A national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

National Renewable Energy Laboratory 

Innovation for Our Energy Future 

Wind Energy and Air Emission 

Reduction Benefits: A Primer 

D. Jacobson 

D.J. Consulting LLC 

McLean, Virginia 

C. High 

Resource Systems Group Inc. 

White River Junction, Vermont 

Subcontract Report 

NREL/SR-500-42616 

February 2008 

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 
National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393 

303-275-3000 • www.nrel.gov 

Operated for the U.S. Department of Energy 

Office of Energy Efficiency and Renewable Energy 

by Midwest Research Institute • Battelle 

Contract No. DE-AC36-99-GO10337

Subcontract Report 

NREL/SR-500-42616 

February 2008 

Wind Energy and Air Emission 

Reduction Benefits: A Primer 

D. Jacobson 

D.J. Consulting LLC 

McLean, Virginia 

C. High 

Resource Systems Group Inc. 

White River Junction, Vermont 

NREL Technical Monitor: Lori Bird 

Prepared under Subcontract No. LAM-7-77553-01 

Period of Performance: August 1, 2007 — December 31, 2007 
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Acknowledgements 

The authors wish to acknowledge the support that made this report possible. The U.S. 

Department of Energy’s Wind Powering America Program funded this report. Lori Bird, Laura 

Vimmerstedt, and Larry Flowers of the National Renewable Energy Laboratory (NREL) 

provided overall guidance and detailed comments. Andrew Vanderjack of The George 

Washington University Law School provided valuable research assistance. 

In addition, we greatly appreciate the input of the following individuals, who provided comments 

during the review process: Amy Royden-Bloom of the National Association of Clean Air 

Agencies; Pam Mendelson of Navarro Research and Engineering; Tom Rawls of THR 

Associates, LLC; Elizabeth Salerno of the American Wind Energy Association; and Paul 

Denholm and Michael Milligan of NREL. 

Although we appreciate all contributions, the authors retain full responsibility for the content of 

the report. 

 1
Table of Contents 

ACKNOWLEDGEMENTS _______________________________________________ 1

EXECUTIVE SUMMARY ________________________________________________ 4

WIND ENERGY AND AIR EMISSION REDUCTION BENEFITS _________________ 6

Introduction ________________________________________________________________________________6

Zero-Emissions Wind Energy Versus Emissions from Fossil Fuel-Fired Generation _____________________6

Major Contribution of Electric Power Plant Emissions to Air Pollution and Climate Change _____________8

Wind Energy Displaces Emissions from Fossil Fuel-Fired Power Plants _______________________________9

Methodologies for Analysis of Avoided Emissions_________________________________________________11

Wind Energy Can Reduce Overall Emissions, Even Under Emissions Trading Programs________________12

State Air Quality Plans Can Recognize Air Emission Reductions Resulting from Wind Energy___________16

Wind Energy Helps to Meet Emission Caps by Reducing Pollution Control Compliance Costs ___________17

Misperceptions about Backup Generation _______________________________________________________18

Conclusion_________________________________________________________________________________18

APPENDICES _______________________________________________________ 19

Appendix A: List of References________________________________________________________________19

Appendix B: Energy Generation and Air Emissions Terminology ___________________________________25

Appendix C: Air Quality Nonattainment and State Implementation Plans: The Basics __________________27

Appendix D: Emissions Trading (Cap and Trade) Background _____________________________________29

Appendix E: Allowance Allocation to Wind Energy under the Clean Air Interstate Rule ________________31

Appendix F: Avoided Emission Rates___________________________________________________________38

 2
Table of Figures 

Figure 1: Contribution of fossil fuel-fired electric power generation to total air emissions in the 

United States. _________________________________________________________ 8 

Figure 2: Air quality nonattainment areas in the United States.__________________________ 9 

Figure 3: States covered by the U.S. EPA Clean Air Interstate Rule. ____________________ 30 

Table of Tables 

Table 1: Summary of the Health and Environmental Effects of Air Emissions from Fossil FuelFired Power Plants in the United States_____________________________________ 7 

Table 2: State Allocation of Nitrogen Oxide Allowances to Energy Efficiency and Renewable 

Energy (EE/RE) Under Clean Air Interstate Rule ____________________________ 32 

Table 3: Details of State Energy Efficiency and Renewable Energy (EE/RE) Set-Asides for 

NOx Allowances Under Clean Air Interstate Rule ___________________________ 33 

Table 4: Examples of Avoided Emission Rates for Wind Power in Selected U.S. Regions ___ 38 

Table 5: Variation in Fossil Fuel Air Emissions Rates for Major U.S. Electric Power Generating 

Companies __________________________________________________________ 40 

 

 3
Executive Summary 

This document provides a summary of the impact of wind energy development on various air 

pollutants for a general audience. The core document addresses the key facts relating to the 

analysis of emission reductions from wind energy development. It is intended for use by a wide 

variety of parties with an interest in this issue, ranging from state environmental officials to 

renewable energy stakeholders. The appendices provide basic background information for the 

general reader, as well as detailed information for those seeking a more in-depth discussion of 

various topics. 

Zero-Emissions Wind Energy Versus Emissions from Fossil Fuel-Fired Generation: One of 

the obvious benefits of wind energy is that the production of electricity from this source involves 

zero direct emissions of air pollutants. In contrast, fossil fuel-fired electric generation from coal, 

oil, or natural gas results in substantial direct emissions of numerous air pollutants that have 

adverse impacts on public health and the environment. 

