# Presentation: 370853

## Update on CAIR Implementation

*Presentation for**** ***
**EPRI CEM User Group Meeting**
**May 14, 2008**
***Beth Murray***
**U.S. Environmental Protection Agency**

**Update on CAIR Implementation**

## Clean Air Interstate Rule

**Clean Air Interstate Rule**

- Overview
- State Response
- Timeline
- Source Response
- What’s New/ Reminders

**Notes:**
Also used by utilities, generators, and trade groups.

## CAIR Overview

**CAIR Overview**

- Affects 28 States + DC
- Annual SO2 and NOx requirements to mitigate interstate transport of fine particles
- Annual SO2 cap
- 3.7 million tons in 2010 – 2014
- 2.6 million tons in 2015 and beyond
- Annual NOx cap
- 1.5 million tons in 2009 – 2014
- 1.3 million tons in 2015 and beyond
- Summertime NOx requirements to mitigate interstate transport of ozone precursors
- Ozone season NOx cap
- 0.58 million tons in 2009 – 2014
- 0.48 million tons in 2015 and beyond

**Notes:**
Also used by utilities, generators, and trade groups.

## CAIR Region

**CAIR Region**

## SO2 Forecast with ARP and CAIR/CAMR/CAVR

**SO****2**** Forecast with ARP and CAIR/CAMR/CAVR**

**Annual SO****2**** Emissions (1,000 t/yr)**

**Electric Power Industry**

## NOx Forecast with ARP, NBP, and CAIR/CAMR/CAVR

**NO****x**** Forecast with ARP, NBP, and CAIR/CAMR/CAVR**

**Annual NO****x**** Emissions (1,000 t/yr)**

**Electric Power Industry**

## State Responses to CAIR

**State Responses to CAIR**

- All States have chosen participation in the regional trading program
- 4 States and DC remain under the full Federal Implementation Plan (FIP)
- 2 States + DC are working to replace FIP this year
- 11 States have chosen to replace only certain provisions of the FIP (abbreviated SIP)
- 7 temporarily until full SIP is approved
- 4 have no plans to submit full SIP*
- 14 States have a full SIP approval*
- *1 State in both these categories

**Notes:**
Also used by utilities, generators, and trade groups.

## State Flexibilities under CAIR

**State Flexibilities under CAIR**

- Allocation methodology
- 10 States using essentially model rule approach
- 19 States chose their own approach
- Allocation updating varies from permanent (unless State amends their rule) to initial 3 year allocation followed by annual updating
- Compliance Supplement Pool (CSP)
- 2 out of 23 States chose not to distribute it
- 4 out of 21 slightly modified the model rule methodology

**Notes:**
Also used by utilities, generators, and trade groups.

## CAIR:  NOx allocation status

|   | State-determined NOx allocations |
| --- | --- |
|  | Federal NOx allocations* |
|  | Not Covered By CAIR |

**CAIR:  NOx allocation status**

- * DC, DE, and PA plan to convert to State allocations in 2010

## State Flexibilities under CAIR, cont.

**State Flexibilities under CAIR, cont.**

- Opt-ins
- 13 States chose to include opt-in provisions
- In all these cases
- States included them in all CAIR programs in which they participate
- States included both allocation methodologies
- 16 States chose not to include opt-ins
- Expanding applicability to include NOx SIP Call trading nonEGUs in the CAIR ozone season trading program
- 15 out of 20 States chose to include them

**Notes:**
Also used by utilities, generators, and trade groups.

## CAIR Implementation Timeline

**CAIR Implementation Timeline**

**CSP Early Emission Reductions Start **
**(annual CAIR NOx program)**
**(‘07 and ‘08)**

- 07

- 07

- 08

- 09

- 10

**NOx Monitoring and **
**Reporting Required**
**(‘08)**

**CAIR NOx Programs **
**Annual:  01/01/09**
**Ozone:  05/01/09**

**SO2 Monitoring and **
**Reporting Required**
**(‘09)**

**CAIR SO2 Program**** **
**Jan 1, 2010**

## Installed, Committed and Projected Advanced SO2 and NOx Controls for Coal-Fired Generation

**Installed, Committed and Projected Advanced SO****2**** and NO****x**** Controls for Coal-Fired Generation**

- Source: EPA 2006 Base Case for CAIR, CAMR, and CAVR results from IPM and 2004 and 2006 NEEDS data sets for IPM
- ***Committed 2006-2010 based on reports from selected major companies. It is an understatement of controls going in place now.  ****Total Units for Projected 2020 does not include new units or IGCC.

