# N O x 

# B u d g e t T r a d i n g P r o g r a m
2 0 0 5 P r o g r a m C o m p l i a n c e a n d E n v i r o n m e n t a l R e s u l t sUnit ed Stat es En vir onmental P r ot ec tion A genc y O ffic e of Air and R adiation O ffic e of A tmospheric P r og rams Clean Air M a rkets Division (6204J ) 1200 P ennsylvania Av e ., NW Washingt on, DC 20460 w w w .epa.go v/airmarkets O ffic e of Air Qualit y Planning and Standar ds Air Qualit y A ssessment Division w w w .epa.go v/air tr ends EP

A430-R-06-013 S ept ember 2006

# Co n t e n t s

Executiv e Summar y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 In tr oduc tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 S e c tion 1 — Backgr ound : Oz one and Major C o n t r ol P r ogr ams . . . . . . . . . . . . . . . . . . . . . 5 Oz one F o rmation and Health and Ec olog ical Eff ec ts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 O v er view : M ajor C o ntr ol P r og rams f or NO x and VOCs
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 O v er view : NO x Budget T r ading P r og ram, 2005
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

### S e c tion 2 — Changes in Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Oz one S eason NO x Reduc tions under the NO x Budget T r ading P r og ram . . . . . . . . . . . . . . . . . . . . . 11 Oz one S eason G eneration and Emission Reduc tions b y F uel T ype . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Stat e -b y-Stat e Reduc tions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Daily Emission T r ends

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 

### S e c tion 3 — En vir onmen tal Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Oz one M onit oring Net w o rks

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 General T r ends: Changes in East ern Oz one C onc entrations sinc e 1997
. . . . . . . . . . . . . . . . . . . . . . 18 Oz one Changes af t er A djusting f or M e t eor ology

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Oz one Changes: F ocus on the NO x Budget T r ading P r og ram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Oz one I mpac ts on F o r est Health

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 

### S e c tion 4 — C omplianc e and Market A c tivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2005 C omplianc e Results

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Bank ing in 2005 and F l o w C o ntr ol in 2006
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 NO x Allo wanc e T r ading in 2005
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 C o ntinuous Emission M onit oring S y st em ( CEMS) Results

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 C omplianc e O ptions U sed b y NBP S our c es in 2005
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 

### S e c tion 5 — F utur e NO x 

### Reduc tions and Oz one Impr o v emen ts: Tr ansition to the Clean A ir In tersta te Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Online Resour c es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Executive Summar y 

# T he N O B u dg et Tr ad in g P r ogr a m (NB P ) i s a x market-b ased cap and tr ad e progr a m cr eated to r e duc e emi ss ions o f nitrogen oxi d e s (NO x ) from p o wer pl ants and oth e r l arg e c ombustion s o urc e s in th e eas t ern Un it ed St at e s. NO is a x prim e in gr edi e nt in th e formation o f ground-l e vel o zon e ( s mog ), a p e r vas ive air p o l l ution probl e m in man y

ar eas o f th e eas t ern Un it ed Stat es. Th e NB P was d e s i gn ed to r e duce NO x emi ss ions durin g th e warm s u mm er months, r e ferr ed to as th e o zon e seas on , wh en ground-l e vel ozon e c o nc entr ations ar e h i ghes t . T h i s r epo rteval uates p r o gr e s s u n de r th e NB P in 2005 b y examinin g emi s s ion r e ductions, c omp arin g chan ge s in emi ss ions to chan ge s in ozon e c o nc entr ations, and r e vi e wi n g c ompliance r e s ults and market activi t y

. 

## 2005 Ke y Results

• Th e NBP ha s s u c c e s s ful l y r e duc ed o z on e sea s on NO emi s s i on s thro u gh o ut th e x r e gion . I n2005, NBP o z on e sea s on NO x emi s s i on s wer e :

– 11 p e rc ent lower than in 2004 e ven as p ower ge n e ra tion increased by 7 p e rc ent ( p rimaril y du e to mov i n g up th e seas onal c o mpli ance p e rio d for 11 M i d

we s t e rn and S o uth e rn s t at es to M a y 1);

– 57 p e rcent lower than in 2000 ( b efor e impl em e nt ation o f th e NB P ); and

– 72 p e rcent lower than in 1990 ( b efor e impl em e nt ation o f th e Cl ean A i r Act Am endm ent s ).

• G r ound-l e vel o z on e ha s improved s i n c e th e impl em ent ation o f th e NB P .

– O zon e formation d e p e nd s gr eatl y on weath e r cond i t ions, wh ich can var y s i gnificantl y fr om ye ar to ye ar . T o g et a tr u e r pictur e o f how emi ss ion chan ge s imp a ct ozon e formation , EP A adjus t s ozon e c o nc entr ations to ac c o unt for th e inf l u e nc e s o f weath e r .

– A ver a g e o zon e le vel s in t h e NB P r e gion ha ve d e cr eased b y ab out 8 p e rcent s i nce 2002. Ground l e vel o zon e has improved s i nce th e NB P b e g a n in 2003.

– T h e r e i s a s t ron g as s o ci ation b e t ween ar eas with th e gr eat e s tr e ductions in NO x emi ss i ons and n e arb y downwi nd s i t e s exhi bitin g th e gr eat e s timprovem ent s in ozon e.

– I n 2004, EP A o f f i ci al l y

d e s i gnat ed 103 ar eas in th e eas t ern Un it ed Stat es as 8-hour o zon e “nonattainm e nt ar eas ”. Th ese ar eas wer e r e quir ed to improve th eir o zon e air qual it y with th e go al o f att ainin g and maint ainin g th e national air qual it y s t and ar d s for groundl e vel o zon e. Based on 2003 to 2005 air monitorin g d at a , o zon e air qual it y improved in al l o f

th ese ar eas. N e arl y

70 p e rcent o f th em (68 ar eas ) now ha ve air qual it y that i s b e tt er than th e l e vel o f th e s t and ar d . Th e NB P i s th e major c o ntri butor to th e se improvem ents.

• Throu gh a wi d e r an ge o f p o l l ution c o ntrol s t r at e gi e s and an acti ve NO x al lowanc e market in 2005, sourc e s achi e ved over 99 p e rce n tco mp l i an ce wi thth e NB P .

– T h e r e wer e 2,570 units af fe ct ed und e r th e NB P in 2005. O n l y

thr e e NB P s o urces ( f our units total) di d not hol ds u f f ici e nt al lowances.

– O ver al l , tr ad in g activi t y

incr eased from 2004 to 2005 with an active market, and al lowance pric e s wer e sli ghtl y

lower and s o m e wh at l e s s v o l ati l e than in 2004.

– T h e f l exi b i l it y o f th e NB P provi d es s o urces options to r e duc e NO x emi s s i ons, s u ch as add i ng NO x emi ss ion c o ntro l t e chno logi e s , r e placing exi s t i ng con t r o l s wi t hmor e ad vanc ed t e chno logi e s, or optimi zin g exi s tin g c o ntrol s .
• Th e Cl ean Air I n t e rs tat e Rul e ( CAIR), i s s u ed in M arch 2005, wi l lc o ntinu e th e progr e s s d e mon s tr at ed by th e NBP . CAIR ex t e nd s thi s s u c c e s s ful cap and tr ad e progr am to c o ntrol b o th o z on e and f i n e p ar t icl e s in 28 ea s t ern s t at e s and th e D i s t rict o f Columbi a . Ex ecutiv e Summar y 1NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Introduction 

# F or mor e than thr e e d e cad e s, th e U
. S
. En vi ronm ent al P r ot e c tion A g enc y (EP A ) has w o rked with s t at e, lo cal , and tri b al r e pr e sent ative s to r e duc e emi ss ions that c o ntri but e to th e formation o f ground-l e vel o zon e. Thi s p o llutant c o ntri but e s to a numb er o f serious h e alth and e c ological ef fe cts. Earl y o zon e mana g e m e nt p o l i ci es fo cused on r e ducin g ozon e by r e ducin g emi ss ions o f on e o f its t w o ke y pr e c urs o rs, v o l ati l e org a nic c o mpo u n ds ( VO C s )
. VO Cs co n t r i b u te t o gr o u n d

- l eve l ozon e for m ation by r e a c tin g with nitrogen oxi d e s (NO x ) i nt h e p r ese n ce o f s u n l igh ta n dh e at . Ozon e l e vel s ha ve d e cr eased s ubs tanti al l y

, b y 20 p e rcent, s i nce 1980 (w ww .e pa .gov/o zon e.html). Th e downwar dtr en d b e gan to slow in th e earl y 1990s. A b out that tim e, em ergin g sci ence ind i cated that NO x c o ntrol s, in ad d i tion to VO C c o ntrol s, migh t r e duce o zon e l e vel s mor e ef fe ctivel y acro s s l arg e r e gions o f th e Un it ed Stat es. EP A r e s p ond e d by d e velopin g progr a ms to r e duc e NO x emi s s ions, includ in g th e NO x St at e I mpl em entation Pl an ( S IP ) Cal lin 1998, d e s i gn ed to r e duc e th e r e gional tr ans p or t o f ozon e and ozon e-formin g p o l l ut ant s in th e eas t ern half o f th e Un it ed Stat es. A l l 19 af fe ct ed s t at es and th e D i s t rict o f C o lumbi a cho se to m e et mand ator y NO S IP Cal lr e ductions throu gh p ar t icipation in x th e NO B u dg et Tr ad in g P r ogr a m (NB P ), a x market-b ased cap and tr ad e progr a m for el e c tric gen e r atin g and l arg e indus t ri al units. Th e 2004 NB P r e p o r t, Evaluatin g Ozon e C o ntrol Pr o gr a ms i nt h e Eas t e r n Un it ed Stat es: F o cus on th e NO x B u dg et Tr ad in g P r ogr a m , c o nclud e d that emi ss ions from af fe ct ed s o urc e s d e cr eased by ab out 50 p e rcent s i nce 2000, b e for e th e NB P was impl em ent e d
. I nad dition , th e r e p o r tshowed that r e d u ct ions in o zon e concent r at ions in mos to f th e eas t ern Un it ed St at e s mor e than doubl e d aft e r impl em ent ation o f th e NB P , b e ginnin g in 2003. Thi s 2005 NB P r e p o r tbui l d s on th e pr e vious anal y s e s b y as se s s in g c o ntinu e d progr e s s un d e r th e progr a m . Th e r e p o r t :

• D e s cri b e s ozon e formation , it s h e alth and en vi

ronm ental ef fe cts, and provi d es b a ckground on th e NB P
.
• Evaluat e s th e ef fe ctiven e s s o f th e NB P in 2005 by r e vi e wi n g emi ssi o nr e du c t i o n s a n dc o r r e s p ondin g chan ge s in ozon e c o nc entr ations.

• E xamin e s progr e ss and c ompli anc e und e r th e NB P , includ in g market activi t y

, al lowance bankin g and progr e s s ive f l ow c o ntrol , and c ompli anc e options employed by s o urc e s und e r th e progr a m .
• O utlin e s th e a d dition alN O re d u c t i o n s a n d x o zon e improvem ents exp e ct ed und e r C AIR and how it wi l laf fe ct NB P s t at es.

I n tr oduc tion 3NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Section 1 — Bac kground: Ozone and Major Control Programs

Oz one F orma tion and Health and Ec ological Effe c t s Ben e f i ci al o zon e o c curs natu r al l y in th e E ar t h ’s up pe rat m o s p he r e ( t he s t r at o s p he r e ) , whe r e i t shi e l d s th e pl an et from th e s u n ’s harmful ultr a viol et r a y s . A tground l e vel , harmful o zon e p o l l ution forms wh en emi ss ions o f nitrogen oxi d e s (NO x ) and v o l ati l e org a nic c omp ound s ( VO C s ) r e act in s u nl ight and h e at. M a jor s o urces o f NO x and VO C emi s s ions includ e motor vehicl es, g a s o l i n e s t ations, dr ycl e an ers, indu s t ri al fa ci liti e s, and el e c tric p o wer pl ants ( s e e F i gur e 1). M e t e orology pl a y s a s i gnif icant rol e in b o th th e formation and tr ans p or t o f o zon e. Th e c ompl e x photo c h e mical r e actions that tr ans f orm emi ss i ons o f NO x and VO C s into o zon e r e quir e warm , s unn y c o nd itions. B e cause ground-l e vel o zon e i s high es t wh en s u nl ight i s mo s tint e nse, th e warm s u mm er months (M a y

1 to Se pt emb e r 30) ar e t y

pical l y

r e ferr ed to as th e “ o zon e seas on . ” Ozon e l e vel s can b e hi ghwh er e th er e ar e c o nc entr at ed lo cal s o urc e s o f NO x and VO C s, s u ch as urban and s uburb an ar eas. Th e lo cation and c o nc e ntr ation o f ozon e p o l l ution ar e al s o af fe ct ed by r e gional tr ans p or t — th e movem e nt o f ozon e and/or its pr e c urs o rs b y th e wi nd . A lthou gh , in gen e r al , urb a n ozon e c o nc entr ations ar e hi gh er than r u r al ar eas, o zon e l e vel s can b e el e vat ed in s o m e r u r al ar eas wh er e th er e ar e fe w lo cal emi ss i on s o urces b e cause o f th e tr ans p or t o f o zon e. 

### Oz one Impac ts on Human Health and Ec osys tems E x p o s ur e to ozon e has b e en linked to a numb er o f

h e alth ef fe cts. A tl e vel s found in man y

urb a n ar eas, o zon e can a g gr a vat e r e s p ir ator y d i sease s , s u ch as as thma , emph y sema , and bronchiti s, and can r e duc e th e r e s p ir ator y sy s t em ’s abi l it y to f i gh t o f

f b a ct eri al infe ctions. Lon g-t erm , r e p e at ed ex

pos u r es t o s u f f ic ie n tleve ls o f o z o n e c a nc aus e p e rman ent d a ma g e to th e lun gs. Re cent r e search s u g g es ts that acut e exp o s ur e to o zon e l i ke l y

c o ntri b ut e s to pr ematur e d e ath
. Ground-l e vel ozon e al s o d amage s veget ation and e c o sy s t e ms, l e adin g to re duced agricultur al crop and c o mm erci al fore s t yi el d s and increased pl ant s u sc e p tibi lit y

to di sease s, p e s t s, and oth e r s tre s s e s , s u ch as harsh weath e r . Ozon e can d amageth e foli age o f trees and oth e r pl ants, ad versel y af fe ct
### We a ther Pla ys a Significan t Role in Determining Oz one P ollution in a Giv en A r ea Oz one is rar ely emitt ed dir ec tly int o the air. I nst ead , g r ound-lev el o z one f o rms when NO x and VOCs r eac t under the right atmospheric c onditions . A dr y , hot, sunn y da y is most fa v o rable f or o z one pr oduc tion. I n general , o z one c onc entrations incr ease during the da y , peak in the af t e rnoon when the t emperatur e and sunlight int ensit y ar e the highest, and dr op back do wn again in the ev ening
. W ind transpor ts o z one and/or its pr ecursors . T her ef or e , depending on its dir ec tion, the wind can bring in mor e pollution t o an ar ea, sometimes fr om hundr eds of miles a w a y. We ather also det ermines ho w quick ly o z one mo v es a w a yor disperses fr om an ar ea. Ve r ylight winds or no wind can allo w o z one and the pollutants that cr eat e o z one t o build up , pr o viding a mor e fa v o rable en vir onment f or the chemical r e ac tions nec essar y t o cr eat e o z one . When look ing at changes in o z one lev els (see S e c tion 3, En vir onmental Results), EP A uses a statistical model t o ac c ount f or the impac t of w e ather on o z one c onc entrations
. While no model can ac c ount f or all c omplex met eor olog ical fac t ors that influenc e o z one , this adjustment pr o vides a bett er estimat e of the under lying o z one tr end (i.e ., the impac t of emission changes).

