29 urban areas
from the Air Quality System (AQS) and 34 rural sites from
the Clean Air Status and Trends Network (CASTNET) to pro-
vide a more complete picture of the nation's air quality than
would be otherwise possible. Sufficient ambient and mete-
orological data for these sites were available to perform
detailed analyses of air quality changes over time.
Air Quality System (AQS)
AQS is EPA's repository for state and local data from moni-
toring networks specifically designed to assess air quality
trends and to support regulatory programs, such as nonat-
tainment area designations and development of State
Implementation Plans. These networks include the State
and Local Air Monitoring Stations (SLAMS) and National Air
Monitoring Stations (NAMS). There are more than 700
SLAMS/NAMS monitoring sites in the eastern United
States. For more information, see
.
Clean Air Status and Trends Network (CASTNET)
CASTNET is a national network of rural monitoring sites,
with more than 50 sites in the eastern United States. EPA
established the network primarily to provide data needed
General Trends: Changes in Ozone
Concentrations since 1997
Like NOX and VOC emissions, ozone concentrations in
urban and rural areas have decreased between 1997 and
2004 in response to control programs. Figure 18 shows
the percent reductions (adjusted for weather conditions)
in seasonal ozone. Seasonal ozone was calculated as the
average of daily maximum 8-hour ozone concentrations
from May 1 through September 30. Ozone reductions
to track and evaluate national and regional air pollution
control programs. These data provide information neces-
sary to study and investigate the effects of atmospheric
pollution on sensitive ecosystems, particularly those effects
caused by long-range transport of emissions from regional
sources. Data gathered from the network are compiled in a
central database and made available on EPA's CASTNET
Web site at .
Urban and Rural Locations
Urban area (AQS]
Rural site (CASTNET]
Source: EPA
Note: Urban areas represent multiple monitoring sites. Rural areas
represent single monitoring sites.
15
-------
were greater than 10 percent across a broad geographic
region; the average reduction was 14 percent.
Role of Meteorology
Variations in weather conditions play an important role
in determining ozone levels. Daily temperature, relative
humidity, and wind speed can affect ozone levels. In gen-
eral, warm dry weather is more conducive to ozone
formation than cool wet weather. EPA uses a statistical
model to account for the impact of weather on ozone
concentrations. Because weather varies over space and
time, this adjustment provides a better estimate of the
underlying ozone trend and the impact of emission
changes (see "Meteorology Matters" on page 17).
To illustrate the overall impact of weather on ozone lev-
els in outdoor air, EPA compared changes in ozone
before and after adjusting for weather, as Figures 17 and
18 show. Adjusting for weather made only a small differ-
ence (1 percent) in overall ozone change in the eastern
United Statesan average reduction of 13 percent
before adjustment, compared to 14 percent after adjust-
ment. Some states showed notable differences. For
example, adjusting for weather at sites in North
Carolina, Virginia, and eastern Tennessee resulted in
significantly smaller reductions, while adjustments in
Ohio, Pennsylvania, and West Virginia showed larger
ozone reductions.
Focus on the NOx SIP Call: Changes in
Ozone
EPA examined geographic patterns and ozone behavior
before and after the NOX SIP Call, and then compared
EPA's projections to what actually occurred.
To analyze ozone changes, EPA selected two baseline
years1997 and 2002. These two years were selected to
coincide with the period of NOX reductions attributable
to the Acid Rain Program and the OTC NOX Budget
Program (1997 through 2002) and the implementation of
the NOX SIP Call (2002 through 2004).
Ozone improvements were larger after implementation
of the NOX SIP Call. The average reduction in ozone
Figure 17:
Percent Reduction in Seasonal
8-Hour Ozone, 1997 vs. 2004
(Not Adjusted for Meteorology)
Source: EPA
Note: Margin of error is ± 5 percent.
Figure 18:
Percent Reduction in Seasonal
8-Hour Ozone, 1997 vs. 2004
(Adjusted for Meteorology)
Source: EPA
Note: Margin of error is ± 5 percent
16
-------
Meteorology Matters
Meteorology plays a major role in both the formation and transport of ozone. For example, the photochemical reactions
that transform emissions of NOx and VOCs into ozone are complex and require warm temperatures and dry conditions.
These graphics illustrate how the summers of 1997, 2002, and 2004 compare with historical records (a 30-year average
using data from 1971 to 2000) for temperature and precipitation in the eastern United States.
Note: Meteorology can vary significantly from one site to the next.