Electric generation from fossil fuel-fired power plants is a leading source of air emissions that 

harm human health and contribute to global climate change – resulting in 39% of carbon dioxide 

(CO2) emissions, 22% of nitrogen oxide (NOx) emissions, 69% of sulfur dioxide (SO2) 

emissions, and 40% of mercury emissions in the United States. Other pollutants include volatile 

organic compounds (e.g., benzene, dioxins) and heavy metals (e.g., arsenic, lead). 

Health experts have documented that pollutants from fossil fueled power plants, particularly coal 

plants, result in a wide range of serious health effects. These adverse health effects include lung 

cancer and other respiratory diseases (e.g., asthma), other carcinogenic effects, neurotoxic 

effects, and elevation of heart disease risks. 

Wind Energy Displaces Emissions from Fossil Fuel-Fired Power Plants: Wind energy 

generation results in reductions in air emissions because of the way the electric power system 

works. Wind energy is a preferred power source on an economic basis because the operating 

costs to run the turbines are very low and there are no fuel costs. Thus, when the wind turbines 

produce power, this power source will displace generation at fossil fueled plants, which have 

higher operating and fuel costs. 

The specific types of fossil fuel-fired power units that will be displaced by wind generation vary 

significantly among states and regions. Some states and regions rely on coal plants for a majority 

of their generation (e.g., West Virginia), whereas other regions and states rely heavily on natural 

gas-fired units (e.g., most of New England). The displaced emissions of CO2, NOx, SO2, and 

mercury generally will be greater in areas with large amounts of coal-fired generation and lower 

in areas where natural gas is the dominant fuel. The emissions level is also influenced by the age 

of the fossil fuel-fired units, as well as their relative levels of efficiency and pollution control. 

Methodologies for Analysis of Avoided Emissions: There are a variety of recognized methods 

to measure the amount of air emission reductions that result when fossil fuel-fired electric 

generating plants are displaced by wind power. Different methods may be most appropriate 

depending on the analysis goal. Although there are variations in methodologies, the process 

involves several major steps: (1) specifying the appropriate geographic areas where the avoided 

emissions occur; (2) identifying the fossil fuel-fired electric generation that is displaced when 

 4
wind plants come online; and (3) determining the emission rates for the fossil fuel-fired 

generation that is displaced in the specific time periods that wind generation is occurring. In 

addition, analysis of displaced emissions may focus on the effects of avoided emissions from 

current units operating at the margin and the effects of avoided emissions from the future 

construction of new fossil fuel-fired units. 

Wind Energy Can Reduce Overall Emissions Even Under Emissions Trading Programs: 

The impact of wind generation on overall emissions is more complicated for pollutants —

including NOx and SO2 — that currently are subject to emissions trading (cap and trade) 

programs. In such cases, it is not sufficient to simply analyze the physical operation of the 

electric system. Rather, it is also necessary to review the specific rules governing the emissions 

trading program to determine if overall emissions will be reduced below the level of the cap. 

Moreover, many pollutants that pose serious adverse health and environmental impacts, such as 

CO2, fine particulate matter, volatile organic compounds (i.e., dioxins), and trace heavy metals 

are not currently subject to emissions trading requirements. Emissions of these pollutants also 

may be reduced when fossil fuel generation is backed down by wind generation. 

State Air Quality Plans Can Recognize Emission Reductions Resulting from Wind Energy: 

In recent years, the U.S. Environmental Protection Agency (EPA) has formally recognized that 

wind energy purchases — combined with the retirement of a commensurate amount of emissions 

allowances by a wind developer or the state — can qualify for emissions reduction credit in a 

state air quality plan under specified circumstances. Since 2005, several states and municipalities 

have followed this guidance, and they have relied on wind purchase commitments in their SIPs 

in conjunction with the retirement of allowances to demonstrate a reduction in NOx emissions. 

Wind Energy Helps to Meet Emission Caps by Reducing Pollution Control Compliance 

Costs: Even for projects in which wind energy does not reduce total air emissions below the 

level of general emission caps, the increased use of wind energy contributes to efforts to meet 

such caps. When wind energy comes online, it generally reduces the amount of energy that must 

be generated from fossil fuel-fired generators, thereby reducing emissions from such facilities 

and lowering the costs faced by the owners of those facilities in complying with pollution control 

requirements. These reduced pollution control costs will facilitate compliance with emission 

reduction goals for both greenhouse gases and conventional pollutants. 

Misperceptions about Backup Generation: One of the misperceptions about wind power 

generation is that the air emission reduction benefits are extremely limited because of the need to 

construct significant additional backup fossil fuel generation. With increased experience in 

integrating wind generation and balancing various sources of electric power over a large power 

control area, utility grid operators have learned how to reduce variability and limit reserve additions 

to modest requirements when wind generation is brought online. This operational experience has 

been demonstrated most clearly at moderate levels of wind penetration of up to 10% to 20%. 

Conclusion: In summary, wind energy can be cited for several important air emission reduction 

benefits. It contributes to the reduction of emissions of various harmful air pollutants, has played 

a role in improving regional air quality, and has supported efforts to meet emission caps in a 

cost-effective manner. 