5 S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og ramsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### 8-Hour Oz one Standar d T

o bett er pr ot ec t public health, EP A r evised its national air qualit y standar ds f or o z one in 1997, establishing an 8-hour standar d

. T he 8-hour standar d is 0.08 par ts per million (p pm). An ar ea meets the standar d if the 3-y ear a v erage of the annual f our th highest daily maximum 8-hour a v erage c onc entration is less than or equal t o 0.08 p pm. F or mor e inf ormation on the 8-hour o z one standar d and o z one nonattainment ar eas in the Unit ed Stat e s , visit <w w w .epa.go v/air/ oaqps/g r eenbk/map8hrnm.html>.
in g th e l and scap e o f citi es and national p ark s, fore s t s, and re creation areas. Fo r exampl e, th e Un it e d S t at e s Fo re s t S e rv i c eo b s e rve d o z o n e induced injury to th e l e a ves o f c e r t ain o zon e sens iti

ve pl ants ( f rom 1997 to 2002) in man y

areas o f th e c o untry , w ith th e hi gh e s t o c cur ren c e s in th e No r th e as t. Refer to Se ction 3, En v

i ronm ental Re s ults, for moreinformation
. F o r mor e information on ground-l e vel o zon e, includ in g h e alth and e c ological ef fe cts, vi s i t <www .e pa .gov/e pahom e/o zon e.htm>. 

## O v er vie w: Major C o n t r ol P r ogr ams for NO x 

## and V OCs Th e majorit y

o f NO and VO C emi s s ions in th e x eas t ern Un it ed St at e s c o m e from mobi l e s o urc e s , indus t ri al pro ces se s, and th e p o wer indus t r y . M o bi l e onro ad and nonro a d s o urces (59 p e rcent) and el e c tric g e n e r atin g units and l arg e indus t ri al s o urces (22 p e rcent) wer e r e s p ons i bl e for th e ma jori t y

o f annual NO emi s s i ons in th e eas t ern x Un it ed Stat es in 2005 ( s e e F i gur e 1). Thi s r e p o r t examin e s improvem ents in NO emi ss ions and x air qual it y und e r th e NO Bu d g e tTr a d in g x P r ogr a m (NB P ), wh ich r e duces NO emi s s i ons x from el e c tric gen e r atin g units and l arg e indus t ri

### F i gur e 1: M anmade S our c es of NO x 

### and VOC Annual Emissions in the East ern Unit ed Stat e s , 2005 NOx VO C s Elec tric O t her G e ner a ting O t her 19% and Lar ge I n dus t r ial Industrial Pro c e s s e s So l ve n t s Sour c es 27% 32% 22%

M

obile O t her N onr oad 2%

21%
M obile O n r oad M obile M

obile 38% O n r oad N onr oad 24%

15% Notes:
• Emissions ar e fr om M innesota, Io wa, M issouri, Ark a nsas , L ouisiana, and stat es east.
• T he O ther cat egor y f or NO x emissions includes some lar ge industrial sour c es outside the NO x Budget T r ading P r og ram (NBP), small industrial sour c e s , and other smaller sour c es such as r esidential fuel c ombustion.
• T he emission data pr esent ed in this figur e ar e measur ed or estimat ed values fr om EP A’

s National Emissions I n v e nt or y (NEI). T he NEI inc orporat es po w er industr y data measur ed b ythe c o ntinuous emission monit oring sy st em ( CEMS); emissions f or other sour c es w e r e estimat ed b yint e rpolating bet w een the 2002 final NEI data and a pr ojec t ed 2010 emission in v e nt or y dev eloped t o sup por t the Clean Air I n t erstat e Rule ( C AIR). S our c e : EP A

6 S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og ramsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F igur e 2: M anmade Annual NO x 

### and VOC Emissions in the East ern Unit ed Stat e s , 1990-1995, 1997–2005

18 18 16 16

0 2 4 6 8 10 12 14

1990 1991 1992 1993 1994 1995 Ye a r 4 6 8

1997 1999 2001 2003 2005 Y earEmissions (Millions ofTons)Emissions (Millions ofTons) 14 12 10

2 0

VO C s NO x Notes:
• Emissions ar e fr om M innesota, Io wa, M issouri, Ark a nsas , L ouisiana, and stat es east.
• 1996 is not r epr esent ed in the g r aphs because ther e was a change in the method used t o c ollec t and estimat e emissions , par ticular ly f or NO x emissions fr om stationar y sour c es such as the po w er industr y. • T he emission data pr esent ed in this figur e ar e measur ed or estimat ed values fr om EP A’

s National Emissions I n v e nt or y (NEI). F r om 1990 t o 2002, the final v ersion of the NEI was used . Star ting in 1997, the NEI inc orporat ed po w er industr y data measur ed b yc o ntinuous emission monit oring sy st ems ( CEMS). F or this analy sis , EP A used CEMS data f or the po w er industr y f or 2003 thr ough 2005. Emissions f or other sour c es f or 2003 thr ough 2005 w e r e estimat ed b yint e rpolating bet w een the 2002 final NEI data and a pr ojec t ed 2010 emission in v e nt or y dev eloped t o sup por t the Clean Air I n t erstat e Rule ( C AIR). S our c e : EP A
al b o i l ers and tu rb in es. Given that th ese s o urces ac c o unt e d for ab out 22 p e rcent o f NO emi s s i ons x in 2005 in th e eas t ern Un it ed Stat es, futu r e improvem ent s in air qualit y as a r e s ult o f r e ductions from th ese s o urces wi l lb e l i mit e d b y th eir co n t r i b u t i o n . F i gur e 1 show s that 98 p e rcent o f VO C emi s s ions cam e from indus t ri al pro c e s se s ( i ncludin g s o lvents ) and mobi l e s o urces. A s i gnif icant p o r t ion o f

VO C emi ss ions mi gh t al s o c o m e from natu r al s o urces, s u ch as tr ees, e s p e ci al l y

durin g th e o zon e seas on . N o t e that th e r e s ults pr esent e d in thi s r e p o r tdo not includ e emi s s i ons from natu r al s o urc e s. EP A has d e velop e d mor e than a do zen progr a ms s i nce 1990 to improve o zon e air qual it y b y r e ducin g emi s s ions o f NO x and VO C s from major s o urces. Th ese progr a ms c ompl e m e nt s t at e and lo cal ef for t s to improve o zon e air qualit y and m e et national s t and ar d s. T o g e th er , th ese progr ams ha ve ach i e ved s i gn ifican t emi s s ion r e d u ctions acro s s th e eas t ern Un it ed St at e s. F i gur e 2 show s that total NO and VO C emi s s i ons ha ve x d e cr eased s i nce 1990, with th e l arg es t r e ductions o c currin g aft e r 1997. T h i s r epo rtf o c u s e s o ne l ec t r ic g e ne r at i ng u n i t s and l arg e indus t ri al b o i l ers and tu rb in es c o ver e d und e r th e NB P
. F o r information on c o ntrol progr ams for oth e r major s o urces o f NO and VO C s , x s u ch as mobi l e s o urc e s and indus t ri al pro c e s se s, r e fer to th e 2004 NO x B u dg et Tr ad in g P r ogr a m Re p o r tat <www .e p a .gov/airmarkets/fednox>. 1

1 “ Evaluatin g O zon e C o ntro l P r ogr a m s in th e E a s t ern Un it ed Stat es: F o cus on th e NO x B u dg et Tr ad in g P r ogr a m , 2004, ” <www .e p a .gov/airmarkets/fednox>. S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og rams 7NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### Snapshot: Na tional and Regional P o w er Industr y NO x 

### C o n t r ol P r ogr ams A cid R a in P r ogr am ( ARP) — C ong r ess established the ARP as par t of the Clean Air A c t Amendments of 1990. T his annual , national pr og ram r educ es sulfur dio xide (SO 2 ) fr om elec tric generating units thr ough a cap an d t r ade pr og ram. T he ARP also r educ es NO x emissions fr om some of these units , but unlike the SO 2 por tion of the ARP , ther e is no NO x allo wanc e trading or cap on NO x emissions . I nst ead , the ARP NO x pr o v isions ap ply boiler-specific NO x emission limits (lb/mmBtu) on c e r tain c oal-fir ed boilers that ar e subjec t t o the SO 2 r equir ements of the ARP . NO x limits under the ARP ap plied beg inning in 1996 f or some of the lar gest boilers subjec t t o the SO 2 r equir ements; a sec ond phase t o r educ e NO x emissions fr om additional c oal-fir ed generating units began in 2000. F or mor e inf ormation, visit <w w w.epa.go v/airmarkets/arp>. Oz one Tr anspor t C ommission ( O TC ) NO x Reduc tion P r ogr ams — T he OTC was established under the 1990 Clean Air A c t Amendments . Stat es in the Nor theast c ollaborat ed t o help r educ e summer time g r ound-lev el o z one in the r e g i on b yachieving o z one season NO x r educ tions in sev eral phases . I n 1995, sour c es w e r e r equir ed t o r educ e their annual NO x emission rat es t o meet Reasonably Av ailable C o ntr o l T

echnology (RA C T ) r equir ements . F r om 1999 t o 2002, stat e s achiev ed r educ tions in NO x fr om f ossil fuel-fir ed elec tric generating units and lar ge industrial boilers and turbines thr ough Phase I of an o z one season cap and trade pr og ram, k n o wn as the OTC NO x Budget P r og ram. T he sec ond phase of the OTC NO x Budget P r og ram was slat ed t o beg in on M a y 1, 2003, but was superseded b yEP A’

s NO x Stat e I mplementation Plan C all (NO x SIP C a ll). T he OTC stat es include C onnec ticut, Dela war e , M aine , M a r yland , M assachusetts , New Hampshir e , New Jersey , New Y o rk, P ennsylvania, R hode Island , Ve rmont, V i r g inia, and Washingt on, D .C. (M aine , Ve rmont, and V i r g inia did not join the OTC trading pr og ram. New Hampshir e is not subjec t t o r equir ements of the NOx SIP C all). F or mor e inf ormation on the OTC, visit <w w w .epa.go v/airmarkets/ot c>. NO x SIP C all and the NO x Budget Tr ading P r ogr am (NBP) — I n 1995, EP A and the En vir onmental C ouncil of the Stat es f o rmed the Oz one Tr anspor t A ssessment Gr oup t o beg in addr essing the pr oblem of o z one transpor t acr oss the entir e east ern Unit ed Stat e s . Based on the g r oup ’ s findings and other t echnical analy ses , EP A issued a r egulation in 1998 t o r educ e the r e g ional transpor t of g r ound-lev el o z one . T his rule , c ommonly called the NO x SIP C all , r equir es stat es t o r educ e o z one season NO x emissions that c o ntribut e t o o z one nonattainment in other stat e s . T he NO x SIP C all does not mandat e which sour c es must r educ e emissions . R a ther , it r equir es stat es t o meet emission budgets and g i v es them flexibilit y t o dev elop c o ntr o l strat e g ies t o meet those budgets

. Under the NO x SIP C all , EP A dev eloped the NBP t o allo w stat es t o meet their emission budgets in a highly c ost- eff ec tiv e manner thr ough par ticipation in a r e g ion- wide cap and trade pr og ram f or elec tric generating units and lar ge industrial boilers and turbines . All 19 aff ec t ed stat es and the Distric t of C olumbia chose t o meet their NO x SIP C all r equir ements thr ough par ticipation in the NBP

. While EP A administ ers the trading pr og ram, stat es shar e r esponsibilit y with EP A b yallocating allo wanc es , inspec ting and auditing sour c e s , and enf or cing the pr og ram. C omplianc e with the NO x SIP C all was scheduled t o beg in on M a y 1, 2003 f or the full o z one season. Ho w e v e r , litigation dela y ed implementation until M a y 31, 2004. Ref er t o the “NO x Budget T r ading P r og ram: A f f e c t ed Stat es and C omplianc e Dat e s ” on page 9 f or mor e inf ormation. Clean A ir In tersta te Rule ( C AIR) — On M a r ch 10, 2005, EP A pr omulgat ed CAIR, a rule that will achiev e the lar gest r educ tion in air pollution in mor e than a decade . I n addition t o addr essing o z one attainment, CAIR assists stat es in attaining the P M 2.5 National Ambient Air Qualit y Standar ds (NAA QS) b yr educing transpor t ed pr ecursors , SO 2 and NO x . CAIR ac c omplishes this b ycr eating thr ee separat e pr og rams: an o z one season NO x pr og ram and annual NO x and SO 2 pr og rams . Each of the thr ee pr og rams uses a t w o phased ap pr oach, with declining emission caps in each phase based on highly c ost eff ec tiv e c o ntr ols on po w er plants . Similar t o the NO x SIP C all , CAIR g i v es stat es the flexibilit y t o r educ e emissions using a strategy that best suits their cir cumstanc es and pr o vides an EP A-administ er ed , r e g ional cap and trade pr og ram as one option. Stat es ar e no w choosing the strat egy that best enables them t o achiev e these mandat e d r educ tions and plans ar e due t o be submitt ed t o EP A f or ap pr o v al b ythe fall of 2006.

8 S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og ramsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



## O v er vie w: NO x 

## Budget Tr ading P r ogr am, 2005 O ver th e p a s t3 ye ars, th e NO x S IP Cal lhas achie ved s i gnificant NO x r e ductions, c o ntri butin g to improvem ent s in r e gional air qualit y acro ss th e N o r t h e as t and mi d- A tl a ntic r e gions. Th e primar y m e chani s m for achi e vin g th ese r e ductions is t h e N B P
. 

### NO x 

### Budget Tr ading P r ogr am: A f fe c t ed Sta t es and C omplianc e Da tes I n2005, al l NB P af fe ct ed s o urces wer e r e quir ed to c ompl y

for th e ful lo zon e seas on , M a y 1 throu gh Se pt emb er 30. Wh e nre vi e wi n g re sul t s u n d e rt h e N B P , i ti s imp o r t ant to und e rs tand progr a m impl em entation and c ompli anc e d at e s. C ompli anc e with th e NO S IP Cal lwas sch e dul e d to b e gin on M a y 1, x 2003 for th e ful lo zon e seas on . H o we ver , l i tig ation d e l a ye d impl em entation unti l M a y 31, 2004. Th e s t at e s pr e viousl y

in th e OTC NO x Bu d g e t P r ogr a m adopt e d th e ori ginal c ompli anc e d at e in tr ans i tionin g to th e NO x S IP Cal land th er efor e b e g a n p ar t icipatin g in th e NB P on M a y 1, 2003 ( s e e F i gur e 3). Th ese s t at es includ e C o nn e c ticut, D e l a war e, M ar y l a nd , M a s s achusetts, N e w J e rse y , N e w Y o rk, P e nnsy l vani a , Rho d e I s l a nd , and th e D i s t rict o f C o lumbi a . D u e to th e l i tig ation , th e f i rs t c ompl i ance p e rio dd i d not b e gin unti l M a y 31, 2004, a month into th e normal o zon e seas on for s t at e s not pr e viousl y

in th e OTC NO x Bu d g e t P r ogr a m ( s e e F i gur e 3). Th ese s t at es includ e Al ab ama , Il linoi s, I n di ana , Ke ntuck y

, Mi chi g an , N o r t h Carol i na , O h io, S o uth Carol i na , T e nn es se e, V

i rgini a , and W e s tV i rgini a . Th e af fe ct ed p o r t ions o f

Mi s s ouri and G e orgi a ar e r e quir ed to c ompl y with th e NO x S IP cal las o f M a y 1, 2007. H o we ver , EP A has s t a yed th e NO x S IP Cal lr e quir em ents for Ge orgi a wh i l e it r e s p ond s to a p e tition to r e c o ns i d e r G e orgi a ' s inclus ion in th e NO x S IP Cal l
.