Temperature
Precipitation
1997
(normal ozone-forming potential)
Temperature - In general below
normal, except Florida and
New England [near normal)
Precipitation - Mixed [slightly above
normal in some places and slightly
below normal in others)
2002
(above normal ozone-forming potential]
Temperature - Mostly above
normal, except South (near normal
to slightly below normal]
Precipitation - Mostly below
normal except South and Midwest
(above normal]
2004
(below normal ozone-forming potential)
Temperature - Mostly cooler to
much cooler except Southeast
[normal to slightly above normal)
Precipitation - Mostly above
normal except upper Midwest
[below normal]
Departure from Normal Temperature
^ Lower Higher ^
Percent of Normal Precipitation
10% iso%
and Less-^ 1QO% ^-and More
Sources: National Oceanic and Atmospheric Administration (NOAA), EPA
17
-------
Figure 19:
Percent Reduction in Seasonal 8-Hour
Ozone Per Year, 1997-2002
(Adjusted for Meteorology)
Source: EPA
Note: Margin of error is ± 1 percent.
between 1997 and 2002 was about 4 percent (adjusted
for weather), compared with more than 10 percent
between 2002 and 2004. Meteorological adjustment was
especially important for this analysis because of the sig-
nificant difference in the ozone-forming potential
between 2002 and 2004. The difference in ozone levels
between 2002 and 2004 was about 17 percent before
adjusting for weather, compared with about 10 percent
after adjustment.
Figures 19 and 20 illustrate how reductions in ozone lev-
els changed before and after the NOX SIP Call (after
adjusting for weather). These figures show average per-
cent changes per ozone season between two time
periods: 1997 through 2002 (the five-year period before
the NOX SIP Call) and 2002 through 2004 (the two-
year period after the NOx SIP Call). This analysis of
emissions and ozone shows that the NOX SIP Call
achieved an additional 4 percent reduction per ozone
season. Before the NOX SIP Call was in place, ozone
declined about 1 percent per ozone season in most areas
Figure 20:
Percent Reduction in Seasonal 8-Hour
Ozone Per Year, 2002-2004
(Adjusted for Meteorology)
Source: EPA
Notes:
Margin of error is ± 2 percent.
j*~-
Locations with ozone changes greater than 3 percent per ozone
season are highlighted in red.
in the East, although some states (Kentucky and
Florida) realized average reductions as large as 3 percent
per ozone season (see Figure 19). After implementation
of the NOX SIP Call (see Figure 20), the ozone reduc-
tion was larger5 percent per ozone season on
averagewith many areas exceeding 5 percent.
EPA expects that NOX and VOC emissions will contin-
ue to decrease in 2005. Despite these improvements,
ozone levels in 2005 could be higher than in 2004,
depending on weather conditions. (Weather conditions
in 2004 were not conducive to ozone formation.) To
accurately estimate trends in ozone air quality, meteoro-
logical effects must be taken into account.
18
-------
Figure 21:
Reductions in Ozone Season Power Industry NOx Emissions and 8-Hour Ozone,
2002 vs. 2004
Power Industry NOX Emissions
8-Hour Ozone,
Adjusted for Meteorology
Ozone Season Tons Reduced
I l
-------
Ozone Reduction in Rural Areas Shows Regional Improvements
The primary goal of the NOX SIP Call is to reduce regional transport of ozone across state boundaries by reducing NOX.
EPA's Clean Air Status and Trends Network (CASTNET) provides long-term data on ozone air quality at more than 50 mon-
itoring sites in rural areas across the eastern United States. The monitoring information collected at rural sites is a good
indicator of background ozone concentrations, because rural areas are not as influenced by local emissions sources. The
rural network is particularly relevant to assessing progress under the NOx SIP Call, because it represents levels of ozone
and precursor gases that are being transported from one area to another.
Due to changing weather conditions, air quality trends often show high year to year variability over time. Some of this vari-
ability can be overcome through the use of consistent and continuous long-term monitoring data. The results presented
here show the variability over time in actual observed ozone concentrations at rural sites on a regional level.
The figure below shows a gradual decline in seasonal average 8-hour daily maximum ozone levels from 1997 to 2004 for
all four eastern regions. The largest improvements occurred after 1998 and again after 2002. The downward trend is
especially evident in the Southeast, which has experienced a steady decline in ozone in rural areas since 1998. These
results have not been adjusted for weather; however, the overall downward trend is consistent with trends that have been
adjusted for the influences of weather.
Rural Seasonal Average 8-hour Daily Maximum Ozone by Region,
1997-2004
Northeast
Mid-Atlantic
Southeast
Midwest
Source: EPA
Note: Ozone concentrations are in parts per billion (ppb)
20
-------
Figure 22:
Ozone Season Power Industry NOx Emissions Reduced, Anticipated and Actual
Anticipated
(2007 base vs. control)
Actual
(2002 vs. 2004)
Percent of Total NOX
Emissions Reduced
I I <3
I 13.1 -B
6.1-9
Source: EPA
Notes:
Darker states show larger NOx reductions.
Percent of total NOx emissions reduced is an individual state's emissions reduced, divided by total reductions across all states (in tons).
Anticipated results are the estimated difference in power industry emissions between the 2007 base case and 2007 with the NOx SIP Call for the days mod-
eled, which represent the ozone season.