 5
Wind Energy and Air Emission Reduction Benefits 

Introduction 

In recent years, increasing attention has been focused on understanding and quantifying the 

impact of wind energy development on various air pollutants. The focus on this issue has 

intensified as public concern about global climate change has heightened and the contribution to 

greenhouse gas emissions from fossil fuels to this critical problem has been recognized. 

For example, wind energy’s air emission reduction benefits have been a source of some 

confusion in state proceedings to site wind turbines. As utility commissions, environmental 

agencies, and other stakeholders assess the environmental impacts of wind energy, air emission 

reductions have become an important part of the evaluation. 

This document provides a description of the impact of wind energy development on air 

emissions. The core document is intended for use by a variety of parties with an interest in this 

issue, such as state energy and environmental agencies, county and municipal officials, 

environmental organizations, and the renewable energy community. The appendices provide full 

references, as well as detailed information for those seeking a more in-depth discussion of 

selected topics. 

One of the obvious benefits of wind energy is that producing electricity from wind produces zero 

direct emissions of air pollutants. In contrast, fossil fuel-fired electric generation from coal, oil, 

or natural gas results in substantial direct emissions of numerous air pollutants that have adverse 

impacts on public health and the environment. The generation of wind energy also displaces 

generation from individual fossil fuel-fired power plants or units – thereby reducing fuel 

consumption and the resulting air emissions that would have otherwise occurred. 

It should be noted that all forms of energy development — from coal and nuclear generation to 

wind generation — have positive and negative environmental impacts. However, the focus of 

this document is limited to air emissions, and it is not designed to provide a comprehensive lifecycle analysis of the full range of environmental effects of the various forms of electric 

generation. 

Zero-Emissions Wind Energy Versus Emissions from Fossil Fuel-Fired 

Generation 

Wind energy produces zero direct air emissions in the generation process. Wind energy nearly 

always displaces fossil fuel-fired generation that has direct air emissions of pollutants that 

adversely impact public health and the environment. As a result of these environmental 

differences, there generally are air quality benefits when wind generation reduces fossil fuel 

combustion at existing power plants or reduces the need to build and operate new fossil fueled 

power plants. 

The principal air emissions from fossil fuel-fired electric power plants and their major health and 

environmental effects are described in Table 1. 

 6
Table 1: Summary of the Health and Environmental Effects of Air Emissions from Fossil Fuel-Fired 

Power Plants in the United States* 

*

Emissions references are from the U.S. Environmental Protection Agency, Compilation of Air Pollution Emissions 

Factors (AP42), Chapter 1.1, updated 2007. The air emission health effects descriptions are based on U.S. EPA, Air 

Quality Index: A Guide to Air Quality and Your Health, EPA-454/K-03-002, 2003. The description of the mercury 

health impacts is based on U.S. EPA, Clean Air Mercury Rule: Basic Information, 2004. 

Air Pollutant Fossil Fuel 

Sources 

Health & Environmental 

Impacts 

Other Considerations 

Sulfur Dioxide 

(SO2) 

Produced by 

combustion of sulfur 

in coal- and oil-fired 

plants 

Exacerbates heart disease and 

chronic lung disease, especially 

in children, older adults, and 

asthmatics 

A major contributor to acid 

rain, particulate matter, and 

regional haze 

 

Nitrogen Oxides 

(NOx) 

Produced during 

combustion by the 

oxidation of nitrogen 

in coal, oil, and 

natural gas and the 

oxidation of nitrogen 

in the air 

At high concentrations, can 

cause adverse respiratory effects 

in children and adults 

Precursor to ground-level 

ozone that is formed by 

photochemical reactions with 

VOCs. Ozone is a lung irritant 

that affects people with 

respiratory diseases, including 

asthma, especially during 

outdoor exercise. Also a 

contributor to the formation of 

particulate matter 

Particulate 

Matter 

(PM10 and 

PM2.5) 

Produced by 

combustion of fossil 

fuels and by reactions 

of SO2 and NOx 

Can cause or aggravate heart or 

lung diseases. Causes regional 

haze and visibility problems 

Can be transported long 

distances and acts as a carrier 

for toxic substances, including 

trace heavy metals 

Mercury 

(Hg) 

Emitted during coal 

combustion 

Primary exposure is from eating 

fish high in mercury 

compounds. Fetal exposure may 

lead to neurobehavioral and 

learning problems 

Mercury is transferred from the 

air to water bodies where it 

accumulates in the food chain 

Volatile Organic 

Compounds 

(VOCs) 

Produced during 

combustion from 

hydrocarbons, 

principally in coaland oil-fired plants 

VOCs include polynuclear 

aromatic hydrocarbons, dioxins, 

furans, formaldehyde, and 

benzene. These are human 

carcinogens and toxins 

VOCs react with NOx to form 

ground-level ozone in the 

lower atmosphere ( See NOx 

above ) 

Trace Heavy 

Metals 

Emitted during 

combustion in coaland oil-fired plants 

Trace heavy metals include 

arsenic, cadmium, lead, 

antimony, manganese, nickel, 

beryllium, cobalt, chromium, 

and selenium. These are human 

carcinogens and/or toxins 

Trace heavy metals are 

transferred to water bodies 

where they accumulate in the 

food chain 

Carbon Dioxide 

(CO2) 

Produced during 

combustion by the 

oxidation of carbon 

in coal, oil, and 

natural gas 

Carbon dioxide is the principal 

greenhouse gas causing global 

warming 

Combustion of fossil fuels also 

contributes to emissions of 

other greenhouse gases: 

methane (CH4) and nitrous 

oxide (N2O) 

 7
Major Contribution of Electric Power Plant Emissions to Air Pollution and Climate 

Change 

Electric generation from fossil fuel-fired power plants is one of the major sources of air 

emissions that harm human health and the environment and contribute to global climate change. 

