Acid Rain and Related Programs:
2009 Highlights
Years of Results
1995 to 2009
United States
Environmental Protection
Agency
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
The Acid Rain Program (ARP), established under Title IV of the 1990 Clean
Air Act (CAA) Amendments, requires major emission reductions of sulfur
dioxide (SC^) and nitrogen oxide (NOX), the primary precursors of acid rain,
from the electric power industry. The SC>2 program sets a permanent cap on the
total amount of SC>2 that may be emitted by electric generating units (EGUs) in the
contiguous United States, and includes provisions for trading and banking emission
allowances. The program is phased in, with the final 2010 SC>2 cap set at 8.95 million
tons, a level of about one-half of the emissions from the power sector in 1980. NOX
reductions under the ARP are achieved through a program that applies to a subset of
coal-fired EGUs and is closer to a traditional, rate-based regulatory system.
The 2009 compliance year marked the fifteenth anniversary of the ARP and
fifteen years of compliance emissions monitoring data. The program's success
has demonstrated that market-based trading systems can cost-effectively reduce
pollution and address environmental damage. The ARP's example led the way for
programs like the NOX Budget Program (NBP) and the Clean Air Interstate Rule
(CAIR).
From August to October 2010, the U.S. Environmental Protection Agency (EPA)
released three reports detailing progress under the ARP. These reports can be ac-
cessed at . This report highlights
the key results from the previous reports and discusses the effects of CAIR.
For more information on the ARP. please visit: . Detailed emission results and other facility and allowance data
are also publicly available on EPA's Data and Maps website at . To view emission and other facility information in an interactive file
format using Google Earth or a similar three-dimensional platform, go to . Additionally, updated
quarterly SC>2 emission data for ARP coal-fired power plants can be found at . For general information on cap and
trade programs, please visit: .
&ER&
Dedicated to Brian McLean, PhD,, on his retirement after 41 years of distinguished
public service. Among his many contributions to improving public health and the
environmen t, Mr. McLean led EPA's efforts to design and implement the acid rain cap and
trade program — recognized nationally and internationally as a model for innovative
and effective environmental protection. The 15 years of progress accomplished by the
Acid Rain Program and documented in this report are due in large measure to the
vision, leadership, hard work and keen practicality of Mr. McLean.
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Key Components of the ARP S02 Trading
Program
Phases and Reductions: Title IV of the 1990 CAA Amend-
ments set a goal of reducing annual SC>2 emissions by 10
million tons from all sources (8.4 million tons from power
plants) below 1980 levels. To achieve these reductions,
the law required a two-phase tightening of the restrictions
placed on fossil fuel-fired power plants. Phase I began in
1995 and Phase II began in the year 2000.
Allowance Allocation: The EPA allocates allowances to
affected utility units based on their historic fuel consump-
tion and a specific emissions rate. Each allowance permits
a unit to emit 1 ton of SC>2 during or after a specified year.
Annual Reconciliation: For each ton of SC>2 emitted in a
given year, one allowance is retired, that is, it can no lon-
ger be used. Allowances may be bought, sold, or banked.
At the end of each year, sources are granted a 60-day grace
period to ensure that they have sufficient allowances to
match their SC>2 emissions during the previous year. If they
need to, they may buy allowances during the grace period.
Sources may sell allowances that exceed their emissions or
bank them for use in future years.
Allowance Trading: SC>2 allowance trading minimizes
compliance costs, and since unused allowances can be sold
to other program participants, the system encourages units
to reduce emissions beyond required levels.
Flexible Compliance: Each source can choose the most
efficient way to reduce its SC>2 emissions. Installing new
control technology, switching to lower-sulfur fuel, or
optimizing existing controls are all options.
Stringent Monitoring: Each source must continuously
measure and record its emissions of SC>2, NOX, and CC>2, as
well as heat input, volumetric flow, and opacity. Most emis-
sions are measured using a continuous emission monitor-
ing system (GEMS).
Automatic Penalties and Enforcement: Any source that
fails to hold enough allowances to match its SC>2 emissions
for the previous year must pay to EPA an automatic penalty
of $2,000 (inflation-adjusted to $3,517 for 2009) per ton
of emissions in excess of allowances held. The source must
also immediately surrender to EPA an amount (referred to
as an "offset") of allowances, issued for the year the pay-
ment is due, equalling the tons of excess emissions.