Actual results are the difference in state total ozone season power industry emissions between 2002 and 2004, as reported to EPA.
Comparison of NOx SIP Call Results to Program
Design
EPA uses air quality models to help predict the impacts
of new or proposed programs (see "Estimating the
Impact of Proposed Control Programs" on page 22). For
the NOX SIP Call, EPA used models to estimate
changes in NOX emissions and their effects on ozone
levels. Figure 22 shows the state-by-state percentage of
total NOX emission reductions anticipated from the
NOX SIP Call and the actual reductions achieved by
the power industry between 2002 and 2004. Because the
majority of the states subject to the NOX SIP Call were
required to meet their emission caps by 2004, EPA
expects few additional reductions after 2004 as the com-
pliance supplement pool is used up, and in response to
growth in fossil fuel generation to meet increasing elec-
tric demand.
Figure 22 shows that actual NOX emission reductions
occurred where anticipated. The largest reductions took
place in states along the Ohio River Valley. States are
color-coded based on the percent of total emissions
reduced, which is calculated as an individual state's
emission reductions, divided by total reductions across
all states (in tons). Anticipated reductions are based on
tons reduced across days modeled, which represent the
ozone season. Actual reductions are based on tons
reduced across ozone season days.
21
-------
Figure 23:
Percent Reductions in Seasonal 8-Hour Ozone, Anticipated and Actual
Anticipated
[2007 base vs. control]
Actual
(2002 vs. 2004)
Source: EPA
Notes:
EPA used projections of 2007 emissionsboth with and without the NOx SIP Callto evaluate the rule's impact on ozone concentrations. Although
EPA's modeling used 2007 as a base year, the regulation required the majority of these reductions to be implemented prior to May 31, 2004 (in all
affected states, except portions of Missouri and Georgia).
For this report, EPA compared model-predicted changes in seasonal average 8-hour ozone to actual ambient changes, before and after the NOx SIP Call.
Similarly, Figure 23 illustrates where ozone reductions
were anticipated and where actual ozone reductions
were achieved. Both maps use average daily maximum
8-hour ozone concentrations. Anticipated improve-
ments are based on model predictions, and actual
improvements are based on measurements taken during
the ozone season. As with NOX emissions, the antici-
pated and actual changes in ozone generally are similar
(e.g., both show largest reductions along the Ohio River
Valley), indicating that the NOX SIP Call appears to
have achieved its goal of reducing ozone in the eastern
United States.
Estimating the Impact of Proposed Control
Programs
EPA uses air quality models to predict how emissions from a
specific source or combination of sources will contribute to
ozone concentrations at downwind sites. Using estimates of
hourly emissions and meteorology, these models simulate
the physical and chemical processes that contribute to ozone
formation and transport. These models allow EPA to test
hypotheses about how ozone levels will respond to reduc-
tions in VOC and NOX emissions resulting from an individual
control program or combination of control programs.
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chemistry and transport throughout the geographic area
of interest.
22
-------
Chapter 4: NOx Budget Trading
Program Compliance, Market Activity,
and Banking
A review of the second year of cap and trade under the
NOX Budget Trading Program (NBP) shows that the
market continues to mature. In 2004, for the first time,
a substantial number of sources in 11 states began to
comply with the emission reduction requirements under
the program. Many of these sources had to make signifi-
cant reductions to achieve compliance, and the market
appears to have played a significant role as participants
determined what control strategies to pursue and on
what timetable. At the same time, a number of units
added controls to meet emission reduction requirements
in the non-OTC states between the end of the 2003
and the beginning of the 2004 ozone season.
This chapter examines compliance under the NBP in
2004 and examines trends in this maturing market,
including those in allowance pricing and transactions. It
also addresses how the high level of banking in 2004
will affect future restrictions on the use of banked
allowances for compliance. In addition, this chapter
reviews the monitoring and control methods employed
by sources to meet program requirements.
2004 Compliance Results
Under the NBP, sources must hold sufficient allowances
to cover their ozone season emissions each year. Sources
can maintain the allowances in compliance accounts
(established for each unit) or in an overdraft account
(established for each facility with more than one unit).
The overdraft account allows greater flexibility in "bub-
bling" between units, managing banked allowances from
previous years, managing transferred allowances from
other sites, and managing allowances purchased from
other NBP participants. The sources have a two-month
window after the end of the control period to move
allowances between accounts (and to buy or sell addi-
tional allowances) to ensure their emissions do not
exceed allowances held. After the two-month period,
allowances may not be transferred into or out of these
accounts while EPA reconciles emissions with allowance
holdings for program compliance.
Nearly all of the NBP sources that participated in
2004both electric generating units and industrial
unitsheld sufficient allowances to cover their emis-
sions at the time.
EPA performed reconciliation and identified a single
facility with two units that had an allowance deficiency
of nine allowances. In cases where the source does not
hold enough allowances to cover its emissions, the pro-
gram requires an automatic penalty deduction (three
allowances for each excess ton of emissions) from the
23
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source's allocations for the next control period. Table 2
summarizes the allowance reconciliation process for
2004.