69%

22%

40%

39%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Sulfur Dioxide

Nitrogen Oxides

Mercury

Carbon Dioxide

% of Total US Emissions

Figure 1: Contribution of fossil fuel-fired electric power generation to total air emissions in the 

United States.1

Fossil fuel-fired power plants, especially coal-fired electric generation, are the largest source of 

sulfur dioxide emissions, and as a result, fossil fuel-fired electricity is the principal cause of acid 

precipitation in the Eastern states. In addition, both sulfur dioxide and nitrogen oxide emissions 

are major contributors to fine particulate pollution and regional haze. 

Combustion from coal-fired power plants also is the largest source of mercury emissions in the 

country, and air emissions from coal plants in the United States and other countries are a primary 

cause of mercury deposition into water bodies. This mercury pollution accumulates in the food 

chain and results in dangerous concentrations of mercury compounds in freshwater fish used for 

human consumption.2

In addition, fossil fuel-fired electricity is a major source of nitrogen oxides. On a national basis, 

electric power plants are approximately co-equal as the major source of nitrogen oxides, along 

 

1 Miller, P.J.; Van Atten, C. North American Power Plant Emissions, Commission on Environmental Cooperation in 

North America, 2005 (Table 1.1 based on 2002 data). 

2

 U.S. Environmental Protection Agency, Clean Air Mercury Rule: Basic Information; Letter from Jon Mueller, 

Chesapeake Bay Foundation, to Mary Major, Virginia Department of Environmental Quality, Concerning the 

Virginia Clean Air Mercury Rule, November 4, 2005. 

 8
with mobile sources, including cars and trucks. Moreover, in some regions of the country, the 

transport of ozone from outside the region3 contributes to an even greater share of the problem 

than do local mobile sources.4

Air emissions from fossil fuel-fired power plant generation are a major cause of unhealthy air 

because NOx and SO2 are major contributors to the formation of two dangerous pollutants: 

ground-level ozone (smog) and fine particulate matter (soot).5 As of August 2007, 368 counties 

(or parts of counties) in the United States failed to meet the national air quality standards for 

ground-level ozone (8-hour ozone standard) or fine particulate matter (PM 2.5).6

 A map of air 

quality nonattainment areas is shown in Figure 2. 

Figure 2: Air quality nonattainment areas in the United States.7

For more detail on air quality nonattainment, see Appendix C. 

Wind Energy Displaces Emissions from Fossil Fuel-Fired Power Plants 

Wind energy generation results in reductions in air emissions because of the way the electric 

power system works. Wind energy is a preferred power source on an economic basis because the 

 

3

 This transport of ozone is formed from NOx emissions from outside the region coming from fossil-fuel-fired power 

plants and other sources of NOx, as well as VOCs. 4

 Maryland Department of Environment, The Basic Science of Air Pollution Transport, July 2005. 5

 U.S. Environmental Protection Agency, Preamble to the Clean Air Interstate Rule, 70 Fed. Reg. 25162 et seq. 

(May 12, 2005). 

6

 U.S. Environmental Protection Agency, Green Book, August 2007. 7

 U.S. Environmental Protection Agency, Green Book, October 2007. 

 9
operating costs to run the turbines are very low8

 because there are no fuel costs. Thus, when the 

wind turbines produce power, electricity supplies from other sources will be reduced or not 

brought online.9

 Almost always, the most expensive power will be “backed down” or avoided.10

Typically, wind power will displace generation at individual fossil fuel-fired power plants, which 

have higher operating costs and substantial fuel costs. 

At the same time, wind energy generation almost never displaces nuclear power on the electric 

grid. Nuclear power plants are normally operated as baseload generators that run at full capacity 

because they have such low operating costs. 

In addition, wind energy generally does not reduce hydroelectric energy on the grid because of 

its low operating costs and flow constraints. Although hydroelectric generation may be shifted in 

time as a result of wind generation, total generation at such hydroelectric plants is generally not 

reduced on average. The operating schedule of hydroelectric plants also may be limited by 

environmental constraints. 

Variations by State, Region, and Fuel Type 

The specific types of fossil fuel-fired power units that will be displaced by wind generation vary 

significantly among states and regions of the country. Some states and regions rely on coal 

plants for a majority of their generation (e.g., West Virginia, Pennsylvania, and other parts of the 

PJM power market, and parts of the Midwest and the South), whereas other states and regions 

rely more heavily on natural gas-fired units (e.g., most of New England, New York, and 

California).11 For example, according to the chief operating officer of the PJM Regional 

Transmission Organization, wind energy displaced coal-fired generation about 70% of the time 

in this power market in 2006.12 This result occurs because coal plants provide not only baseload 

power but also intermediate and peakload power during certain hours and seasons of the year.13

Even in New England, where natural gas is typically the marginal fuel, wind energy backs down 

some generating units fired by coal and residual oil at certain times.14

The displaced emissions of CO2, NOx, SO2, and mercury generally will be greater in areas with 

large amounts of coal-fired generation and lower in areas where natural gas is the dominant or 

load-following fuel. (See Appendix F for a discussion of emission rates for selected regions). 