### F igur e 3: NO x 

### SIP C all P r og ram I mplementation

S our c e : EP A

S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og rams 9NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### Ke y C omponen ts of the NBP T he NBP is an o z one season (M a y1 t o S ept ember 30) cap and trade pr og ram f or elec tric generating units and lar ge industrial boilers and turbines

. T he pr og ram has sev e ral impor tant f e atur es:
• Under the NBP , the r e g ion-wide cap is the sum of the stat e emission budgets EP A established under the NO x SIP C all t o help stat es meet their air qualit y goals

. • A uthorizations t o emit, k n o wn as emission allo wanc es , ar e then allocat ed t o aff ec t ed sour c es based on stat e trading budgets

. T he NO x allo wanc e market enables sour c es t o trade (buy and sell) allo wanc es thr oughout the y ear. • A t the end of ev er y o z one season, each sour c e must surr ender sufficient allo wanc es t o c o v er its o z one season NO x emissions (each allo wanc e r epr esents 1 t on of NO x emissions). T his pr oc ess is called annual r e c onciliation.

• I f a sour c e does not ha v e enough allo wanc es t o c o v er its emissions , EP A will aut omatically deduc t allo wanc es fr om the f ollo wing y ear ’ s allocation at a 3:1 ratio

. • I f a sour c e has ex c ess allo wanc es because it r educ ed emissions bey ond r equir ed lev els , it can sell the unused allo wanc es or “ bank ” (i.e ., sa v e) them f or use in a futur e o z one season. T he NBP also has “ p r o g r essiv e flo w c o ntr o l ” pr o visions , which w e r e desig ned t o disc ourage ex t ensiv e use of banked allo wanc es in a par ticular o z one season. When the bank in an y g i v en y ear ex c eeds 10 per c e nt of the r e g ional trading budget f or the nex t y ear , flo w c o ntr ol is trigger ed and det ermines the amount of NO x emissions a banked allo wanc e can off set. M o r e inf ormation on flo w c o ntr ol is a v ailable in S e c tion 4, C omplianc e and M a rket A c tivit y. • T o ac curat ely monit or and r e por t emissions , sour c es use c o ntinuous emission monit oring sy st ems ( CEMS) or other ap pr o v ed monit oring methods under EP A’

s stringent monit oring r equir ements (40 CFR P a r t 75). F or mor e inf ormation on the NBP , including stat e trading budgets , allo wanc e allocations , and c omplianc e sup plement pool ( CSP) allo wanc es , r e f er t o <w w w .epa.go v/airmarkets/f edno x>.



### NO x 

### Budget Tr ading P r ogr am: A f fe c t ed Units in 2005 Th er e wer e 2,570 units af fe ct ed und e r th e NB P in 2005. Th ese includ e el e c tric ge n e r atin g units, wh ich ar e l arge b o i l ers, tu r b in es, and c ombin ed cycl e units used to ge n e r at e el e c tricit y for sal e. A s shown in F i gur e 4, el e c tric ge n e r atin g units c o ns t itut e 87 p e rcent o f al l r e gul at e d NB P units. Th e progr am al s o appli e s to l arge indus t ri al units that pro duce el e c tricit y and/or s t eam primari l y

for int e rnal use. E x ampl es o f th ese units ar e b o i l ers and tu r b in es at h e a v

y manufacturin g faci l i ti es, s u ch as p a p e r mi l l s, p e trol eum r e f i n e ri es, and iron and s t eel pro duction faci l i ti es. Th ese units al s o includ e s t eam pl ants at ins t itutional set tin gs, s u ch as l arge uni vers i ti es or ho sp ital s. S o m e s t at es ha ve includ ed oth e r t y

p e s o f units, s u ch as p e trol eum r e f i n e r y pro ces s h e at ers and c e m e nt ki lns. 

### F igur e 4: Number of Units in the NO x 

### Budget Tr ading P r og ram b y T ype , 2005

338 ( 13% )
720 (2 8 % )

1,079 ( 42% )

433 ( 17% ) Coal Electric G ener ati ng U n i t s

Oil Electric G ener ati n g

Units Industrial

Units

Gas Electric Generating Units

Notes:
• T otal aff ec t ed units in 2005 = 2,570.
• F or a br eakdo wn of NBP units b yo z one season generation, r e f er t o S e c tion 4, C omplianc e and M a rket A c tivit y. S our c e : EP A

10 S e c tion 1 — Backg r ound: Oz one and M ajor C o ntr o l P r og ramsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Section 2 — Changes in Emissions 

# T o as se s s th e ef fe ctiven es s o f th e NO Bu d g e t x Tr ad in g P r ogr a m (NB P ) in 2005, thi s se ction c omp ar e s nitrogen oxi d e s (NO x ) emi ss ion l e vel s in 2005 to l e vel s in 1990 and 2000 ( b asel in e ye ars ), and 2003 and 2004. Th ese r e s ults includ e emi ss ions from af fe ct ed s o urc e s in s t at e s included in th e NB P ( s e e F i gur e 3). 

## Oz one S eason NO x 

## Reduc tions under the NO x 

## Budget Tr ading P r ogr am F i gur e 5 show s th e total o zon e seas on NO emi s ­ x s i ons for al l af fe ct ed s o urc e s in th e NB P r e gion in 2005 c ompar ed to 1990, 2000, 2003, and 2004. I n 2005, NB P s o urces emitt ed ab out 530,000 tons o f NO x , r e ducin g emi s s ions b y ab out 11 p e rcent from 2004, 57 p e rcent from 2000, and 72 p e rcent from 1990. M an y

o f th e NO r e ductions s i nce 1990 ar e a x r e s ult o f progr ams impl em ent e d und e r th e Cl ean A

i r Act s u ch as th e Ac i dR ain NO Reduction x P r ogr am and oth e r s t at e, lo cal , and fed e r al pro

### Baseline Y ears for Measuring P r ogr ess under the NO x 

### Budget Tr ading P r ogr am EP

A has chosen t w o baseline y e ars for measuring pr og r ess under the NBP :
• 1990 , which r epr esents emission lev els bef or e the implementation of the 1990 Clean Air A c t Amendments

. • 2000 , because most of the r educ tions due t o the implementation of ear lier NO x r egulat o r ypr og rams under the 1990 Clean Air A c t Amendments had alr eady oc curr ed b y2000, but sour c es w e r e not y et implementing the NBP at that time

.
gr ams. Th e s i gnif icant d e cr ease in NO emi ss ions x aft e r 2000 l argel y r e f l e c ts r e ductions achi e ved by th e Ozon e T r ansp or t C o mmi s s i on ( O TC ) and NB P
. NO x emi s s ions in 2005 wer e lower than in 2004, d e s pit e a 7 p e rcent incr ease in total h e at input as so u r ces co n t i n u e t o r e d u ce a ve r ag e NO emi ss ion x r at e s, expr es sed as p o und s o f NO x emitt ed p e r



### F igur e 5: Oz one S eason Emissions under the NO x 

### Budget T r ading P r og ram 2,000 1,800 1,600 1,400 1,200 1,000

800 600 400 200

0 1,860

1,222

819 593 530

1990 2000 2003 2004 2005 O z o n e Se a s o n (Ma y 1 -Se ptember 3 0 )OzoneSeason NOxEmissions(Thousand Tons)

S our c e : EP A
11 S e c tion 2 — Changes in EmissionsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental ResultsAverage Rate (lb/mmBtu) 

### W h a t Is Hea t Input? Heat input is the heat deriv ed fr om the c ombustion of fuel in a unit. I tis a simple wa y t o track o z one season po w er generation or utilization of aff ec t ed units

. T h e o v erall o z one season heat input t o aff ec t ed NBP sour c es incr eased b y about 7 per c e nt bet w een 2004 and 2005, although ther e was no sig nificant change in the number of NBP sour c e s . Ho w e v e r , despit e the incr ease in o z one season po w er generation in 2005, NBP sour c es still achiev ed substantial NO x emission r educ tions (11 per c e nt).

mi l l ion B tu o f h e at input ( l b/mmB tu ). F i gur e 6 show s th e a ver a g e monthl y emi s s ion r at e s for th e 2004 and 2005 o zon e seas ons. Th e a ver a g e r at e d e cr eased each month wh en c omparin g 2004 to 2005, with th e mo s tnotabl e r e ductions o c currin g in M a y

. B e t ween th e 2004 and 2005 o zon e seas o ns, emi s s ion r at e s in M a y drop p e d almo s t39 p e rc ent. Thi s sharp d e clin e o c curr ed primari l y 

### F igur e 6: C omparison of Av erage M o nthly NO x 

### Emission R a t es in the NO x 

### Budget T r ading P r og ram, 2004 and 2005

0.30 2004 NO x Rate 0.25 2005 NO x Rate 0.20
0.15
0.10
0.05
0.00 May June July August September S our c e : EP A
b e cause s o urces in th e non-OTC s t at es d i d not ha ve to c ompl y

unti l M a y 31, 2004. E x clud in g M a y

, th e a ver a g e emi ss ion r at e d e cr eased each month durin g th e 2005 o zon e seas on b y 0.02 l b/mmB tu , or almo s t10 p e rcent from 2004.



### T

a ble 1: C omparison of 2003, 2004, and 2005 Oz one S eason NO x 

### Emissions ,

Heat I nput, and NO x 

### Emission R a t es in the NO x 

### Budget T r ading P r og ram
Units b y F uel T ype Oz one S eason NO x Emissions (t ons) Oz one S eason Hea tInput (mmBtu) Oz one S eason NOx Emission Ra t e(lb/mmBtu) 2003 2004 2005 2003 2004 2005 2003 2004 2005 C o al 770,000 (94%) 548,000 (93%) 475,000 (90%) 4.72 billion (84%) 4.71 billion (83%) 4.90 billion (81%) 0.33 0.23 0.19

O i l 25,000 (3%) 25,000 (4%) 32,000 (6%) 260 million (5%) 260 million (5%) 310 million (5%) 0.19 0.19 0.21

Gas 24,000 (3%) 20,000 (3%) 23,000 (4%) 590 million (11%) 690 million (12%) 840 million (14%) 0.08 0.06 0.05

T otal 819,000 593,000 530,000 5.57 billion 5.66 billion 6.05 billion 0.29 0.21 0.18
Notes:
• T he NO x t ons ar e r ounded t o the near est 1,000 t ons and the heat input values ar e r ounded t o the near est 10 million mmBtus
. T otals r epr esent the sum of the r ounded values

. T he 2003 thr ough 2005 data r epr esent the full o z one season, M a y 1 t o S ept ember 30, f or each y ear. • T he a v erage emission rat e is based on dividing t o tal r epor t ed o z one season NO x emissions f or each fuel cat egor y b ythe t otal o z one season heat input r epor t e d f or that cat egor y. T he a v erage emission rat e expr essed f or the t otal is the heat input w eight ed a v erage f or the thr ee fuel cat egories
. S our c e : EP A S e c tion 2 — Changes in Emissions 12NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



## Oz one S eason G ener a tion and Emission Reduc tions b yF uel T ype T

a

bl e 1 prov i d es th e total emi s s i ons and h e at input for NB P units by fu el t y

p efor th e 2003, 2004, and 2005 o zon e seas ons. C o al-f ired units ac c o unted for al l o f th e emi s s i on re ductions from 2004 to 2005, d e creas i n g emi s s i ons by ab out 73,000 tons. Th e majorit y

o f th ese re ductions ( a b o ut 67,000 tons ) cam efrom c o al-f ired units that op er at ed ad d-on c o ntrol s durin g th e 2005 o zon e seas on ( s e e Se ction 4, C ompli ance and M arket Ac ti v

it

y

). T h e m o std r a m at i c re sul ti s t h e c o n t i n u e d d e cr ease in NO emi s s i on r at e s l e ad in g to th ese x r e ductions for c o al-f ir ed units, d e s pit e an incr ease in h e at input from th ese units b e t ween 2004 and 2005. Th e l arg e s t incr ease in h e at input cam e from oi l-f ir ed and g a s-f ir ed units, wh ich incr eased emi s s ions b y ab out 10,000 tons b e t ween 2004 and 2005 l arg el y du e to incr eased uti l i z ation
. 

## Sta t e - b y -Sta te Reduc tions T h e NB P s t at es ha ve ach i e ved s i gn ifican t r e d u ctions in o zon e seas on NO emi s s ions s i nce t h e x basel i n e ye ars 1990 and 2000 ( a s shown in F i gur e 7). A l l s t at e s ha ve achi e ved r e ductions s i nc e 1990 as a r e s ult o f progr a ms impl em ent e d und e r th e Cl ean A i r A ct Am endm ents, with man y

s t at es r e ducin g th eir emi s s i ons b y mor e than half s i nce 1990. Th e d e cr ease in NO emi s s ions aft e r 2000 x l arg e l y

re f l e c t s re d u c t i o n s a c h i e ve db y t h e O T C and NB P
. W h il e th e NB P achi e ved an 11 p e rc ent d e crease in NO x emi s s ions overall from 2004 to 2005, Fi gure8 shows that th e emi s s i on re ductions from 2004 to 2005 vari ed s o m ew h at from s t at e to s t at e. Gi ven that 2005 was th e f i rs t fullo z on e seas on c ompli

ance p e rio d for s t at es outs i d e th e OTC, tho se s t at es sa

w th e mo s t s i gnif icant re ductions from 2004.



### F i gur e 7: NO x 

### Budget T r ading P r og ram Stat e -b y-Stat e Oz one S eason NO x 

### Emission Reduc tions fr om 1990 and 2000
250,000

200,000

150,000

100,000

50,000

0 IN OH

MI IL KY

AL NC WV
TN

VA SC PA

NY
MD NJ MA DE CT DC RI Non-OTC States OTC States

Reductions between 1990 and 2000

Emissions in 2005 Reductions between 2000 and 2005

Notes:
• B ecause emissions in the Distric t of C olumbia and Dela war e incr eased bet w een 2000 and 2005 b yap pr o ximat ely 146 and 1,282 t ons , r espec tiv ely , ther e is no g r een bar sho wn in the figur e f or those stat e s . • F or each stat e , the t otal bar (i.e ., the sum of the orange , g r een, and blue stacked bars) depic ts emissions in 1990. T he sum of the g r een and orange stacked bars depic ts emissions in 2000, and the orange bar depic ts emissions in 2005.
• R esults in Alabama and M ichigan r epr esent o z one season emissions fr om only the aff ec t ed por tion of each stat e (see F igur e 3). S our c e : EP ANOxEmissions (Tons)

S e c tion 2 — Changes in Emissions 13NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F i gur e 8: NO x 

### Budget Tr ading P r og ram Oz one S eason NO x 

### Emissions fr om 1990, 2000, 2004, and 2005, and 2005 Stat e T r ading Budgets

T he non- OTC stat es ar e shaded in g r a y ; OTC stat es ar e sho wn in y ello w . R esults in Alabama and M ichigan r epr esent o z one season emissions fr om only the aff ec t ed por tion of each stat e (see F igur e 3). 1990 Emissions 2000 Emissions 2004 Emissions 2005 Emissions 2005 St ate T rading Budget s 120,000 T ons

Notes:
• • S our c e : EP A

E i gh t s t at es ( C onn e cticut, M a s s achusetts, N e w J e rse y , N e w Y o rk, N o r t h Carol i na , Rho d e I s l a nd , S o uth Carol i na , T e nn es se e ) had o zon e seas on emi s s ions b e low th eir tr ad in g bud g ets in 2005 ( s e e F i gur e 8 and T a

bl e 2). Thr e e o f th ese s t at es, Conn e c ticut, M a s s achusetts, and Rho d e I s l a nd , wer e b e low th eir tr ad in g budg ets b y at l e as t 30 p e rcent. Emi s s ions in ei gh t oth e r s t at es (A l a

bama , Il l i noi s, I n d i ana , Ke ntuck y

, O h io, P e n n sy l va n ia , V i rgi n ia , a n dW e s tV i rgi n ia) r e main ed ab ove th eir tr ad in g budg ets. H o we ver , al l o f th ese s t at es r e duced emi s s ions from 2004 l e vel s, and mo s twer e within 1 to 6 p e rcent o f th eir r e s p e c tive budg ets. I nad d i tion , I n d i ana , O h io, and W e s tV i rgini a ac c o unt e d for mor e than 50 p e rcent o f th e total r e ductions from 2004 to 2005 ( a b o ut 35,000 tons ). 