NOx Allowance Trading in 2004
Allowance trading generally comprises three main types
of transfers:
1. Transfers within a company or between related enti-
ties (e.g., holding company transfers to a small
operating subsidiary).
2. Transfers between separate economic entities. These
transfers are categorized broadly as "economically
significant trades."
3. Transfers from or to the state as allowance alloca-
tions or allowance surrenders.
In 2004, economically significant trades represented
approximately 40 percent of the total transfers between
entities other than a state. The economically significant
trades provide the strongest indicator of true market
activity, because they represent an actual exchange of
assets between unaffiliated participants.
There were more than 230,000 allowances involved in
economically significant trades in 2004, slightly lower
than in 2003. However, overall trading activity
remained robust. As in the earlier OTC trading pro-
gram, industrial sources have actively traded allowances.
These sources traded more than in 2003 and participat-
ed in approximately 13 percent of the economically
significant trade volume.
Table 2:
NOx Allowance Reconciliation Summary2004
Total Allowances Held lor Reconciliation
Allowances Held in Compliance and Overdraft Accounts
Allowances Held in Other Accounts*
676,574
609,249
67,325
Allowances Deducted for 2004 Emissions
Termination of 2003 Early Reduction Credit (or Compliance
Supplement Pool) Allowances**
Banked Allowances
Allowances Held in Compliance and Overdraft Accounts
Allowances Held in Other Accounts***
Penally Allowances Deducted**** (from future vear allowances)
468,824
125
207,625
133,857
73,768
Source: EPA
* Other Accounts refers to general accounts in the NOx Allowance Tracking System (NATS) that can be held by any
source, individual, or other organization, as well as state accounts.
** Compliance Supplement Pool (CSP) allowances can only be used for two years. In the OTC states, CSP allowances
not used for reconciliation in 2003 or 2004 have been retired permanently.
*** Total includes 6,477 new unit allowances returned to state holding accounts.
**** These penalty deductions are made from future vintage year allowances, not 2004 allowances.
24
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< 150,000
100,000
50,000
During certain periods, the price for NOX
allowances can reflect market uncertainties as
companies evaluate ongoing trends in control
installations, energy demand, and other exter-
nal factors that affect the overall costs of
control. In addition, program elements such as
progressive flow control and the retirement of
compliance supplement pool allowances enter
into transfer decisions, as do questions about
the integration of the NBP with the recently
finalized (March 2005) Clean Air Interstate
Rule (CAIR). Despite these uncertainties,
allowance prices stabilized in 2004 and are
down appreciably from early 2003 (see Figure
25), which is one indication that the cap and
trade market has matured.
Banking in 2004 and Flow
Control Next Season
Under the NBP, banking provisions allow companies to
decrease emissions more than what was required early in
the program, and then save unused allowances for future
use. Banking results in environmental and health bene-
fits earlier than required by the NBP and provides a
pool of allowances available to address unexpected
events or smooth the transition into deeper emission
reductions.
Figure 24:
Economically Significant Trades
300,000
250,000
200,000
Total Allowances Traded
2003
Industrial Source Activity
2004
Source: EPA
If sources use a large number of banked allowances in
one year, the elevated emissions could potentially
reduce the environmental effectiveness of the NBP. The
NBP's progressive flow control provisions were designed
to discourage extensive use of banked allowances in a
particular ozone season. Flow control is triggered when
the total number of allowances banked for all sources
exceeds 10 percent of the total regional budget for the
next year. When this occurs, EPA calculates the flow
Figure 25:
Vintage Year NOx Allowance Prices by Month of Sale
9000
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£ BOOO
JD
~O 5000
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'£ 3000
O
Z 2000
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2003
-2004
-2005
2006
2007
-------
control ratio by dividing 10 percent of the total trading
budget by the number of banked allowances (a larger
bank will result in a smaller flow control ratio). The
resulting flow control ratio indicates the percentage of
banked allowances that can be deducted from a source's
account in a ratio of one allowance per ton of emissions.
The remaining percentage of banked allowances, if used,
must be deducted at a rate of two allowances per one
ton of emissions.
With a large number of additional sources in 2004 and
the addition of Compliance Supplement Pool (CSP)
allowances to states' budgets, the level of banked
allowances in the NBP increased to nearly 208,000, well
beyond the previous year's total of more than 28,000.
These banked allowances represent 40 percent of the
total allocations for the 2005 ozone season. Because this
ratio exceeds 10 percent, flow control will be triggered
in 2005.
Continuous Emissions Monitoring
System Results
In order for NOX allowances to be accurately tracked
and traded, NBP sources must use consistent monitoring
procedures to determine their emissions. Accurate and
consistent monitoring ensures that all allowances in the
NBP have the same value (i.e., a ton of NOX emissions
from one NBP source is equal to a ton of NOX emissions
from any other source in the program). Analysis of the
continuous emissions monitoring data reported by NBP
sources in 2004 convincingly demonstrates the high
quality of the data (see Figure 26).