 

8

 Interview with Karl Pfirrmann, Interim President and CEO of PJM Interconnection, PJM and Wind, E-Cubed 

Publication of Penn Future, December 5, 2007. 

9

 Ibid. 

10 Ibid. 

11 U.S. Environmental Protection Agency, Emissions & Generation Resource Integrated Database (eGRID), 2005. 12 Interview with Karl Pfirrmann, Interim President and CEO of PJM Interconnection, PJM and Wind, E-Cubed 

Publication of Penn Future, December 5, 2007. 

13 U.S. Environmental Protection Agency, Emissions & Generation Resource Integrated Database (eGRID), 2005. 

Once a coal plant is running, the operator can easily increase the amount of fuel that is fired in the boiler, thereby 

increasing the amount of electricity produced. For example, a large coal-fired plant often provides baseload power 

in the middle of the night, and then ramps up to intermediate capacity on a summer morning and to peakload power 

in the afternoon on a hot summer day. Coal plants provide intermediate and peakload power in the markets where 

such plants are available because of the very high cost of natural gas and residual fuel oil. 

14 Independent System Operator New England, 2004 New England Marginal Emission Rate Analysis, 2005. 

 10
The level of emissions reduction is influenced by the age of the fossil fuel-fired units, their 

relative levels of energy efficiency, the fuel characteristics (such as sulfur content of the coal), 

and their relative levels of pollution controls. For example, a new high-efficiency combinedcycle natural gas-fired plant with good pollution controls — typical of natural gas plants 

constructed in the past 15 years — will have relatively low emission rates for all of the major air 

pollutants. The typical NOx emission rate for such plants would be less than 0.1 pounds per 

megawatt-hour (lbs/MWh),15 and the CO2 emission rates are reduced substantially because of the 

high electric generation efficiency of such plants. In comparison, older natural gas-fired plants 

that are inefficient and have limited pollution controls may have NOx emission rates of 7 to 8 

lbs/MWh.16 (See Appendix B for background on the terminology used in discussing emission 

rates.) 

In the United States, the fleet of coal plants includes many older coal plants that are inefficient 

and have limited pollution controls.17 Such plants have NOx emissions that may exceed 8 

lbs/MWh and also have high levels of CO2 emissions. In comparison, modern coal plants with 

state-of-the-art pollution controls will have much lower emission rates for NOx, SO2, and 

particulate matter. For example, NOx emission rates for these modern plants are typically less 

than 0.1 lbs/MWh.18 However, the CO2 emission rates are not affected by pollution controls for 

NOx and SO2. (See Appendix G for additional detailed information on emission rates of fossil 

fueled plants). 

Methodologies for Analysis of Avoided Emissions 

There are a variety of recognized methods to measure the amount of air emission reductions that 

result when the output of conventional electric generating plants is reduced by wind power.19

Expert commentators have stated that different methods may be most appropriate depending on 

the goal of the analysis.20

Some documents providing guidance on calculating avoided emissions have focused on the 

analysis of specific pollutants. For example, EPA has issued a specific guidance document 

concerning the analysis of avoided NOx emissions,21 and the World Resources Institute and the 

 

15 Ibid., U.S. Environmental Protection Agency, Compilation of Air Pollution Control Factors (AP42), updated 

2007. 

16 U.S. Environmental Protection Agency, Emissions & Generation Resource Integrated Database (eGRID), 2005. 

This emission rate is for grid-connected plants that are dispatched regularly. It should be noted that small diesel 

electric generators (typically used to meet emergencies and extreme peak loads) can have much higher NOx

emission rates than 7 to 8 lbs/MWh. 

17 Ibid. 

18 Ibid. 

19 World Business Council for Sustainable Development and World Resources Institute, The Greenhouse Gas 

Protocol - Guidelines for Quantifying GHG Reductions from Grid-Connected Electricity Projects, 2007; Biewald, 

B.; Using Electric System Operating Margins and Build Margins in the Quantification of Carbon Emission 

Reductions Attributable to Grid Connected CDM Projects, 2005; Schiller, S., National Action Plan for Energy 

Efficiency: Model Energy Efficiency Program Impact Evaluation Guide, November 2007. (Although the latter 

document focuses on avoided emissions from energy efficiency, the methodology is relevant to the analysis of wind 

energy.) 

20 Schiller, S., National Action Plan for Energy Efficiency: Model Energy Efficiency Program Impact Evaluation 

Guide, November 2007. 21 U.S. Environmental Protection Agency, Guidance on State Implementation Plan (SIP) Credits for Emission 

Reductions from Electric-sector Energy Efficiency and Renewable Energy Measures, August 2004. 

 11
EPA Climate Leaders Program have recommended alternative methods for quantifying 

reductions in greenhouse gas emissions.22 

Although there are variations in methodologies, the process of calculating emissions avoided as a 

result of wind generation involves several major steps: 

(1) Specifying the appropriate geographic areas (e.g., power market or National Electric 

Reliability Council region) where the avoided emissions occur 

(2) Identifying the fossil fuel-fired electric generation that is displaced when wind plants 

come online 

(3) Determining the emission rates for the fossil fuel-fired generation that is displaced in 

the specific time periods that wind generation occurs. 