*83 Units***

*69 Units*

*  **129 Units*

*229 Units*

*   **112 Units***

*  **83 Units*

*  **63 Units *

*  **153 Units*

*  **48 Units***

*  **13 Units*

*  **28 Units*

*  **132 Units*

**Gigawatts**

## Further Source Response to CAIR

**Further Source Response to CAIR**

- Sources have established Designated Representatives for CAIR programs
- Facility allowance accounts have been established and allocations recorded*
- Sources have begun monitoring and reporting NOx emissions
- Reporting began this year with first quarter reports due in April 2008
- Some sources are earning early reduction credits in the annual program

**Notes:**
Also used by utilities, generators, and trade groups.

## What’s New: NOx

**What’s New: NOx**

- NOx compliance begins in 2009 for both the annual and ozone season programs
- Allowance transfer deadlines for 2009:
- November 30, 2009 for ozone season
- March 1, 2010 for annual
- NOx Budget Trading Program under NOx SIP Call ends after this year
- 2009 allowances allocated under the NBP have been converted, via State’s rules, into CAIR NOx ozone season allowances
- All banked allowances from the NBP will be transferred into the CAIR NOx ozone season program after 2008 compliance completed

**Notes:**
Also used by utilities, generators, and trade groups.

## What’s New: NOx, cont.

**What’s New: NOx, cont.**

- NOx annual and ozone season programs are two separate and distinct programs
- Allowances are not fungible between the two programs
- The NOx annual program accounts for emissions during the entire calendar year, not just the months outside of the ozone season

**Notes:**
Also used by utilities, generators, and trade groups.

## What’s New: SO2

**What’s New: SO2**

- CAIR SO2 compliance begins in 2010
- Allowance transfer deadline for 2010 is Mar. 1, 2011
- SO2 compliance uses existing Acid Rain allowances at higher than 1:1 ratios
- 2010 – 2014 allowances are deducted at a 2:1 ratio
- 2015 and beyond allowances are deducted at a 2.86:1 ratio
- Only whole allowances will be deducted
- It’s complicated – sources need to be prepared

**Notes:**
Also used by utilities, generators, and trade groups.

## CAIR SO2 Compliance Example

**CAIR SO2 Compliance Example**

-    Source W has 100 tons of SO2 emissions in 2012
- It is holding 70 vintage 2009 allowances and 50 vintage 2012 allowances
_***For Acid Rain:***_
-  70 vintage 2009 allowances and 30 vintage 2012 allowances are deducted:  compliance complete
_***For CAIR:***_
-  the tonnage equivalent of the above deductions is 85 tons  (70 1-to-1 and 30 2-to-1= 70+15=85)
- the remaining 20 vintage 2012 allowances are deducted at 2-to-1 (a tonnage equivalent 10 tons) = 95 tons accounted for = 5 tons excess emissions
- 5 tons excess emissions = 15 ton penalty
- 15 tons deducted from 2013 allocation at 2:1 ratio = 30 allowances deducted

**Notes:**
Also used by utilities, generators, and trade groups.

## Important Reminders

**Important Reminders**

- CAIR compliance is at the facility level
- Allowances need to be held in one facility account for all units at the facility
- Allowances need to be held for each program to which the facility is subject
- Keep a “buffer” of allowances in the facility compliance account for each program

**Notes:**
Also used by utilities, generators, and trade groups.

## Clean Air Markets

**Visit the Clean Air Markets web site to view:**
**Emissions data**
**Allowance transfers**
**Program rules and guidelines**
**Studies and reports**
**Clean Air Markets**
**www.epa.gov/airmarkets**