### C ap and Tr ade: Guar an teed En vir onmen tal Results C ap and trade pr og rams deliv er r esults with a mandat o r ycap on emissions while pr o viding sour c es flexibilit y in ho w they c omply

. C ap and trade pr og rams ha v e pr o v en highly eff ec tiv e in r educing emissions fr om multiple sour c es on a r e g ional or lar ger scale

. T he mandat o r ycap on emissions is critical t o pr ot ec t public health and the en vir onment and t o sustain that pr ot ec tion int o the futur e . Under cap and trade pr og rams , aff ec t ed sour c es ar e allocat ed authorizations t o emit in the f o rm of emission allo wanc es , but the t otal number of allo wanc es cannot ex c e ed the cap

. T he cap also ser v es t o pr o vide stabilit y and pr edic tabilit y t o the allo wanc e trading market.

14 S e c tion 2 — Changes in EmissionsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### T

able 2: NO x 

### Budget T r ading P r og ram Oz one S eason NO x 

### Emissions f or 1990, 2000, 2004, and 2005, and 2005 Stat e T r ading Budgets St a t e 1990 Emissions (t ons) 2000 Emissions (t ons) 2004 Emissions (t ons) 2005 Emissions (t ons) 2005 S t a t e T rading Budgets (t ons) CT 11,203 4,697 2,194 3,022 4,477 DC 576 134 36 280 233 DE 13,180 5,256 5,066 6,538 5,227 MA 40,367 14,324 7,483 8,276 12,861 MD 54,375 28,954 19,943 20,988 15,466 NJ 44,359 14,630 10,796 11,163 13,022 NY 84,485 43,583 34,161 36,645 41,350 PA 199,137 87,329 52,172 51,135 50,843 RI 1,099 288 177 222 936 OT CS t a t e s 448,781 199,195 132,028 138,269 144,415 AL 89,758 84,560 40,564 33,631 25,497 IL 124,006 119,460 40,976 37,829 35,557 IN 218,333 145,722 68,375 57,260 55,729 KY 153,179 101,601 40,394 36,734 36,224 MI 120,132 80,425 39,848 42,264 31,247 NC 92,059 73,082 39,821 32,943 41,547 OH 240,768 159,578 67,352 54,358 49,499 SC 56,153 39,674 25,354 18,196 19,678 TN 115,348 69,641 31,399 25,721 31,333 VA 51,866 40,043 25,443 22,309 21,195 WV 149,176 109,198 41,333 30,408 29,043 Non- OT C S t a t es 1,410,778 1,022,984 460,859 391,653 376,549 T

otal NBP S t a t es 1,859,559 1,222,179 592,887 529,922 520,964

Note: Results in Alabama and M ichigan r epr esent o z one season emissions fr om only the aff ec t ed por tion of each stat e (see F igur e 3). S our c e : EP A Th e D i s trict o f Columbi a , D e l a ware, M ary l and , ti vel y

. Th e D i s trict o f Columbi a ’s emi s s i ons t e nd to and Mi chigan had 2005 o zon e seas on NO x emi s- f luctu at e greatl y from ye ar to ye ar as th e af fe ct ed s i ons that exceed e d b o th th e s t at e tr adin g budgets el e c tric ge n e r atin g units prov i d e p e akin g p ower to and 2004 emi s s i on l e vel s. D e l a ware, M ary l and , and m e et seas onal d e mand ( a s opp o sed to morec o nMi chigan had emi s s i on increase s o f 1,472, 1,045, s i s t entl y op er atin g b a se lo ad units ). A f t e r 2000, th e and 2,416 tons ab ove 2004 emi s s i on l e vel s, re sp e c - D i s trict o f Columbi a ’s NO x emi ss ions ha ve

S e c tion 2 — Changes in Emissions 15NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results

re main ed low at l e s s than 300 tons p e r o zon e seas o n . Stat e-sp e cif i c factors ha ve s tron gl y

af fe ct ed NO emi s s ions in th ese s t at es. Fo r exampl e, x D e l a wareexp e ri enced a s i gnif icant jump in b o th h e at input and emi s s i ons, primari l y as s o ci at ed w

ith t wo pl ants. I nM ary l and , thre e pl ants were re sp ons ibl e for over 65 p e rc ent o f NO x emi ss ions in 2005, and emi s s i on c o ntrol s are pl ann e d at th e se pl ants in up c omin g years as re quired by a fed e r a l c o nsent d e cree and re centl y

p a s s ed s t at e le gi s l ati o n . 2 I nMi chigan , wh i l e emi s s i ons increased 6 p e rcent from 2004, h e at input increased 9 p e rc ent durin g 2005 — th e l arge s t increase w ithin th e non-OTC re gion
. 

## Daily Emission Tr ends Stu d i e s in di cat e th at m a n y

of th e h e alth ef fe ct s ass o ci at ed with ozon e ar e linked to d ai l y exp o s u r e. EP A d e velop e d th e 8-hour o zon e s t and ar d to prot e ct a g ains t s u ch exp o s ur e. A lthou ghth e NB P ens u r e s s i gnif icant r e gional NO x re d u c t i o n s throu ghout th e c o urse o f th e o zon e seas on , th er e ha ve b e en c o nc erns that a seas onal cap w o ul d not s u f f ici e ntl y

r e duce shor t-t e rm , p e ak NO x emi s s ions that can o c cur on hot, highel e c tricit y de ma ndda ys . I npr actice, th e NB P has had a s i gnif icant impact on d ai l y emi s s i ons s i nce th e progr a m b e g a n in 2003. F i gur e 9 c ompar es d ai l y NO x emi s s i ons durin g 2003, 2004, and 2005 for th e NB P r e gion . I n 2005, d ai l y NO x e m is s i o nleve ls f o rJu ne t h r o ugh Se pt emb er r e main ed c omp ar abl e to tho se in 2004. NO x emi s s ions in M a y 2005 d e cr eased n e arl y

47 p e rcent from M a y 2004, i l lus t r atin g th e s i gnif i cant r e ductions a c hi e ved by th e n o n-OTC s t at es as t h ey be g a npart icip at i n g i nt h e p r ogr a m on a ful lozon e seas on b a s i s.Daily NOxEmissions (tons) 

### F igur e 9: C omparison of Daily NO x 

### Emission L e v els , 2003–2005
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000
0 May Jun Jul Aug Sep O ct 2003 2004 2005

S our c e : EP A

2 By 2008, und e r a fed e r al c o nsent d e cr ee, on e o f th e c ompani e s with af fe ct ed units in M ar y l a nd wi l lb e r e quir ed to cap emi s s ions from thr e e M ar y l a nd pl ants and on e V i rgini a pl ant to 6,150 tons p e r o zon e seas on . Th e emi s s ions cap in thi s c o nsent d e cr ee shoul dr e duce e mi ss ions from exi s tin g pl ants in M ar y l a nd wel lb e low budg et l e vel s. Th e emi s s ions from th ese four pl ants total e d over 14,800 tons in th e 2005 o zon e seas on . I nad d i tion , M ar y l a nd r e centl y p a s s ed l e gi sl ation , th e H e alth y A i r A ct, wh ich wi l lfur t h e r lower futu r e NO x emi ss ions. S e c tion 2 — Changes in Emissions 16NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Section 3 — En vironmental Results 

# T o b e t t er und e rs tand how th e NO x Bu d ge t T

r adin g P r ogr am (NB P ) af fe cts o zon e, thi s se ction examin es o zon e air qualit y acro s s th e NB P s t at es s i nce 1997 and th en lo ok s at chan ge s in ozon e c o nc entr ations b eforeand aft e r impl em ent ation o f th e NB P
. I nad dition , thi s se ction c omp are s ge ogr a phic p at t erns in ozon e c o ncentr ations to re ductions in nitrogen oxi d es (NO x ) emi s s ions und e r th e NB P
. Th ese anal y s e s c o ns i d er th e impact o f weath e r , b e cause vari ations in weather c o nditions pl a y

an imp o r t ant rol ein d e t e rminin g o zon e l e vel s. 

## Oz one Monitoring Netw orks F o r thi s r e p o r t, EP A as sembl e d d ata from 36 urb a n ar eas from th e A i r Qu al it y Sy s t em (AQ S ) and 35 r u r al s i t e s from th e Cl ean A i r Status and Tr end s N e t w ork ( C AS TNE T) to provi d e a mor e c ompl e t e pictur e o f air qualit y in th e eas t ern Un it ed Stat es ( s e e F i gur e 10). EP A onl y

used s i t e s with s u f f ici e nt m e t e oro l ogical and ozon e d at a within each tim e p e rio d . F o r a monitor or ar ea to b e includ ed in thi s anal y s i s, 50 p e rcent o f th e d a y s for th e o zon e seas on had to ha ve c ompl e t e and val i d d at a .



### F igur e 10: L o ca tion of Urban and Rur al Oz one Monitoring Net w orks

Urban A r ea(A QS ) Rural Site (CASTNET) Notes:
• Stat es par ticipating in the NBP in 2005 ar e shaded in g r een (r ef err ed t o as the “NBP r e g ion ”).
• U rban ar eas r epr esent multiple monit oring sit es . Rural ar eas r epr esent single monit oring sit es . • F or mor e inf ormation on A QS, visit <w w w .epa.go v/ttn/airs/airsaqs>. F or mor e inf ormation on CASTNE T , visit <w w w .epa.go v/castnet>. S our c e : EP A

S e c tion 3 — En vir onmental Results 17NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F igur e 11: T r ends in S easonal Av erage 8-Hour Oz one C onc entrations in the NO x 

### Budget T r ading P r og ram Reg ion (Not A djust ed f or M e t eor ology)
70

60

50

40 1997 1998 1999 2000 2001 2002 2003 2004 2005 O z o n e S e aso n A Q S U r ban O z one Lev e l s C A S TN E T R u ra l O z one Lev el s NBP Region Ozone L e v e l s Note: Data pr esent ed in this figur e ar e un w eight ed a v erages of 8-hour daily maximum o z one c onc entrations during the o z one season f o r sit es within the NBP r e g ion, shaded in g r een in F igur e 10. S our c e : EP AOzoneConcentrations(ppb)



## G ener al Tr ends: Changes in Eastern Oz one C onc en tr a tions sinc e 1997 F i gur e 11 show s tr end s in th e “ s eas o nal a ver a g e ” 8-hour o zon e c o ncentr ations in th e NB P r e gion from 1997 to 2005, showin g th e vari abi l it y over t i m e in m e as ur ed o zon e concent r at ions at urban and r u r al s i t e s. Th e seas onal a ver a g e o zon e c o ncentr ation i s th e a ver a g e o f d ai l y ma ximum 8­ hour ozon e c o nc entr ations from M a y 1 throu gh Se pt emb er 30. O na ver a g e, 2005 o zon e c o ncentr ations in th e NB P r e gion r e main b e low 2002 l e vel s , but ar e high er than in 2004 ( n ot adjus t ed for me teo r o l o gy )
. I ng e ne r al , we at he rco n d i t i o n s wer e mor e c o nducive to o zon e formation in 2005 than in 2004. F i gur e 11 al s o show s that on a ver a g e, o zon e in r u r al ar eas i s lower than o zon e in urb a n ar eas but fol l ow s a s i mi l ar tr end
. Th ese r e s ults provi d e a seas onal a ver a g e for NB P s t at es and do not show variat ions in o zon e concent r at ions for s p ecific urban or r u r al ar eas. A lthou ghurban and m e trop o lit a n ar eas t y

pical l y exp e ri enc e d hi gh er ozon e c o ncentr ations, non-urb an ar eas can al s o exp e rienc e hi ghozon e l e vel s du e to tr ans p or t and lo cal emi s s ion s o urces (e.g., mobi l e s o urces ). Fo r exampl e, th e Na tional P ar k

Serv ice rep o rt ed that b a sed on a 3-y ear a verage o f th e fourth high e s t d ail y ma ximum 8-hour o zon e c o ncentration ( i n p art s p e r billion , or pp b) for th e y e ars 2002 to 2004, thre e Na tion al P ar k

U

n it s in th e ea s t er n U n it ed Stat es (Acadi a , Cap eC o d , and Great Smok y Mo unt ains ) exp e ri enc e d hi ghozon e c o nc entrations that exceed e d 85 pp b. 3 

## Oz one Changes after A djusting fo r Meteor ology V

ari ations in weath e r c o nditions pl a y

an imp o rtant rol ein d e t e rminin g o zon e l e vel s. EP A use s a s t ati s tical mo d e l to ac c o unt for th e weath e r re l at e d vari abi lit y o f seas onal o zon e c o ncentr ations to prov i d e a moreac cur at eas se s s m e nt. 4

3 N ational P ark Ser vice A i r Re s o urces D ivi s i on . “ Annual D ata Su mmar y , 2004 Gase ous P o l l utant M o ni torin g, P r ogr a m Ozon e, Sulfur D i oxi d e , M e t e orological O b ser vations. ” U
. S
. D e par t m e nt o f th e I n t e rior . <www2.natur e.nps.gov/air/pubs/p df/ad s/2004/G PM P

- X

X.p df>.
4 Cox, W i l l i a m M. and S h ao-H an g Chu
. (1996). “ A s s e s s m ent o f I n t e r annual Ozon e V ari ation in Urban Ar eas from a Cl imatological P e rs pec t ive . ” Atm o sph e ri c Env ironm ent , 30.14, 2615-2625. S e c tion 3 — En vir onmental Results 18NO X Budget T r ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### Meteor ology Ma tters T he g r aphics belo w sho w ho w the summers of 1997, 2002, and 2005 deviat e fr om normal summer c onditions f or t emperatur e and pr ecipitation (a surr ogat e f or humidit y). Normal c onditions ar e det ermined b y a v erag ing 30 y ears of t emperatur e and pr ecipitation data (1971 t o 2000) at each sit e f or June thr ough A ugust. T he inf ormation pr esent ed belo w is useful in evaluating the o z one f o rming pot ential f or a par ticular o z one season.