In addition, the following elements may be included in the analysis. In situations in which 

greater accuracy is required, more detailed analytic approaches can be used to address these 

issues: 

 

(1) Incorporating seasonal and daily patterns of wind generation and focusing on the 

avoided emissions of fossil fuel-fired generating units that are operating at the margin 

(i.e., those units that are the last to be switched online or first to be switched offline)

rather than on the average avoided emissions of all plants on the grid 

(2) Analyzing the effects of avoided emissions from current units operating at the margin 

(so-called “operating margin”) and the effect of avoided emissions from the future 

construction of new fossil fuel-fired units (the “build margin”). The analysis of avoided 

fossil fuel emissions resulting from wind plant generation is typically weighted primarily 

on the operating margin if the purpose of the analysis is to estimate avoided emissions in 

the near term. In comparison, if the analysis is focused on long-term policy effects, such 

as the impact of enactment of a Renewable Portfolio Standard over several decades, the 

build margin is weighted more heavily.23 In view of the increasing stringency of air 

pollution controls, the average calculated avoided emission rates for most conventional 

pollutants typically decline over time. 

Wind Energy Can Reduce Overall Emissions, Even Under Emissions Trading 

Programs 

Although it is clear that wind energy reduces the energy production of fossil fuel-fired generation 

at individual power plants or units and reduces actual emissions at those plants, the impact of 

wind generation on total overall emissions is more complicated for pollutants that are subject to 

regulation under emissions trading programs. These pollutants currently include NOx and SO2. 

In addition, some regions are in the process of developing CO2 emissions caps. EPA’s Clean Air 

 

22 World Resources Institute, The Greenhouse Gas Protocol: Guidelines for Quantifying the GHG Reductions from 

Grid Connected Electricity Generation, 2007; U.S. Environmental Protection Agency, Climate Leaders Guidance 

on Purchases of Green Power and Renewable Energy Certificates, December 2007. 23 World Resources Institute, The Greenhouse Gas Protocol: Guidelines for Quantifying the GHG Reductions from 

Grid Connected Electricity Generation, 2007. It should be noted that emission reduction estimates over the longer 

term can be calculated as part of detailed wind integration studies, which typically use detailed simulation models 

that mimic the unit commitment and economic dispatch decisions of the grid operators. These simulations calculate 

the generation mix that will operate during each hour of the year, given a specific wind generation scenario. 

 12
Mercury Rule, providing cap and trade requirements for mercury emissions from electric 

generating units, was recently struck down by the D.C. Circuit Court of Appeals.24

In cases in which emissions trading programs are in effect, it is not sufficient to simply analyze 

the physical operation of the electric system to determine the impact of wind generation on air 

emissions. Rather, it also is necessary to review the specific governmental rules regulating the 

program to determine if emissions will be reduced on an aggregate or system-wide basis (as 

opposed to a power plant or unit basis). 

Under some rules, such as the NOx trading rules adopted by many states, emissions can be 

reduced in the overall trading market as well as at the individual power plant or unit level. 

However, under other legislative and regulatory frameworks, such as the Federal SO2 trading 

rules, wind energy generally will not reduce emissions in the overall trading market below the 

level set by the emissions cap. The determining factor is not whether the pollutant is subject to an 

emissions cap but how the individual cap and trade rules are designed for the particular pollutant. 

EMISSIONS TRADING (CAP AND TRADE) BASICS

Emissions trading is a regulatory approach to reduce air pollution through the use of economic 

incentives. Under an emissions trading program, the regulatory agency sets a maximum limit or cap on 

the total amount of emissions (in tons) of a particular pollutant (e.g., SO2, NOx). The cap limits 

emissions from all covered facilities in a specific industry (e.g., electric generation). The program 

generally requires that the cap will be reduced over a period of years. 

The regulatory agency implements an emissions trading program by creating and distributing 

(allocating) a specific number of allowances to regulated entities. An allowance represents an 

authorization to emit a specific amount of a pollutant (generally measured in tons) during a particular 

year or season. The total amount of allowances cannot exceed the cap, thereby limiting total 

emissions. 

At the end of each year, each regulated entity must demonstrate that it possessed sufficient 

allowances to cover all emissions of the capped pollutant. If an entity releases emissions (for a 

particular year) in excess of the allowances initially granted to it by the regulatory agency, it can meet 

the program requirements by buying additional allowances from entities that polluted less than their 

allowances would otherwise have permitted. This exchange of allowances is called a trade. In effect, 

the seller of the allowances is rewarded for reducing its pollution below its number of allowances and 

the buyer of the allowances must pay a premium for releasing emissions in excess of its allocated 

Sulfur Dioxide Emissions 

Under the acid rain provisions of the Clean Air Act regulating emissions of SO2, virtually all 

allowances have been distributed to fossil fuel-fired generating units.25 Moreover, distribution of 

 

24 State of New Jersey, et al., v. Environmental Protection Agency, No. 05-1097, slip op. (D.C. Cir. Feb. 8, 2008). 

The court found that EPA had violated the requirements of the Clean Air Act by removing electric generating units 

from the list of sources regulated under Section 112 of the Act without making the required findings. As a result, the 

court determined that EPA’s Clean Air Mercury Rule must fall. 