Key Results of the S02 Trading Program
Affected Units: The S02 requirements under the ARP ap-
ply to EGUs, fossil fuel-fired combustors that serve a gen-
erator that provides electricity for sale. The vast majority
of ARP SC>2 emissions result from coal-fired EGUs (close to
99 percent), although the program also applies to oil and
gas units. There were 3,572 EGUs subject to the ARP's S02
requirements in 2009. These units were at 1,231 facilities
and 417 of those facilities had coal-fired generating units.
Figure 1: S02 Emissions from Acid Rain Program Sources, 1980-2009
1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
• Phase I (1995-1999) Sources • Phase II (2000 on) Sources • All Affected Sources • Allowances Allocated
Note: ARP units have reduced annual S02 emissions by 67 percent compared with 1980 levels and 64 percent compared with 1990 levels.
Source: EPA, 2010
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S02 Emission Reductions: As Figure 1 shows, ARP units
have reduced annual SC>2 emissions by 67 percent com-
pared with 1980 levels and 64 percent compared with
1990 levels. Sources emitted 5.7 million tons of SC>2 in
2009, well below the current annual emission cap of 9.5
million tons, and already below the statutory annual cap of
8.95 million tons set for compliance in 2010 (see Figure 2).
Compliance: All 3,572 units at ARP facilities complied in
2009 with the requirement to hold enough allowances to
cover SC>2 emissions.
Allowances: EPA allocated 9.5 million SC>2 allowances un-
der the ARP for 2009. When added to the 8.5 million un-
used allowances carried over (or banked) from prior years,
there were a total of 18 million allowances available for use
in 2009 (see Figure 2). ARP sources emitted approximately
5.7 million tons of SC>2 in 2009, less than the allowances
allocated for the year, and far less than the total allowances
available. As a result, between 2008 and 2009 the bank in-
creased by nearly four million allowances to 12.3 million
allowances, a 45 percent increase. In 2010, the total num-
ber of Title IV allowances allocated annually dropped to
8.95 million and remains statutorily fixed at that level.
Figure 2: S02 Emissions and the Allowance Bank, 1995-2009
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
• Allowances Allocated • Unused Allowances from Previous Years Actual Emissions from Affected Sources
Source: EPA, 2010
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
Allowance Market: In 2009, 2,716 private allowance
transfers involving approximately 15.1 million allowances
of past, current, and future vintages were recorded in EPA's
Allowance Management System (see Table 1 for a summary
of the SC>2 allowance market at the close of 2009). About 4
million allowances (26 percent) were transferred in eco-
nomically significant transactions (i.e., between economi-
cally unrelated parties). Transfers between economically
unrelated parties are "arm's length" transactions and are
considered a better indicator of an active, functioning mar-
ket than are transactions among the various facility and
general accounts associated with a given company. In the
majority of all private transfers, allowances were acquired
by power companies. Figure 3 shows the annual volume of
SC>2 allowances transferred under the ARP (excluding al-
locations, retirements, and other transfers by EPA) since
official recording of transfers began in 1994.
Table 1: S02 Allowance Market in Brief (close of 2009)
Total Value of the S02 Allowance Market
Year-End Price
Total Allowance Volume (Allowable Emissions)
2009 Private Transactions
$1.1 billion
$61 per ton
18,017,192
2,716 transactions moving 15.1 mil-
lion allowances
26 percent of allowances transferred
between economically unrelated
parties
Note: Total value of allowance market is a snapshot based on the
average nominal price as of December 2009 ($61/ton) and total
allowance volume available for 2009 compliance.
Source: EPA, 2010 and CantorC02e Market Price Index, 2010
Figure 3: S02 Allowances Transferred under the ARP
20
15
< 10
25.0
22.5
22.4
19.9
16.7
16.5
16.9
15.2
15.3
15.1
13.5
I I I I I II I I I I I I I III
1994 1995 1996 1997 1998 1999 2000 2001 2002
• Trades Between Distinct Entities (significant transfers)
2003 2004 2005 2006 2007
Trades Between Related Entities
2008 2009
Source: EPA, 2010
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
Key Results of the NOX Program
Title IV requires NOX emission reductions for certain coal-
fired EGUs by limiting the NOX emission rate (expressed
in Ib/mmBtu) to a value based on a unit's boiler type. The
goal of the NOX program is to limit NOX emission levels from
the affected coal-fired boilers so that their emissions are at
least 2 million tons less than the projected level for the year
2000 without implementation of Title IV. EPA estimated
this projected number to be 8.1 million tons.