S our c e : National Oc eanic and A tmospheric A dministration (NO AA ), National Climatic Data C e nt er <http://w w w .nc dc .noaa.go v/oa/climat e/r esear ch/2002/CMB_pr od_us_2002.html>

S e c tion 3 — En vir onmental Results 19NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F i gur e 12: S easonal Av erage 8-Hour Oz one C onc entrations in the NO x 

### Budget Tr ading P r og ram Reg ion bef or e and af t er A djusting f or We ather
70

60

50

40

U nadj u s t ed f o r

M e t eor ol ogy A dj u s t ed f o r

M e t eor ol ogy 1997 1998 1999 2000 2001 2002 2003 2004 2005 Ozone Season

Note: Data pr esent ed in this figur e ar e un w eight ed a v erages of 8-hour daily maximum o z one c onc entrations during the o z one season f o r sit es within the NBP r e g ion, shaded in g r een in F igur e 10. S our c e : EP AOzoneConcentrations(ppb)

T h i s r e p o r tu s e s ana s s e s s m e n ta p p r o a c hth at ac c o unts for th e impacts o f weath e r by normal i z in g weath e r vari ations to provi d e a b e t t er e s timat e o f th e und e rl yin g o zon e tr end and th e impact o f NO x emi s s ion r e ductions. Th e r e s ultin g es timat e s r e pr esent o zon e l e vel s anticipat e d und e r t y

pical weath e r c o nditions. Thi s m e tho d ology and th e o zon e e s timat e s wer e provi d ed by EP A

’s O f f i ce o f A

i r Qu al it y Pl annin g and Stand ar d s ( O AQP S), A i r Qu al it y A s se s s m e nt D i vi s i on , www .e p a .gov/air tr end s . F i gur e 12 show s tr end s in th e seas onal a ver a g e 8­ hour ozon e c o nc entr ations b e for e and aft e r adjus t in g for m e t e orology . Th e blu e dott ed lin e show s th e tr end in unadjus t ed , obser ved valu es at monitorin g s i t e s. Th e or an g e s o l i d l i n e i l lustr at e s th e und e rl yin g o zon e aft e r r e movi n g ef

fe cts o f weath e r to provi d e a mor e ac cur at e o zon e tr end for as se s s in g chan g e s in emi s s ions. Wh en c omp arin g t

w o years with s i gnif icantly differ e nt weath e r c o nditions and ozon e formin g p o t e nti al (e.g., 1997 v s. 2002), it i s imp o r t ant to ac c o unt for th e vari ation caused b y m e t e orology . F o r exampl e, in ge n e r al , lower t emp er atur es d e p r e s s ed o zon e formation in 1997 wh i l e high er t emp er atur es incr eased o zon e formation in 2002. Removi n g th e ef fe cts o f weath e r us in g thi s t y

p e o f me teo r o l o gi c ala d j u s t me n ta p p r o a c hr e s ult s i na high er than obser ved o zon e e s timat e for 1997 and a lower than obser ved o zon e e s timat e for 2002. 

## Oz one Changes: F ocus on the NO x 

## Budget Tr ading P r ogr am Th e 2004 NB P r e p o r t, Evaluatin g Ozon e C o ntrol Pr o gr a ms i nt h e Eas t e r n Un it ed Stat es: F o cus on th e NO x B u dg et Tr ad in g P r ogr a m , c o nclud e d that th e a ver a g e r e duction in o zon e in th e eas t ern Un it ed St at e s b e t we e n 1997 and 2002 was ab out 4 p e rc ent ( a djus t e d for m e t e oro l ogy ), c omp ar ed with mor e than 10 p e rcent b e t ween 2002 and 2004. 5 F i gure s 13 and 14 i l lus tr at echan ge s in o zon e c o ncentr ations b e t ween 1997 and 2002 and 2002 and 2005, aft e r adjus tin g for m e t e orolog y

. Th e a ver age re duction in o zon e in th e NB P re gion b e t ween

5 “Evaluatin g O zon e C o ntro l P r ogr a ms in th e E a s t ern Un it ed Stat es: F o cus on th e NO x B u dg et Tr ad in g P r ogr a m , 2004, ” <www .e p a .gov/airmarkets/fednox>. S e c tion 3 — En vir onmental Results 20NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F i gur e 13: P e r c ent Change in S easonal F igur e 14: P e r c ent Change in S easonal 8-Hour Oz one , 1997 v s . 2002 ( A djust ed f o r 8-Hour Oz one , 2002 v s . 2005 ( A djust ed f o r M e t eor ology) M e t eor ology)

I n c rease Between 25% and 34% I n c rease Between 15% and 25% I n c rease Between 5% and 15% I n c rease Les s T h an 5% Decr ease Less Than 5% D e c r ease B e twee n 5% and 15% D e c r ease B e twee n 15% and 23% M a r g in oferror is + /- 5 p e rce n t. Note: Shaded r e g ion sho w s ar eas aff ec t ed under the NBP as of 2005. S our c e : EP A
2002 and 2005 was ab out 8 p e rcent. Wh i l e, on a

ver age, th ere was no improvem e nt in o zon e in th e NB P re gion b e t ween 2004 and 2005 ( a b o ut 0.5 p e rcent increase as shown in F i gure12), th ese re s ult s sh ow th at th e m a j o rit y

of th e ozon e progre s s mad eb e t ween 2002 and 2004 was re t ain ed . I nge n e r a l , weath e r c o nditions in 2005 weres i mi l ar to weath e r c o nditions in 2002 ( i .e., b o th years had hi gh er than a ver age ozon e formin g p o t e nti a l). B eforeadjus tin g for m e t e orolog y

, th e a

ver age re duction in o zon e b e t ween 2002 and 2005 was al s o ab out 8 p e rcent. Fi gure15 shows th e re l a tionship b e t we e n re ductions in p ower indus try NO x emi ss ions and re ductions in ozon e aft e r impl em ent a tion o f th e NB P
. Bet ween 2002 and 2005, th ere wered e crease s in o z on e acro s sall NB P s t at e s, w ith th e l arges t re ductions o c currin g in Conn e c ticut, New Y o r

k, No rth Caroli na , P e nnsy l vani a , and W e s t V

i rgini a . Th ere weres o m eincrease s in th e s o uth e rn U n it ed St at e s , Note: Shaded r e g ion sho w s ar eas aff ec t ed under the NBP as of 2005. S our c e : EP A

sp ecifica ll

y

in Fl orida ( w

h i ch i snot in th e NB P )
. G e n e ra ll

y

, th ere i sa s tron g as s o ci ation b e t we e n areas w ith th e great e s t NO x emi s s ion re ductions and dow n

w

i nd s it e s exhibitin g th e great e s t improvem ent in ozon e. Thi ss u gge s t sthat l e vel so f transp ort e d NO x emi ss ions ha ve b e en re duc e d in th e eas t ern U n it ed St at e s. W h il e thi srep o rt doe s not at trib ut e all o zon e re ductions aft e r 2002 to th e NB P , it do e ssh ow th at th e NB P h a s pl a y

ed a key r o le in re du cing o z on e concentrations. O th e r re c e nt s t udi e s s u pp ort th e k ey f i ndin gs o f thi srep o rt. G égo et al . examin ed th e ef fe cti ven es s o f

th e NO x S IP Callby quantifyin g chan ge s in d ail y ma ximum 8-hour o z on e c o ncentrations at monitorin g s it e s in th e eas t ern U n it ed St at e sb efore (1997 to 1998) and aft e r (2003 to 2004) impl em entation o f th e program . 6 Th e re search ers primaril y used CA S T NET d a t a

for thi sanal ys i sb e cause th e s e m e as urem ents are t a k

e n in rura l areas w h ere ozon e pro duction d ep e nd s s tron g l y

on NOx co n 6 G é go, E d ith P , et. al . “O bser vation-b ased as se s s m e nt o f th e impact o f nitrog en oxi d es emi s s ions r e ductions on o zon e air qual it y over t h e eas t

ern Un it ed St at e s . ” J

o urnal of A p

pli ed M e te o rolog y and Climatolog y

, s p e c i al i s s u e on th e NO A A-EP A

G o l d en Jubi l e e Symp o s ium ( s ubmitt ed). S e c tion 3 — En vir onmental Results 21NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F igur e 15: Reduc tions in Oz one S eason P o w er I ndustr y NO x 

### Emissions and 8-Hour Oz one , 2002 v s . 2005
P o w er I ndustr y NO x 

### Emission 8-Hour Oz one , A djust ed f o r Reduc tions M e t eor ology

Ozone Season NO XEmissions Ozone Season 8-Hour Ozone T o ns Reduced Percent Reduced I n c rease Between 15% and 22% Increase Less Than 1,000 I n c rease Between 5% and 15% Decrease Less Than 25,000 I n c rease Les s T h an 5% D e crea se Betwe en 25 ,000and 50,0 0 0 Decr ease Less Than 5% D e c r ease B e twee n 5% and 15% D e crea se Betwe en 50 ,000and 75,0 0 0 D e c r ease B e twee n 15% and 23% D e crea se Betwe en 75 ,000and 105 ,000 Ma rg i n o f e r ro ri s + /
- 5 pe r c en t

.
Note: F r om 2002 t o 2005, Dela war e (943 t ons), New Hampshir e (216 t ons), C onnec ticut (76 t ons), and Ve rmont (44 t ons) sho w small incr eases in o z one season NO x emissions
. S our c e : EP A

ce ntra ti o n san d i sn e ar l y

i n depe n de nt o f VO Cs
. A

f t e r adjus tin g for m e t e orolog y

, thi ss t ud y found that o z on e c o ncentrations are on a verage 13 p e rc e nt l e ss (ran gin g from 4 to 27 p e rc ent acro ss all sit e s ) th an th ey we reb eforeth e program . Thi s s t

ud y al s o used a b a ck traje c tory anal ys i sand found that NO emi s s ion re ductions in th e O h io x Ri

ve r V a

ll ey re s ult ed in s u bs t anti a l improvem ent s in o zon e air qualit y in dow n

w

i nd re gions, e sp e ci all y

eas t and north e as t o f th e O h io Ri ver V a

ll ey . Thi s s t

ud y c o nclud e d that th e NO S IP Callhas b e en x ef

fe cti ve in re ducin g int e rs tat eo z on e transp ort and h e lpin g to improve ozon e air qualit y in th e eas t ern Un it e d S t a t e s .

22 S e c tion 3 — En vir onmental ResultsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### Impr o v emen ts in 8-Hour Oz one C onc en tr a tions I n April 2004, based generally on 2001 t o 2003 data, EP A desig nat ed 126 ar eas as nonattainment f or the 8-hour o z one standar d

. 7 O f those ar eas , 103 ar e in this par t of the east ern Unit ed Stat es (see figur es belo w) and ar e home t o about 100 million people (US C ensus , 2000). Based on 2003 t o 2005 data, 68 of the 103 ar eas (near ly 70 per c e nt) either ha v e o z one air qualit y that is bett er than the lev el of the 8-hour standar d or meet the standar d and ha v e been r edesig nat ed t o attainment. T hese impr o v ements bring cleaner air t o about 20 million people living in these 68 ar eas . S e v e ral of these ar eas ha v e r eview ed or ar e r eviewing the r equir ements f or r edesig nation as described in the Clean Air A c t S e c tion 107. Near ly 81 million people liv e in the r emaining 31 ar eas in this par t of the east ern Unit ed Stat e s . On a v erage , o z one c onc entrations in these ar eas impr o v ed b y8 per c e nt. Giv en that the only major r elevant emission r educ tion that oc curr e d af

t er 2003 is the NBP , it is clear that the NBP is the major c o ntribut or t o these impr o v ements in o z one air qualit y.
8-Hour Oz one Nona ttainmen t A r eas , A r eas Remaining A b o v e Standar d A pril 2004 (2001–2003 A ir Q ualit y Da ta) (2003–2005 A ir Q u alit y Da ta)

Note: I ncluded on the maps , but ex cluded fr om the analy sis , ar e f our ar eas with inc omplet e data f or 2003 t o 2005 ( C ass C o , MI; Da yt on-Springfield , OH; Essex C o ( W hit efac e Mtn), N Y ; La P o r t e , IN).

7 40 C F R P ar t81, A i r Qu al it y D e s i gnations and Cl as s i f i cation for th e 8-H our Ozon e N ational Ambi ent A i r Qu al it y Stand ar d s (N A

A Q S )
.
S e c tion 3 — En vir onmental Results 23NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### Spac e - T ime Modeling A p pr oach to A djusting for Meteor ological Influenc es on Oz one T her e ar e diff er ent ap pr oaches t o ac c ount f or the influenc es of met eor o logy on o z one f o rmation. T his analy sis pr esents r esults fr om a spac e -time modeling ap pr oach dev eloped b yEP A’

s O ffic e of Resear ch and Dev elopment. T he method can pr o vide the unc er tainties surr ounding o z one tr end estimat es and can be expanded t o pr edic t o z one at an y location (e .g ., ev en bet w een o z one monit oring sit es) and f or an y time period

. T he g r aphic belo w sho w s the per c e nt change in seasonal a v erage o z one c onc entrations at rural CASTNE T sit es using the spac e -time modeling ap pr oach. T he r esults fr om this analy sis c o rr oborat e the findings pr esent ed thr oughout the r e por t; on a v erage o z one c onc entrations ha v e decr eased acr oss the east ern Unit ed Stat e s sinc e 2002 (see figur e belo w). By exploring and dev eloping new methodolog ies f o r assessing o z one , EP A hopes t o c o ntinue advancing assessment capabilities int o the futur e . P e r c en t Change in S easonal 8-Hour Oz one, 2002-2004

Increase Between 15% and 22% Increase Between 5% and 15% Increase Less Than 5% Decrease Less Than 5% Decrease Between 5% and 15% Decrease Between 15% and 23% S our c e : EP A

24 S e c tion 3 — En vir onmental ResultsNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



## Oz one Impac ts on F o r est Health A s with human h e alth , EP A i s c o nc ern e d ab out th e impacts o f air p o l l ution on e c ological sy st e ms. Ground-l e vel ozon e-induc ed ef fe ct s on tr ees and for e s t s includ e r e duced growth and/or r e pro d uction and incr eased s u sc e p ti bi l i t y

to d i sease, p e s t s, and oth e r en vi ronm ental s t r e s s e s (e.g., harsh weath e r ). Ground-l e vel o zon e can al s o cause vi s i bl e injur y to l e a ves and fol i a g e. Th e Un it ed St at e s F o r e s tS e r vi c e F o r e s tH e alth M o nitorin g P r ogr a m (F HM) use s vi s i bl e fol i ar injur y as an indicator that ground-l e vel ozon e i s impactin g tr ees and for e s t s. Th e Ozon e B i o s it e I n d e x ( s e e T a

bl e 3) was d e velop e d b a sed on th e prop or tion o f d a ma g e d l e a ves and th e se verit y

o f symptoms to th e numb er o f non-injur ed l e a ve s within a d e f i n e d for e s t ed ar ea . 8 Th e F o r e s t Ser vic e use s th e Ozon e B i o s it e I n d e x to s u r ve y for e s t ed ar eas in th e Un it ed Stat es. Th e mo s t r e ce n tdata ar e p r ese n te das a na ve r ag e val u e from 1999 to 2002 ( s e e F i gur e 16). Thi s anal y s i s sh ow s th at fo li ar injur y o c curr ed m o r e e xt e n s ivel y

in th e eas t ern Un it ed St at e s than th e we s t ern Un it ed St at e s in thi s tim e p e rio d , e s p e ci al l y

in th e Mi d- A tl a ntic and th e S o uth e as t. Th ese d ata show vi s i bl e foli ar injur y b e for e th e NO x emi ss ion r e ductions und e r th e NB P to ok ef fe ct. Re cent improvem ent s in ozon e du e to emi s s i on c o ntro l progr a ms ha ve o c curr ed in man y

ar eas wh er e fores t e c o sy s t e ms had exp e ri enced th e mo s tvi s i bl e fol i ar injur y from o zon e exp o s ur e. Wh i l e it wi l l t ake tim e for for e s te c o sy s t e ms to r e s p ond to ozon e improvem ent s, as d at a b e c o m e a vai l a bl e ( i .e., 2002 to 2005 d ata), EP A wi l lc o ntinu e to examin e th e impacts o f o zon e on for e s t indicators.