25 Under Section 404(f) and (g) of the Clean Air Act Amendments of 1990, EPA established a Conservation and 

Renewable Energy Reserve (CRER) that included 300,000 SO2 allowances. The allowances were set aside from the 

emission cap of allowances imposed on fossil fuel-fired generators. Allowances could be awarded for energy 

conservation and renewable energy projects, including wind energy projects, implemented between 1992 and 1999. 

 13
SO2 allowances to existing plants must be made on a permanent basis. As a result of this legal 

structure, the addition of wind energy to the grid generally does not result in a reduction of the 

total amount of SO2 emissions below the level of the emissions cap.26 

This occurs for the following reason. Although the wind energy generation reduces the output of 

individual fossil fuel-fired power plants or units, the owner of the fossil fueled plants still retains 

the allowances – the authorization to emit a ton of SO2. Therefore, the total air emissions of SO2

will not be reduced because the owner of the allowances will either (1) transfer the allowances to 

another generating unit under its control; (2) bank the allowances for future use; or (3) sell the 

allowances in the emissions trading market to another party — one that expects to exceed its 

emissions limit and requires additional allowances. In other words, the effect of the added wind 

energy generation under the acid rain program is to make it less expensive for the fossil fuelfired generator to meet its emission control requirements or to gain additional revenues. Thus, 

total SO2 emissions generally will not be reduced below the level of the emissions cap. 

Nitrogen Oxide Emissions 

In comparison, the Clean Air Act and the U.S. Environmental Protection Agency (EPA) have 

provided state governments with authority to issue rules governing NOx emissions trading that 

allow wind developers to reduce air emissions. In fact, under the EPA’s Clean Air Interstate Rule 

(CAIR), nearly half of the 28 states subject to the Rule have issued proposed or final regulations 

authorizing wind generators to apply for NOx allowances or have stated the intention to do so. 

(See Appendix D for a map of the states covered by the Clean Air Interstate Rule and Appendix 

E for a review of the treatment of wind energy under state CAIR regulations). 

If the wind generator either commits to retire such NOx allowances itself (permanently removing 

the allowances from the market and preventing their use) or to sell the energy and allowances to 

an entity (e.g., municipality) that commits to retire such allowances, then total air emissions and 

the level of the emissions cap will be reduced.27 

Under many state rules, the wind generator will have the choice of retiring the NOx allowances 

distributed to the generator or selling the allowances directly into the NOx emissions trading 

 The minimum share of allowances allocated to renewable energy was 60,000 allowances. However, as of June 1999, 

only 6,700 allowances of the total of 300,000 (less than 3% of total NOx allowances in the Reserve) had been 

allocated to renewable energy projects. Wooley, D., A Guide to the Clean Air Act for the Renewable Energy 

Community, Issue Brief No. 15, Renewable Energy Policy Project, February, 2000, pp. 18-19. 

According to the Wooley article cited above, the CRER failed to achieve significant utilization by wind energy 

developers for several reasons: (1) “[t]he program was designed primarily to achieve early reductions [in emissions] 

(to occur before the statutory deadlines) and not as a long-term incentive for renewables;” (2) eligibility for 

allowances was limited to electric utilities, and independent wind energy developers were not eligible for 

allowances; and (3) even electric utilities were subject to restrictive conditions on ratemaking – conditions that 

“were increasingly difficult to meet under a restructured [electric utility] industry.” Id., p. 19. 

26 Ibid.

27 It is true that an entity can purchase and retire allowances for NOx, SO2, or other pollutants without a related 

purchase of wind generation. However, doing so is likely to raise allowance costs without the compensating benefit 

that zero-emissions wind generation provides of reducing emissions that must be controlled by fossil-fuel-fired 

generators and thereby reducing compliance costs. 

 14
market. In the latter case, the generator may sell the allowances to obtain additional revenues, 

thereby helping to encourage additional zero-emissions wind generation.28 However, if such a 

sale is made, the wind generator will not be able to claim that such generation resulted in reduced 

NOx emissions. 

Greenhouse Gas Emissions

Although some greenhouse gas cap and trade programs have been proposed by state 

policymakers in certain U.S. regions or in national legislation, there are no cap and trade 

programs currently in effect in the United States to limit greenhouse gas emissions. Thus, at the 

present time, all wind energy generation that displaces fossil fuel-fired generation reduces CO2

emissions at the individual power plant or unit level as well as at the aggregate level, thereby 

reducing total CO2 emissions in the power market. 

Under any future regional or U.S. cap and trade program, the addition of wind energy to the grid 

will generally help to meet the emissions cap. However, the policy design of any future regional 

or U.S. cap and trade program for greenhouse gas emissions will impact whether wind energy 

projects will reduce overall CO2 emission levels in the future below the level of the general 

emissions cap. There are a variety of policy options for enabling wind to reduce total emission 

levels. 29 For example, the model rule adopted by the 10 states involved in the Northeast 

Regional Greenhouse Gas Initiative, which is scheduled to take effect in 2009, includes an 

optional section authorizing states to retire allowances on behalf of voluntary renewable energy 

purchases30 to help ensure a reduction of greenhouse gas emissions. As of October 2007, half of 

the states involved in the initiative have included this section in their draft regulations or 

legislation or are considering further legislative action to support this approach.31 

 

28 States and the Environmental Protection Agency have cited all of these benefits for adopting this policy approach. 

Bluestein, J.; Salerno, L.; Bird, L.; and Vimmerstedt, L., Incorporating Wind Generation in Cap and Trade 

Programs, NREL Report No. TP-500-40006, July 2006, p. 2. 29 Bird, L.; Holt, E.; Carroll, G., Implications of Carbon Regulation for Green Power Markets, NREL Report No. 