NOX Emission Reductions: Figure 4 shows that NOX emis-
sions from all ARP sources were 2.0 million tons in 2009.
This level is 6.1 million tons less than the projected level
in 2000 without the ARP, or more than triple the Title IV
NOX emission reduction objective. Although the ARP was
responsible for a large portion of these annual NOX reduc-
tions, other programs — such as CAIR, the NBP under EPA's
NOX State Implementation Plan (SIP) Call, the Ozone Trans-
port Commission (OTC), and other regional and state NOX
emission control programs — contributed significantly to
the NOX reductions achieved by sources in 2009. The sig-
nificant drop from 2008 to 2009 is the largest single year
decline in the history of the program. Lower demand for
electricity contributed to reduced NOX emissions, but ARP
sources also reduced their NOX emission rate from 0.22
Ib/MMBtu in 2008 to 0.16 Ib/MMBtu in 2009. This large
reduction in emissions is primarily attributable to com-
pliance with the annual and ozone season CAIR NOX pro-
grams beginning in 2009.
Compliance: In 2009, all 960 units that were subject to the
ARP NOX Program achieved compliance.
Overall Progress Lowering Emissions
Figures 1 and 4 provide a sense of the emission reductions
of SC>2 and NOX that have resulted from the electric
power industry from the ARP and related programs over
time. Another useful measure is the improvement of the
emissions rates of the fossil generation fleet over time.
Table 2 provides this information for SC>2 and NOX from
1990 through 2009. For this time period, the S02 rate
has dropped 71 percent and the NOX rate has dropped 77
percent.
Table 2: S02 and NOX Emission Rates (Ib/MMBtu), 1990-2009
S02
NOX
1990
1.60
0.68
1995
1.09
0.56
2000
0.88
0.40
2005
0.75
0.27
2006
0.70
0.26
2007
0.64
0.24
2008
0.56
0.22
2009
0.46
0.16
Source: EPA, 2010
Figure 4: NOX Emission Trends for All Acid Rain Program Units, 1990-2009
1990 1995 1996 1997 1998 1999 2000
• NOX Program Affected Sources
2001 2002 2003 2004 2005
• Title IV Sources Not Affected for NOV
2006
2007
2008
2009
Source: EPA, 2010
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Environmental Results
S02 Air Quality: Data collected from monitoring networks
show that the decline in SC>2 emissions from the power
industry has improved air quality. The national compos-
ite average of SC>2 annual mean ambient concentrations
decreased 76 percent between 1980 and 2009. The larg-
est single-year reduction (20 percent) occurred in the first
year of the ARP, between 1994 and 1995. The second larg-
est single-year reduction (16 percent) occurred most re-
cently between 2008 and 2009.
Acid Deposition Improvements: Monitoring data show
significant improvements in the primary acid deposition
indicators:
• Wet Sulfate Deposition: Between the 1989 to 1991
and 2007 to 2009 observation periods, regional
decreases in wet deposition of sulfate averaged 43
percent for the eastern United States (see Figure 5).
• Nitrogen Deposition: Inorganic nitrogen in wet de-
position decreased in the Mid-Atlantic and Northeast,
but to a lesser extent than sulfur (see Figure 6). Wet
nitrogen deposition is influenced by sources outside
the ARP.
Figure 5: Annual Mean Wet Sulfate Deposition
1989-1991
2007-2009
Note: Areas of red indicate higher deposition levels and areas of
green indicate lower deposition levels.
Source: NADP, 2010
Figure 6: Annual Mean Wet Inorganic Nitrogen Deposition
1989-1991
Note: Areas of red indicate higher deposition levels and areas of
green indicate lower deposition levels.