### T

able 3: Oz one Biosit e I ndex C a t egories , R isk A ssumption, and P ossible I mpac t Biosit e Inde x Bioindic a t or Response A ssumption of Risk t o F o rest Resource P ossible Impac t

0 t o < 5.0 Little or No F oliar Injur y None V isible injur y t o isola t ed genot ypes of sensitiv e species; e

. g ., c o mmon milkw eed , black cherr y. 5.0 t o < 15.0 Ligh t t o Moder a t e F oliar Injur y Lo w V isible injur y t o highly sensitiv e species , e . g ., black cherr y; effec ts not ed primarily a tthe tr ee lev el

. 15.0 t o < 25.0 Moder a t e t o S e v e r e F oliar Injur y Moder a t e V isible injur y t o moder a t ely sensitiv e species , e . g ., tulip poplar; effec ts not ed primarily a tthe tr ee lev el

. > 25 S e v e r e F oliar Injur y High V isible injur y leading t o changes in structur e and func tion of the ec osyst em. S our c e : Smith, G.C. FHM sec ond o z one bioindicat or w o rkshop – summar y of pr oc eedings . Unpublished manuscript. 12 p

. On file with: USD A F o r est S e r vic e , F o r est Health M onit oring P r og ram, P
. O
. Bo x 12254, Resear ch T r iangle P a rk, NC 27709

8 Ambro se, M J .; C o nk l i n g, B.L., ed s. I npr es s. F o r e s tH e alth M o nitorin g 2005 national t e chnical r e p o r t. G e n . T e ch . Re p. A s h e vi l l e , NC: U
. S
. D e par t m e nt o f Agricultur e F o r e s tSer vice, S o uth e rn Re search Station
. S e c tion 3 — En vir onmental Results 25NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F igur e 16: Av erage Annual Biosit e I ndex b yEc or eg ion S e c tion, 1999–2002

Note: T able 3 pr o v ides a description of each cat egor y in the Oz one Biosit e I ndex. S our c e : F o r est Health M onit oring 2005 National T echnical Repor t 9

9 Ambro se, M J .; C o nk l i n g, B.L., ed s. I npr es s. F o r e s tH e alth M o nitorin g 2005 national t e chnical r e p o r t. G e n . T e ch . Re p. A s h e vi l l e , NC: U
. S
. D e par t m e nt o f Agricultur e F o r e s tSer vice, S o uth e rn Re search Station
. S e c tion 3 — En vir onmental Results 26NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Section 4 — Compliance and Mar ke t Activity

S o urces achi e ved over 99 p e rcent c ompl i ance with th e NO B u dg et Tr ad in g P r ogr a m (NB P ) in x 2005. Thi s se ction examin es c ompl i ance und e r th e NB P in 2005 and r e vi e w s al lowance tr ad in g and pricin g tr end s in thi s maturin g market. I n ad d i tion , thi s se ction r e vi e w s th e monitorin g and c o ntrol m e tho d s employe d b y s o urces to m e et progr a m r e quir em ents. 

## 2005 C omplianc e Results Un der t h e NB P , sour ces m u s thold s u f f icien t al lowances to c o ver th eir o zon e seas on nitrog en oxi d es (NO x ) emi s s ions each year . S o urc e s can mai n tai nt h e al l o wa nces i nco mp l i a n ce acco u n ts (e s t abli sh ed for each unit) or in an over dr aft ac c o unt (e s t abli sh ed for each faci lit y

with mor e than on e unit). Th e s o urces ha ve a 2-month p e rio dfol l owin g th e end o f th e c o ntrol p e rio dto bu y or sel lal lowanc e s and/or move al lowanc e s b e t we e n ac c o unts to ens u r e th eir emi s s i ons do not exc e e d al lowanc e s h e l d . Af t e r th e 2-month p e rio d , EP A r e c o nci l e s emi s s ions with al lowanc e hol d in gs to d e t e rmin e progr a m c ompl i ance. So u r ces ma y

not t r a n s f e ral l o wa nces u n t i la n n u al r e c o nci l i ation i s c ompl e t e . Th er e wer e 2,570 units af fe ct ed und e r th e NB P in 2005. O n l y

thr e e NB P s o urces (4 units total) d i d not hol ds u f f ici e nt al lowanc e s to c o ver th eir emi ss i ons. T a

bl e 4 s u mmari zes th e al lowance r e c o nci l

i ation pro ces s for 2005.



### T

able 4: NO x 

### Allo wanc e Rec onciliation the Summar y f or the NO x 

### Budget Tr ading P r og ram, 2005 T otal Allo w anc es Held for Rec oncilia tion (2003 thr ough 2005 V i n tages) 729,326 Allo w anc es Held in C omplianc e or O v er dr af t A c c oun ts 700,782 Allo w anc es Held in O ther A c c oun ts* 28,544 Allo w anc es D educ t ed in 2005 534,005 Allo w anc es D educ t ed for A c tual Emissions 529,830 A dditional Allo w anc es D educ t ed under P r ogr essiv e F l o wC o n t r ol (PFC ) 4,168 T ermina tion of 2004 Ear ly Reduc tion Cr edits ( or C omplianc e S u p plemen t P ool) Allo w anc es** 7 B ank ed Allo w anc es ( C arried in t o 2006 O z one S eason) 195,321 Allo w anc es Held in C omplianc e or O v er dr af t A c c oun ts 160,604 Allo w anc es Held in O ther A c c oun ts*** 34,717 P enalt y Allo w anc es D educ t ed**** (fr om F utur e Y ear Alloca tions) 12 * O ther A c c ounts r e f ers t o general ac c ounts in the NO x Allo wanc e Tr ack ing S y st em (NA T S) that can be held b yan y sour c e , individual , or other or ganization, as w ell as stat e ac c ounts
. ** C omplianc e sup plement pool ( CSP) allo wanc es can only be used f or 2 y ears . CSP allo wanc es not used f o r r e c onciliation in 2005 ha v e been r etir ed permanently

. *** T otal includes 6,173 new unit allo wanc es r eturned t o stat e holding ac c ounts
. **** T hese penalt y deduc tions ar e made fr om futur e vintage y ear allo wanc es , not 2005 allo wanc es . An additional 264 penalt y allo wanc es ar e o w ed b yone sour c e and will be deduc t ed in the futur e . S e c tion 4 — C omplianc e and M a rket A c tivit y 27NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



## Bank ing in 2005 and F l o wC o n t r o l in 2006 Un d e r cap and tr ad e progr a ms in gen e r al , and th e NB P s p e c if ical l y

, b a nkin g al low s c omp ani e s to d e cr ease emi s s ions b e low th e amount o f al lowan c e s th e y h o l dan d th en s a ve th e unu s ed al lowances for futu r e use. Bankin g r e s ults in en vi

ronm ent al and h e alth b e n e f i ts earl i e r than r e quir ed and provi d e s an a vai l a bl e p o ol o f al lowanc e s that c o ul d ad dr e s s un exp e ct ed e vent s, or s m o o th th e tr ans i tion into d e e p er emi s s ion r e ductions. F i gur e 17 show s th e numb er o f al lowanc e s al locat e d each ye ar , th e al lowanc e s b a nked from th e pr e vious ye ar , and th e total o zon e seas on emi ss i ons for NB P s o urces from 2003 to 2005. S o urces banked over 195,000 al lowances in th e 2005 o zon e seas on ( s e e T a

bl e 4), wh ich wi l lb e a vai labl e for use in 2006 for progr a m c ompl i ance. Thi s i s ab out 6 p e rcent lower than th e n e arl y

208,000 al lowances s o urces b a nked b y th e end o f th e 2004 o zon e seas on , wh ich wer e a vai l a bl e for use in 2005 ( a s shown in F i gur e 17). Th e NB P ’s progr e s s ive f l ow c o ntrol provi s ions wer e des i gn ed to d i scour a g e ext e ns ive use o f banked al lowances in a p ar t icul ar o zon e seas on . F l ow c o ntrol i s trig g e r e d wh en th e total numb er o f

al l o wa nces ba n ke df o ral l so u r ces ex cee d s 1 0 p e rcent o f th e total r e gional budg et for th e n e xt year . Wh en thi s o c curs, EP A calcul at e s th e f l ow c o ntrol r atio b y d ivi d i n g 10 p e rcent o f th e total re gi o n alN O x tr ad in g budg et b y th e numb er o f ba n ke dal l o wa nces ( a larg e rba n k willr e s ul ti na s m al l e r f l ow c o ntrol r atio ). Th e r e s ultin g f l ow c o ntrol r atio e s tabl i s h e s th e p e rcenta g e o f b a nked al lowanc e s that can b e d e duct ed from a s o urc e ’s ac c o unt on a r atio o f on e al lowanc e p e r ton o f emi s s i ons. Th e r e mainin g b a nked al lowances, if used , mus tb e d e duct ed at a r at e o f t w o al lowanc e s p e r on e ton o f emi s s ions. I n2005, th e f l ow c o ntrol r atio was 0.25, and 4,168 ad d i

tional al lowanc e s wer e d e duct ed from th e al lowanc e b a nk und e r th e f l ow c o ntro l provis i ons. F l ow c o ntrol wi l lb e trig g e r e d a g ain in 2006, at a sl i ghtl y

high er r atio o f 0.27 ( s e e “ F low Control W i l lA p pl y in 2006, ” p a g e 29, for d e t ai l s )
.NOxEmissions (ThousandTons) 

### F i gur e 17: NO x 

### Allo wanc e Allocations and the Allo wanc e Bank, 2003–2005 800 700 600 500 400 300 200 100

0 2003 2004 2005 Oz one S e a s on Banked Allowances from Previous Year Allowances Allocated C o ntr ol P eriod Emissions Notes:
• T he 2003 emissions and allocations t otals includes only the OTC stat e s . T he 2004 emissions t otal includes the OTC stat e s emissions (fr om M a y 1 t o S ept ember 30) plus the non- OTC stat es emissions (fr om M a y 31 t o S ept ember 30).
• Allo wanc es allocat ed include base budget, c omplianc e sup plement pool ( CSP), and opt-in allo wanc es . CSP allo wanc es ma y not be used bey ond the 2005 o z one season. F or mor e inf ormation on allo wanc e allocations , visit w w w .epa.go v/airmarkets/f edno x. S our c e : EP A
28 S e c tion 4 — C omplianc e and M a rket A c tivit yNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F l o wC o n t r ol W ill A p ply in 2006 — Ho w W ill I t A f fe c t S our c e s? 2006 Reg ional Budget: 520,957 Allo wanc es Banked Allo wanc es af t er 2005: 195,321 Allo wanc es F l o wC o ntr ol T r igger : 195,321/520,957 = .375 (> than 10 per c e nt), Tr iggering F l o wC o ntr o l f or 2006

• T he 2006 flo w c o ntr ol ratio = 0.27 (det ermined b ydividing 10 per c e nt of the t otal r e g ional trading budget b ythe t otal number of banked allo wanc es , or 52,096/195,321).

• T he flo w c o ntr ol ratio ap plies t o banked allo wanc es in each sour c e ’ s c omplianc e and o v er draf t allo wanc e ac c ounts at the time of c omplianc e r e c onciliation. F or example:

– I f a sour c e holds 1,000 banked allo wanc es at the end of 2006, it can use 270 of those allo wanc es on a 1-f or-1 basis and the r emaining 730 allo wanc es on a 2-f or-1 basis

.

– I f the sour c e used all 1,000 banked allo wanc es f or 2006 c omplianc e , the banked allo wanc es c ould c o v er only 635 t ons of NO x emissions (i.e ., 270 + 730/2).


## NO x 

## A llo w anc e Tr ading in 2005 Th er e ar e thr e e main t y

p e s o f al lowance tr ansactions:

• Tr a ns fers within a c omp an y or b e t we e n r e l at e d entiti es (e.g., hol d in g c ompan y tr ans f ers to a s m al l op er atin g s ubs i d i ar y ), includ in g tr ans f ers b e t we e n a unit c ompl i anc e ac c o unt and an y acco u n the ldb y a

co mp a n y

wi t ha no wne r s h ip int e r e s tin th e unit.

• Tr a ns fers b e t ween se par at e e c onomic entiti es. Thi s ma y includ e c ompani e s with c o ntr a ctual r e l ationships s u ch as p o wer purchase a gr e em e nts, but exclud es p ar e nt-s ubs i d i ar y t y

p e s o f r e l ationships. Th e se tr ans f ers ar e cat egori z ed b r oadl y

as “ e co no m i c all y

s i gn ific a n tt r ades
. ”

• Tr a ns fers from or to a s t at e as al lowanc e al locations or al lowanc e s u rr end e rs. I n2005, e c onomical l y s i gnif icant tr ad es r e pr esent ed ab out 30 p e rcent o f th e total tr ans f ers b e t we e n entiti e s oth e r than a s t at e. Th er e wer e ap proximat el y 228,000 al lowances in v o l ved in e c onomical l y s i gnif icant tr ad es in 2005, an incr ease o f ab out 34,000 al lowances from 2004 ( s e e F i gur e 18). Th e e c onomical l y s i gnif icant tr ad es provi d e a s t ron g ind i cator o f tr u e market act ivi t y

, bec ause t h ey r e p r ese n ta nactu al exchan g e o f as sets b e t ween unaf f i l i at ed p ar t icip ants. I n dus t ri al s o urc e s ac c o unt e d for over 6 p e rc ent o f

th e e c onomical l y s i gnif icant tr ad e v o lum e in 2005, wh ich was down from 2004 l e vel s. Thi s l e vel o f

activi t y

i s prop or tional to th e indus t ri al unit s ’ r e gional emi ss ions c o ntri bution o f sli ghtl y

l e ss than 7 p e rcent. Th e highl e vel o f 2004 tr ad in g activi t y

for indus t ri al s o urc e s was th e r e s ult o f a s i gnif icant numb er o f al lowances purchased b y thi s group o f s o urces. I n2005, that tr end was r e versed as th e indus t ri al s o urc e s tr ans f err e d far mo r e al l o wa nces t o ot h e r s t h a nt h ey r e ceive d . I n mo s ttr ad es, indus t ri al s o urces ar e tr ad in g with el e c tric gen e r atin g c omp ani e s, with onl y

a fe w tr ad e s in v o l vin g indus t ri al s o urc e s on b o th s i d e s of th e tr an s a ction
.