Industrial sources, many of which have been monitoring
under EPA's detailed monitoring procedures (40 CFR
Part 75) only since 2003, were able to perform at nearly
the same level as electric generating units, most of
which have been monitoring under Part 75 for about a
decade. In 2004, both the electric generating units and
industrial units passed more than 98 percent of the qual-
ity assurance tests required of their monitoring systems.
These tests included:
Daily calibration error tests, which use reference
gases of known concentrations, or (for flow moni-
tors) reference signals with known values, to test a
monitor at a zero point and an upscale point.
Quarterly linearity checks (for gas monitors, only),
which are similar to the daily calibration procedure
but performed at three intermediate gas concentra-
tions across the range of the analyzer.
Flow Control Will Apply in 2005How Will It Affect Sources?
2005 Regional Budget:
Banked Allowances after 2004:
Flow Control Trigger:
516,245 allowances
207,625 allowances
207,625/516,245 > 10 percent, triggering flow control for 2005
The flow control ratio will be 0.25 (determined by dividing 10 percent of the total trading program budget by the total
number of banked allowances, or 51,625/207,625).
The flow control ratio is applied to banked allowances in each source's compliance and overdraft allowance accounts
at the time of compliance reconciliation.
- For example, if a source holds 1,000 banked allowances at the end of 2005, it will be able to use 250 of them on
a 1 -for-1 basis, but will have to use the remaining 750, if necessary, on a 2-for-1 basis for compliance.
If the source used all of its 1,000 banked allowances for 2005 compliance, the banked allowances could be used to
cover only 625 tons of NOx emissions (250 + 750/2).
26
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Semiannual or annual relative accuracy test audits
which compare data from the monitoring system to
concurrent measurements of the stack emissions with
an EPA reference test method.
NBP sources also reported quality-assured emissions data
for more than 99 percent of their operating hours in
2004 (see Figure 26). Part 75 requires conservatively
high substitute data values to be reported for missing
data periods, but substitute data were used less than 1
percent of the time in 2004 and therefore had little
impact on the cumulative NOX mass emissions reported
by the NBP sources.
Compliance Options under the NOx
Budget Trading Program
In a way that best fits their own circumstances, sources
can choose from a variety of compliance options to
meet the emissions reduction targets of the NBP. These
include decreasing generation from certain units (such
as units with high NOX emissions), modifying or opti-
mizing the basic combustion process to control the
formation of NOX, using add-on controls, or purchasing
additional allowances from other market participants.
Many electric generating units installed combustion
controls to meet the NOX emission limits of the Acid
Rain Program. In addition, some industrial units added
combustion controls to meet state NOX emission limits.
For boilers, furnaces, and heaters, these controls include
low NOX burner and overfire air technologies, which
modify the combustion process to reduce formation of
NOX from nitrogen present in the combustion air and
fuel. Advances in combustion control technologies con-
tinue to provide cost-effective options to reduce
emissions even further for some units.
Add-on control technologies, such as selective catalytic
reduction (SCR) or selective non-catalytic reduction
(SNCR), are frequently applied for NOX control. SNCR
and SCR are control technologies that achieve NOX
reductions by injecting ammonia, urea, or another NOX
reducing chemical into the flue gas within or down-
stream of the combustion unit to react with NOX,
forming nitrogen and water. SCR adds a catalyst to
allow this reaction to occur in a lower temperature
Figure 26:
2004 NOX Budget Trading Program
Quality Assurance Performance of
Continuous Emissions Monitors, Electric
Generating and Industrial Units
Passed Daily Passed Passed Relative Quality Assured
Calibrations Linearity Accuracy Test Hours
Checks Audits IRATAs)
Electric Generating Units I I Industrial Units
Source: EPA
Note: These results include approximately 1,300 electric generating and
275 industrial units that reported under the NBP using CEMS in 2004.
What Monitoring Options Can Sources Use?
EPA has developed detailed procedures (40 CFR Part
75) to ensure that sources monitor and report emissions
with a high degree of precision, accuracy, reliability, and
consistency. Coal-fired units are required to use contin-
uous emission monitoring systems (CEMS) for NOx and
stack gas flow rate (and if needed, C02 or 02 and mois-
ture), to measure and record their NOx mass emissions.
Oil and gas-fired units may alternatively use a NOx
CEMS in conjunction with a fuel flowmeter to determine
NOx mass emissions. For oil and gas-fired units that are
either operated infrequently to provide power during
periods of peak demand or that have very low NOX
emissions, Part 75 provides low-cost alternatives to
estimate NOx mass emissions. Figure 26 presents only
the results for units that use CEMS.