Source: NADP, 2010
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
Surface Water Quality Improvements: Acid rain
resulting from SC>2 and NOX emissions is one of many large-
scale anthropogenic impacts that negatively affect the
health of lakes and streams in the United States. Surface
water chemistry provides direct indicators of the potential
effects of acidic deposition on the overall health of aquatic
ecosystems. Long-term surface water monitoring networks
provide information on the chemistry of lakes and streams
and on how water bodies are responding to changes in
emissions. Since the implementation of the ARP, scientists
have measured changes in some lakes and streams in the
eastern United States and found signs of recovery in many,
but not all, of those areas.
• Sulfate Concentrations: Measurements of sulfate ion
concentrations in surface waters provide important
information on the level of acidification of a water body.
Decreasing sulfate concentrations in surface water
signify a trend toward recovery from acidification.
Figure 7 shows that sulfate concentrations are
declining at most sites in the Northeast (New
England, Adirondacks, Catskills/Northern Appalachian
Plateau). However, in the Central Appalachians, sulfate
concentrations in some streams (21 percent) are
increasing. This region has highly weathered soils that
can store large amounts of deposited sulfate. As long-
term sulfate deposition exhausts the soil's ability to
store sulfate, a decreasing proportion of the deposited
sulfate is retained in the soil and an increasing
proportion is exported to surface waters. Thus sulfate
concentrations in surface waters, mainly streams in
this region, are increasing despite reduced sulfate
deposition.
Figure 7: Trends in Lake and Stream Water Chemistry at LTM
Sites, 1990-2008 — Sulfate Ion Concentration (ueq/L/yr)
1990-2008 Sulfate Ion Concentration
ncreasing significant trend
© Increasing non-significant trend
• Decreasing non-significant trend
Decreasing significant trend
• Acid Neutralization Capacity (ANC): ANC is
a measure of the sensitivity of a water body to
acidification. Movement toward recovery of an acidified
aquatic ecosystem is indicated by an increase in ANC.
Figure 8 shows that ANC, as measured in surface waters,
is increasing in many of the sites in the Adirondack
and Catskills/Northern Appalachian Plateau regions,
which in part can be attributed to declining sulfate
deposition. The site trends also indicate variation
within each region. Only 12 percent of sites in New
England and the Central Appalachians have improving
ANC trends, but overall, only seven sites in all regions
have a significant downward trend in ANC.
Figure 8: Trends in Lake and Stream Water Chemistry at LTM
Sites, 1990-2008 — ANC Levels (ueq/L/yr)
1990-2008 Acid Neutralizing
Capacity (ANC)
Increasing significant trend
3 Increasing non-significant trend
O Decreasing non-significant trend
Decreasing significant trend
Source: EPA, 2010
Source: EPA, 2010
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
Clean Air Interstate Rule (CAIR)
CAIR was issued on March 10, 2005, in order to build on
the emission reductions under the NBP and the ARP. The
rule was designed to permanently lower emissions of SC>2
and NOX in the eastern United States. CAIR, as promulgated,
was designed to help states address ozone nonattainment
and attain the National Ambient Air Quality Standards
(NAAQS) for PM2.5 by reducing transported precursors,
SC>2 and NOX. CAIR was also expected to improve visibility
in Class 1 areas, including national parks, monuments, and
wilderness areas. To achieve these emission reductions, it
created three separate compliance programs: an annual
NOX program, an ozone season NOX program, and an an-
nual SC>2 program. As Figure 9 shows, the two annual pro-
grams affect the same set of states.
Each of the three programs uses a two-phased approach,
with declining emission caps in each phase. The first phase
began in 2009 for the NOX annual and NOX ozone season
programs, and started in 2010 for the SC>2 annual program.
The rule also establishes a second phase for all three pro-
grams beginning in 2015.
Monitoring and reporting according to EPA's regulations
began in 2008 for the NOX programs and in 2009 for the
SC>2 program.
Litigation and CAIR Replacement Rule
On July 11, 2008, the U.S. Court of Appeals for the D.C. Cir-
cuit issued a ruling vacating CAIR in its entirety. EPA and
other parties requested a rehearing, and on December 23,
2008, the Court revised its decision and remanded CAIR to
EPA without vacatur. This ruling leaves CAIR and the CAIR
Federal Implementation Plans (FIPs)—including the CAIR
trading programs—in place until EPA issues new rules to
replace CAIR.