S e c tion 4 — C omplianc e and M a rket A c tivit y 29NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results

NO x al lowance prices in 2005 wer e sl ightl y

lower 

### F i gur e 18: Estimat ed Volumes of and s o m e wh at l e s s v o l ati l e than durin g 2004 ( s e e 

### Ec onomically Sig nificant T r ades under the F i gur e 19). P o t e nti al r e as ons for th e price d e cl in e 

### NO x 

### Budget T r ading P r og ram, 2003–2005 ma y includ e s o urces ’ n e ed to use r e mainin g c o mpli a nc e s uppl e m e nt p o ol ( C SP ) al lowanc e s b e for e 250, 000

T o t a l A l l o wanc es T raded A llowances Traded by Industrial Sources 2003 2004 2005 I n t e rs tat e Rul e ( C AIR) f i nal i zed in M arch 2005. I n 150, 000 ad d i tion , th e g e n e r al price d i f f er enti al b e t ween
100, 000 vi nta g e ye ars 2004 and 2005 vers us 2006 throu gh 2008 r e f l e c ts th e d i sc ount ap pl i e d to b a nked 50, 000 al lowanc e s as a r e s ult o f f

l ow c o ntrol
.
0 NO x al lowance prices can r e f l e ct market uncert ainti e s as c omp ani e s e valuat e on goin g tr end s in th eir 2005 expir ation and incr eased c o nf i d ence 200, 000 from und e rs tand in g th e impacts o f th e Cl ean A i rNOxAllowances

Note: A s par t of c ompiling this inf ormation f or the 2005 r epor t, EP A has r eexamined all allo wanc e transf er data fr om 2003 and 2004, and has r evised the numbers f or 2003 and 2004 pr esent ed in pr evious r epor ts . Generally , EP A’

s estimat e of ec onomically sig nificant trade v olume in those y ears has decr eased based on fur ther analy sis of outside data sour c es (such as c ompan y Web sit es and S ecurities and Ex change C ommission filings) t o identify c o rporat e r elationships and o wnership int e r ests in units
. T he 2003 data also ha v e been adjust ed t o c o rr ec t a c omputational err o r. Because trades ar e not r epor t ed b ymarket par ticipants with r espec t t o whether they ar e ec onomically sig nificant, EP A pr esents these data as a general estimat e only

. S our c e : EP A



### F i gur e 19: V i ntage Y ear NO x 

### Allo wanc e P r ic es b yM o nth of Sale f or the NO x 

### Budget T r ading P r og ram Vintage Year NO xAllowance Price 9,000 c o ntrol ins t al l ations, en ergy d e mand , and oth e r ext e rnal factors that af fe ct th e over al l c o s t s o f c o ntro l
. Ad ditional inf l u e nc e s on al lowanc e pricin g includ e progr e s s ive f l ow c o ntrol and int e gr ation with oth e r emi ss ion c o ntro l progr a ms, s u ch as C AIR
. 

## C o n tinuous Emission Monitoring S ystem ( CEMS) Results I nor d e r for NO al lowanc e s to b e ac cur at e l y x tr acke d and tr ad ed , NB P s o urces mus tuse c o ns i s t ent emi ss ions monitorin g pro c edur e s to d e t e rmin e th eir emi s s ions. A c cur at e and c o ns i s t e nt m o nitorin g ens u r e s that al l al lowanc e s in th e NB P ha ve th e sam e valu e ( i .e., a ton o f NO x emi ss ions from on e NB P s o urc e i s equal to a ton of

N O x emi s s ions from an y oth e r s o urc e in th e progr a m ). S o urc e s ar e r e quir ed to c o nduct s t ring e nt qual it y as s u r a nce t e s t s o f th eir monitorin g

4,000

0 5,000 6,000 7,000 8,000

Oct ’02 Feb ’03 Jun ’03 Oct ’03 Feb ’04 Jun ’04 Oct ’04 Feb ’05 Jun ’05 Oct ’05 Feb ’06 2003 2004 2005 2006 2007 2008 onl y

ve ri f y

th at th e m o nitorin g sy s t em s ar e m e a s ­ 3,000 urin g ac cur at e l y

, but al s o c omp ar e m e as ur ed 2,000 data t o a s t a n dar dr e f e r e nce me t h od
. An al ys is o f 1,000 th e qual it y-as s ur ed C E MS d ata r e p o r t ed b y NB P s o urces in 2005 c o n vincin gl y

d e mons tr at es th e ac cur a c y o f th e emi s s ion d at a . sy s t ems, s u ch as d ai l y cal i br ations, quar t e rl y l i n-Nominal Dollars per Ton earit y

ch e c k s, and semi-annual or annual r e l ative ac cur a cy t e s taud i ts (RA T

A s ). Th ese t e s t s not

S our c e : E v olution M a rkets , LLC and C a nt or En vir onmental Br okerage I n2005, b o th th e el e c tric ge n e ra tin g units and indus tri al units pas s ed at l e as t 98 p e rcent o f th e qualit y as s uranc e t e s t s re quired o f th eir monitorin g

30 S e c tion 4 — C omplianc e and M a rket A c tivit yNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results

sys t ems. I n dus tri al s o urces, man y

o f w h ich ha ve onl y

b e en monitorin g und e r EP A

’ s d e t ail ed monitorin g pro c edures (40 C F R P art 75) s i nce 2003, wereabl eto p e r f orm at n e ar l y

th e sam el e vel as e l e c tri cge n e ra ti n g un it s , m any of w h i c hh a veb e e n monitorin g und e r P art 75 for morethan a d e cad e. Th e NB P s o urces r e p o r t ed qual it y-as s ur ed emi s s ion d ata for mor e than 99 p e rcent o f th eir op er atin g hours in 2005. P ar t75 r e quir es c o nser vat ive l y

h i ghs ub s t i tu te data val u es t o be r epo rte d for mi s s in g d ata p e rio d s, but s ubs titu t e d ata wer e used l e s s than 1 p e rc ent o f th e tim e in 2005 and th er efor e had l i ttl e impact on th e NO x emi ss ions r epo rte db y NB P so u r ces . 

## C omplianc e Options U sed b yNO x 

## Budget Tr ading P r ogr am S our c es in 2005 S o urces ma y sel e ct from a vari et y o f c ompl i ance options to m e et th e emi s s ion r e duction t arg ets o f th e NB P in wa y s that b e s tf i t th eir own circums t ances, s u ch as:

• D e c r e as in g or s t oppin g gen e r ation from unit s with hi ghNO x emi ss ion r at e s, or shiftin g to lower emitt in g units, durin g th e o zon e seas on .

• U s i n g N O x c ombus tion c o ntro l s that mo dify or optimi z e th e b a s i c c ombus tion pro c e s s to c o ntrol th e formation o f NO
. x
• U s i n g ad d-on emi ss ion c o ntro l s, s u ch as sel e ctive catal ytic r e duction ( S C R) or sel e ctive noncat al ytic r e duction ( S NC R).

• P urchas in g ad ditional al lowanc e s from oth e r market p ar t icipants wh o se emi s s ions wer e lower than th eir al lo cations. B e for e impl em ent ation o f th e NB P , a l arg e numb e r o f el e c tric gen e r atin g units and s o m e industri al unit s ad d e d c ombus tion c o ntro l s to m e et applicabl e NO x emi ss ion limit s o f eith er th e Aci d R ain P r ogr a m (ARP ) or s t at e r e gul ations. F o r b o i l ers, furnaces, and h e at ers, NO x c ombus tion c o ntrol s includ e low NO burn er and over f i r e air x t e chnologi es, wh ich mo d i fy th e c ombus tion 

### Monitoring Options Av ailable to S our c es EP

A has dev eloped detailed pr oc edur es (40 CFR P a r t 75) t o ensur e that sour c es monit or and r epor t emissions with a high deg r ee of pr ecision, ac curac y , r eliabilit y , and c onsist enc y. C oalfir ed units ar e r equir ed t o use CEMS f or NO x and stack gas flo w rat e (and if needed , C O 2 or O 2 and moistur e), t o measur e and r e c o r d their NO x emissions . Oil- and gas-fir ed units ma y alt ernativ ely use a NO x CEMS in c onjunc tion with a fuel flo wmet er t o det ermine NO x emissions . F or oil- and gas-fir ed units that ar e either operat ed infr equently t o pr o vide po w er during periods of peak demand , or that ha v e v e r ylo w NO x emissions , P a r t 75 pr o vides lo w- c ost alt ernativ es t o CEMS f or estimating NO x emissions
.

pro ces s to r e duce formation o f NO x from nitrogen found in th e c ombus tion air and fu el
. Ad d-on c o ntrol t e chnologi es, s u ch as S C R or SNC R , ha ve al s o b e en fr equ e ntl y

ins t al l e d for NO x c o ntro l
. Th e majorit y

o f unit s that ins t al l ad d-on c o ntrol s use th em in c o njunction with th eir exi s tin g c ombus tion c o ntro l s to achi e ve gr eat e r emi s s i on r e ductions. S C R and S N C R ar e c o ntrol t e chno logi e s that a c hi e ve NO x re d u c t i o n s b y inje ctin g ammoni a , ur ea , or anoth e r NO x -r educin g ch emical into th e f l u e g a s downs t r e am o f th e c ombus tion unit to r e act with NO x , formin g el em e nt al nitrogen (N 2 ) and wat e r . S C R , wh ich ad d s a cat al y s tto al low th e r e action to o c cur in a lower t e mp er atur e r a n g e, can b e appli e d to a wi d e r r a n g e o f s o urc e s than SNC R and i s cap a bl e o f

gr eat e r NO x r e moval r at e s. 

### NO x 

### C o n t r ols U sed in 2005 S o urces s ubje ct to th e NB P ar e r e quir ed to r e p o r t p o l l ution c o ntro l equipm ent information , includin g ins t al l ation d at e s, in monitorin g pl ans s ubmitt ed to EP A. F o r thi s r e p o r t, EP A verif i ed th e s o urce-r e p o r t ed EP A emi s s ion c o ntrol equipm ent d at a with s t at e a g en ci e s, with an emph a s i s on c o al-f ir ed units, to c o nf irm th e f i nd in gs. 10

10 T w o af fe ct ed s t at es ar e s t i l lg ath erin g d ata ; al l oth e rs ha ve provi d ed upd at e d c o ntrol s t atus information
. S e c tion 4 — C omplianc e and M a rket A c tivit y 31NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F igur e 20: Number of A f f e c t ed Elec tric G enerating Units (EGU s) and P e r c ent of T otal Oz one S eason Elec tric G eneration b yF uel and C o ntr ol T ype f or 2004 and 2005
2004 EG U P opul a t i on (T ot a l , 2 , 232 U n i t s ) 2 0 0 5 EG U P o pul a t i on (T ot a l , 2 , 232 Units) 203 219 9% 10% 522 508 23% 23% 383 375 17% 17%

126 6% 136 6%

988 1,004 45% 44%

2004 EG U G e n e r a t i o n (T o t a l , 547, 65 9 GWh) 2 0 0 5 EG U G e ne r a t i on (Tot a l , 5 9 6, 2 47 G W h) 64,371 8 6 , 383 2 5 ,408 12% 11,585 2 7,226 14% 2%

219,9 7 5

40% 5%

226,320 41% 5% 14,905

213,555

36% 2 5 4,178 43 % 2%

A dd- on C o nt r o l l e d C o al Co m b u s t i o n Co n t r o l l e d Co a l Un c o n t r o l l e d Co a l C ont r o l l e d O i l and G a s U n c o nt r o l l ed O i l and G a s Note: A dd- on c o ntr ols f or c oal units include SCR and SNCR. C ombustion c o ntr ols include various lo w NO x burner c o ntr o l t echnolog ies , o v er-fir e air , wat er injec tion, and others

. S our c e : EP A

EP A used th e input from th e s t at e a g enci es to up d at e d at a wh er e n e ed ed . EP A c o ntinu e s ef for t s to verif y

that c o ntro l equipm ent d at a ar e a c cur at e and c ompl e t e . F i gur e 20 show s th e br eakdown o f how el e c tric gen e r atin g unit s ha ve employed emi s s i on c o ntrol s as o f th e 2005 o zon e seas on c ompar ed to th e 2004 o zon e seas on . Th e char ts includ e th e r e s ul t s b r o ke nd o wnb o t hb y n u mb e ro f u n i t s a n d b y th e p e rcent o f total o zon e seas on g e n e r ation
. I nth e 2005 o zon e seas on , th er e wer e 2,232 el e c tri c gen e r atin g unit s af fe ct ed un d e r th e N B P
. Th e r e s ult s sh ow th at alth ou ghth e numb er of c o alf i r e d unit s with NO x emi s s i on c o ntrol s ( i .e., ad don c o ntro l s and/or c ombus tion c o ntro l s ) r e pr esents l e s s than 30 p e rcent o f th e total numb e r o f el e c tric g e n e r atin g units, thi s se ctor r e pr esent ed almo s t80 p e rcent o f total g e n e r ation
. Un c o ntrol l ed units, eith er c o al or g a s and oi l , r e pr e sent ab out on e-thir do f al l units, but l e s s than
32 S e c tion 4 — C omplianc e and M a rket A c tivit yNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F i gur e 21: Number of A f f e c t ed I ndustrial Units and P e r c ent of T otal Oz one S eason St eam Output b yF uel and C o ntr ol T ype f or 2004 and 2005
2004 I ndus t r i a l P opul a t i o n (Total, 3 4 0Uni t s ) 2 0 0 5 I ndus t ri a l P o pul a t i on (Total, 338 U n i t s ) 9 10 3% 53 3%

133 39% 16%

75 22% 70 20 % 134 40% 54 62 18%

78 23% 16%

2004 Industrial Steam Generation (Total, 2005 I n d u s t r i a l S t e a m G e n e r a t i o n (T o t a l , 233,424 million pounds - steam) 216, 170 m i l l i o n p o u n d s -s

t e a m ) 10,064

4% 12,331 47,4 9 4

A dd- on C o ntr o l l e d C o al Co m b u s t i o n Co n t r o l l e d Co a l U n c o nt r o l l e d C o al C o nt r o l l ed O i l and G a s U n c o nt r o l l e d O i l and G a s 6% 87,673 20 % 38 % 70,313 33% 51,717 24%

4 8 , 743 41,971 39,450 21% 19% 17 % 39,838 18%

S our c e : EP A 10 p e rcent o f th e total g e n e r ation
. F i gur e 21 show s s i mi l ar information for indus t rial units b a sed on s t eam out p ut r ath er than el e c tric g e n e r ation . I nth e 2005 o zon e seas on , th er e wer e 338 indus t ri al c o al-f ir ed units af fe ct ed und e r th e NB P
. Based on r e p o r t ed monitorin g pl an d at a , it app e ars that onl y

ab out 3 p e rc ent o f th e indus t ri al c o al-f ir ed units use ad d-on NO x c o ntrol s; th er e wer e no case s wh er e a c o al-f ir ed indus t ri al unit r e p o r t ed us in g S C R
. E x c e pt for tu rb in es that can use a r e l ativel y

s i mpl e form o f S C R , th e t e chno logy i s t y

pical l y limit e d to l arg er c o al-f ir ed el e c tric gen e r atin g units that can achi e ve s i gnif icant emi s s i on r e ductions in a c o s t

ef

fe ctive wa y

. O ver al l , th e numb er o f el e c tric gen e r atin g unit s and indus t ri al units with NO co n t r o ls i n c r e a s e d x from th e 2004 to th e 2005 o zon e seas on . F o r exampl e, th e numb er o f c o ntrol l ed c o al-f ir ed unit s (which includ e s unit s that ad d e d c ombustion and/or ad d-on c o ntrol s ) incr eased b y 18 from 2004 to 2005. Th e majorit y

o f c o al-f ir ed units with n e w ad d-on c o ntrol s in 2005 had pr eexi s tin g c ombus tion c o ntro l s.
S e c tion 4 — C omplianc e and M a rket A c tivit y 33NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



### F ocus on A cid R ain P r ogr am Units in the NBP EP

A c onduc t ed a study that examined the NO x rat e per f o rmanc e of 465 units in the NBP r e g ion. T hese units w e r e selec t ed f or this study because they w e r e also r equir ed under 40 CFR P a r t76 of the A cid R ain P r og ram t o meet NO x emission rat e limits

. T he specific g r oup of units f or this study c onsist ed of dr y bott om wall fir ed and tangentially fir ed boilers which had NO x c ombustion c o ntr ols in both the 2000 and 2005 o z one seasons but did not ha v e add- on c o ntr o ls at the star t of 2000. T his study first quantified the a v erage o z one season NO x rat e r educ tions among this g r oup of units bet w een 2000 (when the Phase II limits t ook eff ec t) and 2005. Nex t, EP A examined ho w these units achiev ed those r educ tions . F or this study , EP

A used r epor t ed c o ntr ol equipment data, and then c o ntac t ed a subg r oup of about 60 units t o obtain mor e specific inf ormation on the methods used t o lo w er NO x rat e s . T he r esults ar e summariz ed belo w. Reduc tions in Av er age NO x Ra t e s B e tw een 2000 and 2005 0.500 0.450 Bet w een 2000 and 2005, the a v erage o z one season NO x emission rat e f o r all 465 units decr eased b ymor e than 50 per c e nt, while the units ’ heat input r e mained c omparable

. T he a v erage o z one season NO x rat e f or wall-fir ed boilers dr op ped b y55 per c e nt, whileNOXRate (lb/mmBtu) 0.400 0.350 0.300 0.250 0.200 0.150 0.100 2 0 0 0 Ozone Season 2 0 0 5 Ozone Season

tangentially fir ed boilers achiev ed 0.050 r educ tions of 47 per c e nt. I n 2005, both 0.000 wall-fir ed and tangentially fir ed boiler A l l U n it s Dry Bottom Wall-Fired Tangentially Fired Boilers t ypes operat ed at emission rat es belo w Boilers the limits set in P a r t 76. T he g r aph and S our c e : EP A table summariz e the NO x rat e r eductions b yboiler t ype .