27
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range. While SNCR is mainly applicable to boilers, fur-
naces, heaters, and kilns, SCR can be used for a wider
range of electric generating and industrial units. Sources
report pollution control information, including installa-
tion dates, in monitoring plans submitted to EPA.
Figure 27 shows the breakdown of how electric generat-
ing sources have employed emission controls as of the
2004 ozone season, by both number of units and the
percent of total ozone season generation. In the 2004
ozone season, there were about 2,200 electric generating
units affected under the NBP. Coal-fired electric gener-
ating units with combustion controls (about 400 units)
represented 43 percent of total generation during the
ozone season. Coal-fired electric generating units with
SCR (122 units) constituted about 5 percent of electric
generating units, but represented more than 30 percent
of the total ozone season generation. In contrast, oil-
and gas-fired electric generating units (over 1,500 units)
constituted nearly 70 percent of all electric generating
units but accounted for less than 15 percent of total
ozone season generation.
Figure 28 shows similar information for industrial units,
but based on steam output rather than electric genera-
tion. In the 2004 ozone season, there were 340
industrial units affected under the NBP. Most industrial
units either identify combustion controls in their moni-
toring plans or do not identify any type of add-on
controls. There are only a few exceptions where SCR
or SNCR is employed. There are no cases where coal-
fired industrial units employ SCR. Except for turbines
that can use a relatively simple form of SCR, the use of
SCR is typically limited to larger coal-fired electric gen-
erating units that can achieve significant emission
reductions in a highly cost effective way.
In addition to adding controls, decreasing generation
from certain units (e.g., those with high NOX emissions)
and making operational or fuel changes are other meth-
ods sources can use to achieve emission reductions. Table
3 shows that the total heat input for all NBP sources
increased slightly (less than 2 percent) from 2003 to
Figure 27:
Percent of Total 2004 Ozone Season
Electric Generation by Fuel
and Control Type
6%
43%
Source: EPA
33% nCoal SCR [122 units]
nCoal SNCR [53 units]
nCoal Combustion
Controls [396 units)
nCoal Uncontrolled
[151 units]
n Oil/Gas SCR and
SNCR [268 units]*
n Oil/Gas Combustion
Controls [686 units]
n Oil/Gas Uncontrolled
[554 units]
In 2004, only 14 oil/gas units had SNCR, making up less than 1 per-
cent of ozone season generation.
2004. The heat input from coal-fired units decreased a
small amount, while the heat input from gas-fired units
increased. Although there were small differences
between fuel types, the overall heat input change sug-
gests that there was no substantial shift from coal-fired
units to lower emitting oil- or gas-fired units in 2004.
Coal-fired Units Account for Nearly All
Emission Reductions since 2003
Table 3 indicates that coal-fired units accounted for
nearly all of the 226,000 tons of emission reductions
achieved by NBP units from 2003 to 2004. This analysis
first examines emission reductions from units that added
new controls in 2004 and then focuses on those units
that achieved emission reductions with no reported
change in controls.
By the end of the 2004 ozone season, 122 coal-fired
units reported using SCR controls to meet the NBP
requirements, an increase of more than 30 units since
the end of the 2003 ozone season. Seven units reported
28
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adding SNCR systems during this period, and 17 units
reported the installation of new or upgraded combustion
controls. Overall, units that installed new controls
(since the end of the 2003 ozone season) reduced emis-
sions by about 91,000 tons from 2003 levels. Additional
reductions were achieved by units that installed add-on
controls in the 2003 ozone season or earlier but operat-
ed those controls more in the 2004 ozone season. These
units (primarily units with SCR controls) reduced emis-
sions by about 28,000 tons in the 2004 ozone season.
Coal-fired units with no add-on controls and no report-
ed change in their control status after the 2003 ozone
season were nonetheless able to reduce mass emissions
by more than 100,000 tons from 2003 ozone season lev-
els. To assess how those reductions may have occurred,
EPA analyzed these units based on 2003 NOX rates,
ordered by highest to lowest emitters. This analysis
excludes coal-fired units in OTC states because those
units already had to meet trading program budget
requirements in 2003 and did not reduce emissions sig-
nificantly from 2003 to 2004. In 2004, units with the
highest 2003 NOX emission rates (the top 25 percent)
decreased total ozone season heat input by about 15 per-
cent from 2003 levels. The remaining units had only a
moderate decrease in heat input (generation), approxi-
mately 2 percent. Mass emission reductions were also
attributable to emission rate reductions. For example,
the units with the highest 2003 emission rates (the top
25 percent) experienced a median emission rate reduc-
tion of about 0.12 Ib/mmBtu. The remaining units
realized a more moderate NOX rate reduction (the
median reduction was about 0.05 Ib/mmBtu). While dis-
crepancies in the reported information on types of NOX
controls installed likely explain rate reductions for some
of these units, these types of rate reductions also can
occur as a result of operational changes or fine-tuning of
the existing combustion controls, which sources do not
report to EPA.