EPA is committed to issuing rules to replace CAIR that will
help states address the interstate air emissions transport
problem in a timely way and that fully comply with the
requirements of the CAA and the opinions of the D.C. Cir-
cuit. EPA has developed a proposed Transport Rule that is
intended to replace CAIR in 2012. The proposed rule was
signed in July 2010.
Figure 9: The CAIR Program Region
NBP Outline
D States in the CAIR NOX annual program and
the CAIR SO2 annual program
"I States in the CAIR NOX ozone season
'—' program
• States in the CAIR NOX ozone season
program and both annual programs
Note: In a November 2009 rule, EPA stayed the effectiveness of
CAIR for Minnesota, which had previously been among the states
controlled for fine particles.
Source: EPA, 2010
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Acid Rain and Related Programs: 2009 Highlights
15 Years of Results
Current CAIR Implementation
The CAIR NOX ozone season and CAIR NOX annual program
requirements to hold allowances equivalent to ozone sea-
son and annual emissions started in 2009. For results of
the first year of these programs please visit .
The CAIR SC>2 program requirements for continuous moni-
toring and reporting started January 1, 2009 in the partici-
pating eastern states (see Figure 10). ARP sources that are
already complying with Part 75 monitoring and reporting
provisions essentially do not have to do anything additional
to comply with CAIR 862 monitoring requirements. Sources
not subj ect to the ARP but subj ect to CAIR began complying
with Part 75 monitoring and reporting in 2010. The require-
ment to hold allowances in the CAIR SC>2 program began on
January 1,2010.
Of the 3,321 units in the CAIR S02 program, 2,595 (78
percent) were also covered by the ARP in 2009. The other
units are largely fossil generation units that entered SC>2
control under the broader applicability requirements of
CAIR. All the CAIR SC>2 program facilities participated in a
monitoring and reporting training year in 2009. In 2010,
the first year of operation of the CAIR SC>2 trading program,
facilities were obligated to hold SC>2 allowances. Since SC>2
allowances from the ARP are used in CAIR, there has been
an incentive from 2005 to 2009 for units to lower SC>2 emis-
sions in order to have allowances under CAIR. Except for a
small number of facilities with pending applicability ques-
tions, all participating units reported data in 2009. Their
total SC>2 emissions were 5.0 million tons.
Figure 11 shows that most of the SC>2 emissions under the
ARP are also subject to CAIR, and that the CAIR SC>2 pro-
gram continues and complements the ARP's history of SC>2
emission reductions.
Figure 10: The CAIR S02 Region
Source: EPA, 2010
Figure 11: S02 Emissions from Sources in the ARP and in the
CAIR Annual S02 Program Region, 2004-2009
12,000
2004 2005
2006
2007 2008
2009
iCAIR-Only SO2Units
Non-CAIR Units in ARP
I CAIR Units in ARP
Source: EPA, 2010
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Online Information, Data, and Resources
The availability and transparency of data, from emission
measurement to allowance trading to deposition monitor-
ing, is a cornerstone of effective cap and trade programs.
Clean Air Markets Division (CAMD), in the Office of Air and
Radiation's Office of Atmospheric Programs, develops and
manages programs for collecting these data and assessing
the effectiveness of cap and trade programs, including the
ARP.
The CAMD website provides a public resource for general
information on how market-based programs work and
what they have accomplished, along with the processes,
information, and tools necessary to participate in any
of these market-based programs. For information about
EPA's air emission trading programs, see . For information about the ARP, see .
In a recent effort to increase data transparency, EPA began
posting updates of quarterly S02 and NOX emissions data
from coal-fired power plants controlled under the ARP
and other programs to make it easy for the public to track
changes in emissions from these sources (available at:
and
shown in Figure 12). The data presented on the quarterly
emissions tracking website compare emissions, emission
rates, and heat input from power plant units in the ARP.
These files graphically and spatially compare quarterly
emission data from the most recent completed quarter
with data for the same quarter from 2008. A key feature
on the quarterly tracking website is the use of interactive
motion charts to show, historically, how coal-fired power
plants have responded to the ARP.
To utilize other interactive data tools, visit the website
at .
Figure 12: Quarterly Emissions Tracking Website
Quarterly Emissions Tracking
Source: EPA, 2010
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