Unit T ype ARP Phase II NO x Ra t e limits (lb/mmBtu) 2000 Average Oz one S eason NO x Ra t e (lb/mmBtu) 2005 Average Oz one S eason NO x Ra t e (lb/mmBtu) P e rcent Reduc tion from 2000 t o 2005
All Units (465) NA 0.403 0.194 52% Dr y Bott om WallF i r e d Boilers (221) 0.46 0.432 0.193 55%

T

angentially F i r e d Boilers (244) 0.40 0.373 0.196 47%

Ho w S our c es A chie v ed T hese Reduc tions Based on the r epor t ed c o ntr ol equipment data and the additional c o ntac t with a subset of sour c e s , EP A f ound that out of 465 units:

• 154 units installed add- on c o ntr o ls (SCR or SNCR). Bet w een the 2000 and 2005 o z one seasons , the a v erage N O x rat e f o r this g r oup of units declined b y70 per c e nt (fr om 0.416 t o 0.123 lb/mmBtu) fr om their levels prior t o installing add- on c o ntr ols

. T his is equal t o a decr ease of o v er 267,000 t ons of N O x emissions
. • 311 units operat ed with existing , modified , and/or additional advanc ed NO x c ombustion c o ntr ols

. Bet w een the 2000 and 2005 o z one seasons , the a v erage NO x rat e f or this g r oup of units declined b y 26 per c e nt (fr om 0.388 t o 0.288 lb/mmBtu). T his is equal t o a decr ease of o v er 82,000 t ons of NO x emissions . F r om the t elephone c o ntac t, EP A f ound that sev eral ap pr oaches w e r e used b ythese sour c e s including: installing advanc ed lo w NO x burner t echnology ; adding o v er fir e air or c oal r eburn; and optimizing existing lo w NO x burners and modifying boiler charac t e ristics , such as air-t o -fuel ratio

. I n addition, sour c es not ed the c o -benefits fr om blending or swit ching t o sub -bituminous c oals

.
34 S e c tion 4 — C omplianc e and M a rket A c tivit yNO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Section 5 — Future NO x 

# Reductions and Ozone Improvements: T ransition to the Clean Air Interstate Rule 

# B ui l d in g up on th e nitrogen oxi d e s (NO ) x emi s s ion r e ductions o f th e NO x Bu d g e t Tr ad in g P r ogr a m (NB P ) and th e A c i dR ain P r ogr a m , th e Cl ean A i r I n t e rs tat e Rul e ( C AIR), i s s u ed M arch 10, 2005, wi l lp e rman entl y lower p o wer indus t r y emi s s ions o f s ulfur d i oxi d e ( S O 2 ) and NO x in th e eas t ern Un it ed St at e s, achi e vin g s i gnif icant r e ductions o f th ese p o l l utants. I nad d i

tion to ad dr e s s i n g ozon e att ainm e nt, C AIR ass i s t s s t at es in attainin g th e PM2.5 N ational Ambi ent A

i r Qu al it y Stand ar d s (N A

A Q S) b y r e ducin g tr anspo rte dp r ec u r so r s , S O 2 and NO x . C AIR ac c o mpl i s h e s thi s b y cr eatin g thr e e se par at e progr a ms: an o zon e seas on NO x progr a m and annual NO x and S O 2 progr a ms. E a ch o f th e thr e e progr a ms use s a t w o-phased ap pro a ch , with d e cl inin g emi ss ion caps in each phase b a sed on hi gh l y

c o s t

ef

fe ctive c o ntrol s on p o wer pl ants. Th e f i rs t phase wi l lb e gin in 2009 for th e NO x ozon e seas on and annual progr a ms and 2010 for th e S O 2 annual progr a m . Th e se c o nd phase for al l thr e e progr a ms wi l lb e gin in 2015. Simi l ar to th e NO x S IP Cal l , C AIR gives s t at es th e f l exi b i l it y to r e duce emi s s ions us in g a s t r at e gy that b e s ts u its th eir ci r c u m s t a n ces a n d p r ovides a nEP A

- ad m i n i s t e r e d , r e gional cap and tr ad e progr a m as on e option
. Stat es ar e now cho o s i n g th e s t r at e gy that b e s t enabl e s th em to achi e ve th ese mand at ed r e ductions and pl ans ar e du e to b e s ubmitt e d to EP A for ap proval b y th e fal lo f 2006.



### F i gur e 22: Tr ansition fr om the NO x 

### Budget Tr ading P r og ram t o the Clean Air I n t erstat e Rule

Note: T he aff e c t ed por tions of M issouri and Geor g ia ar e r equir ed t o c omply with the NO x SIP C all as of M a y 1, 2007. Ho w e v e r , EP A has sta y ed the NO x SIP C all r equir ements f or Geor g ia while it r esponds t o a petition t o r e c onsider Geor g i a ’ s inclusion in the NO x SIP C all

. S our c e : EP A

S e c tion 5 — F utur e NO x Reduc tions and Oz one I mpr o v ements: T r ansition t o the Clean Air I n t erstat e Rule 35NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results



## Ho w C AIR A f fe c ts NO x 

## Budget Tr ading P r ogr am Sta t es I n2009, NB P s t at es af fe ct ed und e r C AIR wi l l tr ans i tion to th e C AIR annual and/or o zon e seas o n progr a ms. A l l NB P s t at es, with th e exce ption o f

Rho d e I s l a nd , ar e includ ed in th e C AIR NO x o zon e seas on progr a m ( s e e F i gur e 22). Stat es can m e et th eir NB P obl i g ations us in g th e C AIR NO x o zon e seas on progr a m and , as a r e s ult, C AIR al low s s t at es to includ e al l o f th eir NB P s o urces in th e C AIR NO x ozon e seas on progr a m . EP A al s o wi l lal low Rho d e I s l a nd to opt into th e C AIR NO x ozon e seas on progr a m s o that it can c o ntinu e to p ar t icip at e in an int e rs t at e tr adin g progr a m . Th e 2009 C AIR NO ozon e seas on emi ss ion caps for x el e c tric g e n e r atin g units ar e at l e as t as s t rin g ent as th e NB P , and in s o m e s t at e s ar e ti gh t e r . I f a s t at e includ es indus t ri al units, th e tr ad in g budg et for tho se units r e mains th e sam e as th e NB P
. C AIR al s o al low s s o urc e s to b a nk and use pr e2009 NB P al lowances for th e C AIR NO ozon e x seas on progr a m c ompl i ance on a 1:1 b a s i s, th er eb y givi n g s o urces th e incentive to b e gin r e ducin g th eir emi s s ions now
. P r ogr e s s ive f l ow c o ntrol wi l l b e el iminat ed as o f 2009 with th e s t ar t o f th e C AIR progr a m . 

## C AIR B enefits I n2004, EP A o f f i ci al l y

d e s i gnat ed 103 ar eas in th e eas t ern Un it ed Stat es as 8-hour o zon e " n onattainm e nt ar eas". Based on 2003 to 2005 air monitorin g d ata , n e arl y

70 p e rcent o f th em (68 ar eas hom e to ab out 20 mi l l ion p e opl e ) now ha ve air qu alit y th at i s b e tt er th an th e l e ve l of th e s t and ar d . I n2005, howe ver , th er e wer e s t i l l31 ar eas ( h om e to ab out 80 mi l l ion p e opl e ) that ar e not m e etin g th e 8-hour o zon e s t and ar d . C AIR wi l l h e lp brin g th e r e mainin g 31 ar eas in thi s p ar to f th e ea s t er n Un it ed St at e s into att ainm e nt with th e o zon e s t and ar d
. EP A proje c ts that in 2015, C AIR , th e NB P , and o t h e rp r o gr a m s i nt h e C AI R r e gi o nwi l lr e d u c e p o wer indus t r y o zon e seas on NO x emi ss ions by ab out 40 p e rcent and annual NO x emi s s i ons by



### F i gur e 23: Oz one and P a r ticle P ollution in the F utur e
Ozone and Fine Par ticle Nonattainment Projected Nonattainment Areas in 2010 Projected Nonattainment Areas in 2015 Areas (April 2005) after Reductions from CAIR and after Reductions from CAIR and Existing Clean Air Act Programs Existing Clean Air Act Programs

Nonattainment areas for both 8-hour ozone and fine par ticle pollution Nonattainment areas for fine par ticle pollution only Nonattainment areas for 8-hour ozone only Note: P r ojec tions c onc erning futur e lev els of air pollution in specific geog raphic locations w e r e estimat ed using the best scientific models a v ailable

. T hey ar e estimations , ho w e v e r , and should be charac t e riz ed as such in an y description. A c tual r esults ma y var ysig nificantly if an y of the fac t ors that influenc e air qualit y diff er fr om the assumed values used in the pr ojec tions sho wn her e . S our c e : EP A

S e c tion 5 — F utur e NO x Reduc tions and Oz one I mpr o v ements: T r ansition t o the Clean Air I n t erstat e Rule 36NO x Budget Tr ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results

ab out 55 p e rcent from 2005 l e vel s. EP A al s o proje c ts that C AIR and exi s tin g fed e r al and s t at e progr ams wi l lr e duce th e numb er o f 8-hour o zon e nonatt ainm ent ar eas in th e E a s tto s ix b y 2015 ( s e e F i gur e 23). Th e phase in o f cl ean d i esel en gin e s and low s ulfur fu el r e quir em ent s wi l lfurth er r e duc e ozon e and f i n e p ar t icl e p o l l ution throu ghout th e Un it ed St at e s. A d ditional l y

, s t at e s ar e w o rkin g to i d entify and impl em ent lo cal c o ntrol s to move th ese r e mainin g s ix ar eas into att ainm e nt. By 2015, th e air qual it y improvem ents und e r C AIR ar e proje c t e d to r e s ult in :

• $85 to $100 bi l l ion in annual h e alth b e n e f i ts, annual l y pr e ventin g 17,000 pr ematur e d e aths, mi l l ions o f lo s tw o rk and scho ol d a y s, and t e ns o f

thousand s o f non-fat al h e ar t att a ck s and h o spit al a d mi ssion s.

• N earl y $2 bi l l ion in annual vi s i bi lit y

b e n e f i ts in s o uth e as t e rn national p ark s, s u ch as Gr eat Smok y and S h enando ah
.
• S i g nif i cant r e gional r e ductions in s ulfur and n i t r o g e ndepos i t i o n , r e d u c i ng t h e n u mb e ro f aci d ic l ake s and s t r e ams in th e eas t ern Un it ed St at e s . F o r mor e information , vi s i t <www .e pa .gov/C AIR>.

S e c tion 5 — F utur e NO x Reduc tions and Oz one I mpr o v ements: T r ansition t o the Clean Air I n t erstat e Rule 37NO X Budget T r ading P r og ram: 2005 P r og ram C omplianc e and En vir onmental Results 

# Online Resources G ener al Informa tion:

• O f f ic e o f A

i r and R a d i ation : www .e p a .gov/o ar

– O f f ice o f A

t mo s p h e ric P r ogr a ms: www .e pa .gov/air/o ap.html

– O f f ice o f A

i r Qu al it y Pl annin g and Stand ar d s: www .e pa .gov/o ar/o aqps

• M obi l e S o urces: www . e p a . gov/otaq

• C ap and Tr ad e and Rel at e d P r ogr a ms: www .e pa .gov/airmark t

• A ir Tr end s: www .e p a .gov/air tr end s 

## NO x 

## C o n t r ol P r ogr ams:

• A ci d R ain P r ogr a m : www . e p a . gov/airmarkets/arp

• O zon e Tr ans p or t C o mmi s s i on ( O TC ) NO x B u dg et P r ogr a m : www . e p a . gov/airmarkets/otc

• N O x B u dg et Tr ad in g P r ogr a m (NB P ): www .e pa .gov/airmarkets/fednox

• C l e an A i r I n t e rs tat e Rul e ( C AIR): www .e pa .gov/cair 

## Oz one Informa tion:

• G en er al I n formation : htt p://www .e pa .gov/air/urb anair/o zon e

• U S D A F o r e s tSer vice, F o r e s tH e alth M o nitorin g P r ogr a m htt p://f hm .fs.fed .us/pubs 

## Emission Da ta and Monitoring Informa tion:

• N ational Emi s s ions I n ventor y (NEI): www
. e p a . gov/ttn/chi ef/n et

• C l e an A i r M arkets D ata and M a ps: htt p://cfpub.e pa .gov/g dm 

## Oz one Monitoring Netw orks and Da ta:

• C l e an A i r Status and Tr end s N e t w ork ( C AS TNE T): www
. e p a . gov/cas tn et

• A ir Qu al it y Sy s t ems (AQ S): www .e pa .gov/ttn/airs/airsaqs 

## O ther Emission and A ir Q ualit y Resour c es:

• G en er al I n formation on EP A A i r Qu al it y M o nitorin g N e t w ork s: www . e p a . gov/ttn/amtic

• C l e an A i r M a p p in g and An al y s i s P r ogr a m ( C MAP ): www .e p a .gov/airmarkets/cmap

• T h e Emi s s ions and G e n e r ation Re s o urces I n t e gr at ed D atabase (e G RID): www . e p a . gov/cl e an en ergy/egri d

• AIRN o w : www .e p a .gov/airnow

Online Resour c e s 38United St ates Environment al Protection Agency Of

fice of Air and Radiation Of

fice of Atmospheric Programs Clean Air Market s Division (6204J) 1200 Pennsylvania A ve., NW Washington, DC 20460 www .ep a.gov/airmarket s EP A430-R-06-013 September 2006

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