Figure 28:
Percent of Total 2004 Ozone Season
Steam Output for Industrial Units
by Fuel and Control Type
20%
39%
14%
Source: EPA
n Coal SNCR [9 units]
n Coal Combustion
Controls (51 units]
n Coal Uncontrolled
(72 units]
n Oil/Gas SCR
(6 units]
n Oil/Gas Combustion
Controls (62 units]
n Oil/Gas Uncontrolled
(140 units]
Note: Industrial units generally provide generation data as steam output
load. Some industrial units provide electrical output data because they
provide electrical energy for on-site use. That electrical load data was
converted to a steam equivalent (1,000 pounds per hour) to allow con-
sistent comparison of data.
Heat input is the heat derived from the combustion of
fuel in a unit. It is a simple way to track utilization of
affected units. The overall heat input levels from affect-
ed sources in the NBP states increased slightly
between 2003 and 2004 without the addition of a sig-
nificant number of sources. This indicates that, on a
systemwide basis, sources in the region were able to
maintain their preexisting generation levels while still
complying with the NBP.
29
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Table 3:
Comparison of 2003 and 2004 Ozone Season NOx Mass Emissions, Heat Input,
and NOx Emission Rates in the NOx Budget Trading Program
Units by Ozone Season NOx Mass
Fuel Type Emissions (tons)
Coal
Ozone Season Heat Input (mmBtu)
770,000 (94%)
548,000 (93%)
4.7 billion (84%)
4.7 billion (83%)
Ozone Season NOX
Emissions Rate
(Ib/mmBtu)
0.33
0.23
Oil
25,000 (3%)
25,000 (4%)
260 million (5%)
260 million (5%)
0.19
0.19
Gas
24,000 (3%)
20,000 (3%)
590 million (11 %)
690 million (12%)
0.06
Total
819,000
593,000
5.57 billion
5.65 billi
0.29
0.21
Source: EPA
Notes:
Tons rounded to the nearest 1,000 tons. Totals may not equal the sum of the values for each fuel type due to rounding. The data presented here are for the
ozone season May 1-September 30.
The Average emission rate is based on dividing total reported ozone season NOx mass emissions for each fuel category by the total ozone season heat input
reported for that category. The average emission rate expressed for the "Total" is the heat input weighted average for the three fuel categories.
30
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Chapter 5: Future IMOx Reductions
and Ozone Improvements
Despite improvements in ozone air quality in many
areas of the country, ozone continues to be a pervasive
air pollution problem. More than 100 million people in
the eastern United States are still living in nonattain-
ment areas that do not meet the 8-hour ozone standard.
Continued reductions anticipated under the NOX SIP
Call will help reduce emissions of NOX and improve air
quality. Recent national mobile source regulations will
help reduce ozone by reducing NOX and VOCs from
new passenger vehicles, heavy-duty diesel engines, and
other mobile sources.
In addition, EPA's Clean Air Interstate Rule (CAIR)
will help further reduce ozone in the East. This land-
mark rule, issued March 10, 2005, will permanently cap
power industry emissions of sulfur dioxide (SO2) and
NOX in the eastern United States, achieving large
reductions of these pollutants. CAIR will build on the
ozone season emission reductions from the NOX SIP
Call. In 2015, CAIR, the NOX SIP Call, and other pro-
grams in the CAIR region will reduce power industry
ozone season NOX emissions by about 50 percent and
How Does the Clean Air Interstate Rule (CAIR) Affect NOx Budget Trading Program States?
The NOx SIP Call requirements will remain in place, but in 2009, EPA will stop administering the existing regional ozone
season NOx trading programs. States can meet their NOx SIP Call obligations using the CAIR's ozone season NOx trading
program. CAIR allows states to include all of their NOX SIP Call trading sources in the CAIR ozone season trading program.
If a state includes industrial units, the trading budget for those units remains the same as the NOx SIP Call. The 2009
CAIR ozone season NOx electric generating unit budgets are at least as stringent as the NOx SIP Call budgets, and in
some states are tighter. In 2015, the ozone season emission cap will be further reduced. In addition, because CAIR allows
sources to use pre-2009 NOx SIP Call allowances for compliance on a 1:1 basis with the CAIR ozone season NOx pro-
gram (i.e., the allowances can be banked and carried into the CAIR), NOx Budget Trading Program (NBP) sources have an
incentive to begin reducing their emissions now. Also, as with the NOX SIP Call, the CAIR annual NOX program includes a
compliance supplement pool to provide incentives for sources to reduce non-ozone season NOx emissions prior to CAIR.
For more information, visit .
31
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Figure 29: States Covered by the Clean Air Interstate Rule (CAIR)
ozone and particles
particles only
ozone only
Source: EPA
Note: EPA proposed in March 2005 to add Delaware and New Jersey to the states in CAIR covered for fine particles.
annual NOX emissions by about 60 percent from 2003
levels. In addition by 2015, CAIR and other existing air
programs will reduce the number of 8-hour ozone nonat-
tainment areas, and will bring remaining areas closer to
attainment.
In 2015, EPA predicts that with CAIR and existing fed-
eral and state programs, only six ozone nonattainment
areas will remain in the East: Chicago; Houston;
Philadelphia, New York City; Baltimore and
Washington, D.C. States are working to identify and
implement local controls to move these remaining six
areas toward attainment.
CAIR is similar to the NOX SIP Call in that it requires
states to submit SIPs and meet a budget to reduce emis-
sions. CAIR reduces NOX through two budgets: ozone
season NOX budgets in 25 states and Washington, D.C.,
and annual budgets to reduce fine particle pollution
(PM 2.5) in 23 states and Washington, D.C. In March
2005, EPA proposed to add Delaware and New Jersey to
the states in CAIR covered for fine particles. Many
states are affected by CAIR for both ozone season NOX
and annual NOX and SO2 (see Figure 29). Like the
NOX SIP Call, CAIR establishes EPA-administered,
interstate cap and trade programs that states can choose
to use to obtain the required emission reductions. EPA
anticipates that most, if not all, affected states will join
these trading programs.
32
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Ozone and Particle Pollution in the Future
The Clean Air Interstate Rule (CAIR), Together With Other Clean Air Programs, Will Bring Cleaner Air to Areas in the East.
On March 10, 2005, EPA issued CAIR. This rule will achieve the greatest air quality improvement, and the deepest cut in
emissions of S02 and NOx in more than a decade. Key compliance dates are 2009 (Phase I cap on NOx), 2010 (Phase I
cap on S02) and 2015 (Phase II cap on NOX and S02).
Ozone and Fine Particle Nonattainment
Areas (April 2005]
Projected Nonattainment Areas in 2010
after Reductions from CAIR and
Existing Clean Air Act Programs
Projected Nonattainment Areas in 2015
after Reductions from CAIR and
Existing Clean Air Act Programs
\^^\ Nonattainment areas for both 8-hour ozone and fine particle pollution
^^ Nonattainment areas for fine particle pollution only
^^ Nonattainment areas for 8-hour ozone only
Source: EPA
Note: Projections concerning future levels of air pollution in specific geographic locations were estimated using the best scientific models available.They are
estimations, however. Actual results may vary significantly if any of the factors that influence air quality differ from the assumed values used in the projections
shown here.
33
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Online Resources
General Information:
Office of Air and Radiation: www.epa.gov/oar
Office of Air Quality Planning and Standards: www.epa.gov/oar/oaqps
Office of Atmospheric Programs: www.epa.gov/air/oap.html
National Academies: www4.nationalacademies.org/nas/nashome.nsf
Mobile Sources: www.epa.gov/otaq
Cap and Trade and Related Programs: www.epa.gov/airmarkt/index.html
NOx Control Programs:
Acid Rain Program: www.epa.gov/airmarkets/arp/index.html
Ozone Transport Commission (OTC) NOx Budget Program: www.epa.gov/airmarkets/otc/index.html
NOx Budget Trading Program: www.epa.gov/airmarkets/fednox/index.html
Clean Air Interstate Rule (CAIR): www.epa.gov/cair/index.html
Ozone Information:
Formation of Ozone: www.epa.gov/air/urbanair/ozone/what.html
Health and Ecological Effects: www.epa.gov/air/urbanair/ozone/hlth.html
Ozone Depletion: www.epa.gov/ozone
8-hour and 1 -hour Ozone Trends and Factbook: www.epa.gov/airtrends
Emissions Data and Monitoring Information:
National Emissions Inventory (NEI): www.epa.gov/ttn/chief/net/
Emissions Data for the Power Industry: http://cfpub.epa.gov/gdm
Emissions Development: www.epa.gov/ttn/chief/trends/procedures/neiproc_99.pdf
NOx and VOC Limitation: www.cgenv.com/Narsto/american.chem.council.html
Ozone Monitoring Networks and Data:
Clean Air Status and Trends Network (CASTNET): www.epa.gov/castnet
Air Quality System (AQS): www.epa.gov/ttn/airs/airsaqs
Other Emissions and Air Quality Resources:
General Information on EPA Air Quality Monitoring Networks: www.epa.gov/ttn/amtic
Clean Air Mapping and Analysis Program (C-MAP): www.epa.gov/airmarkets/cmap/index.html
The Emissions and Generation Resource Integrated Database (eGRID): www.epa.gov/cleanenergy/egrid/index.html
AIRNow: www.epa.gov/airnow
34
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United States
Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Office of Atmospheric Programs
(6204J)
1200 Pennsylvania Ave, NW
Washington, DC 20460
www.epa.gov/airtrends
www.epa.gov/airmarkets
EPA454-K-05-001
August 2005
Recycled/RecyclablePrinted with Vegetable Oil Based Inks on 100% Postconsumer, Process Chlorine Free Recycled Paper
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