TP-640-41076, 2007. 

30 Regional Greenhouse Gas Initiative, Model Rule, August 15, 2006. 31 Holt, E., Support for Renewable Energy Marketing Claims in State Carbon Policies, Presentation at the 12th

Renewable Energy Marketing Conference, October 22, 2007. 

 15
Other Pollutants Not Subject to Cap and Trade Regulation

Many pollutants that pose serious adverse health and environmental impacts (as summarized in 

Table 1), such as fine particulate matter, volatile organic compounds (i.e., dioxins), and trace 

heavy metals, are not currently subject to emissions trading. Emissions of these pollutants are not 

covered by cap and trade programs. These emissions also may be reduced when fossil fuel 

generation is backed down by wind generation. 

State Air Quality Plans Can Recognize Air Emission Reductions Resulting from 

Wind Energy 

EPA has emphasized that “[m]eeting energy demand through clean energy sources can reduce 

emissions from fossil fueled generators.”32 Under guidance issued in August 2004, the EPA 

authorized states to include renewable energy purchases as control measures in their state air 

quality plans (formally known as a State Implementation Plan or SIP) under specified 

circumstances.33 States generally were required to obtain and retire NOx allowances or to omit a 

certain fraction of allowances from distribution (thereby lowering the NOx emissions cap at the 

outset) in order to receive credit in the SIP for the wind energy purchase.34 Since 2004, several 

states and municipalities have followed this guidance, and they have relied on wind purchase 

commitments in their SIPs and retiring or withholding a commensurate amount of allowances to 

demonstrate a reduction in NOx emissions. (See Appendix C for additional information.) 

 

32 U.S. Environmental Protection Agency, EPA Clean Energy-Environment Guide to Action: Policies, Best 

Practices, and Action Steps for States, February 2006. 33 U.S. Environmental Protection Agency, Guidance on State Implementation Plan (SIP) Credits for Emission 

Reductions from Electric-sector Energy Efficiency and Renewable Energy Measures, August 2004, pp. 4-7. 34 Id., pp. 17-20. 

 16
WIND ENERGY PURCHASES IN THE MID-ATLANTIC REGION

In May 2005, Maryland became the first state in the country to receive EPA 

approval for emission reduction credit in a SIP based on a renewable energy 

purchase. This wind energy purchase of more than 30,000 MWh involved a 

regional buying effort coordinated by Montgomery County, Maryland in 

conjunction with the Metropolitan Washington Air Quality Committee (MWAQC), A

and as of 2004, the wind energy purchase was the largest ever made by a local 

government entity.B

 Although the credit for the purchase constituted only 8 tons 

during the summer ozone season, this purchase established an important 

national precedent. 

In June 2007, MWAQC completed an air quality plan for the MD-VA-DC 

nonattainment area that committed to increase municipal purchases of wind 

energy fourfold from 2004 levels by 2009. The buyers, including two counties in 

Maryland, three counties in Virginia, and the Washington Suburban Sanitary 

Commission, committed to purchase 123 million kWh of renewable energy 

certificates for wind energy annually. These purchases would reduce NOx

emissions approximately 23 tons during the summer ozone season. C 

A U.S. Department of Energy, Improving Regional Air Quality with Wind Power: Wind Powering 

America Fact Sheet Series, October 2004, p. 2. B

 National Association of Counties, Achievement Award to Montgomery County, Maryland, 

2005.

C Metropolitan Washington Air Quality Committee, Plan to Improve Air Quality in the 

Washington, DC-MD-VA Region: State Implementation Plan for the 8-Hour Ozone Standard, 

May 23, 2007, pp.6-62 to 6-65 and Appendix H- RSG Avoided Emissions Report. 

Wind Energy Helps to Meet Emission Caps by Reducing Pollution Control 

Compliance Costs 

Even in areas where wind energy does not reduce total air emissions below the level of general 

emission caps, the increased use of wind energy contributes to efforts to meet such caps by 

reducing pollution control compliance costs.35 When wind energy is generated, it most often 

reduces the proportion of fossil fuel-fired generation in the system, thereby reducing average 

emissions and lowering the costs faced by the owners of fossil fuel-fired facilities in complying 

with air pollution control requirements. In other words, even in cases in which wind energy does 

not reduce total emissions because of the design of a particular emissions trading program, the 

wind development will reduce the overall emission rate per MWh as well as the compliance cost 

at certain individual power plants or units. These reduced pollution control costs will facilitate 

compliance with emission reduction goals for greenhouse gases and conventional pollutants. It 

is noteworthy that in a 2007 analysis of one of the leading Federal GHG emissions trading 

proposals, the U.S. Energy Information Administration stated that its “analysis suggests that 

increasing the use of...renewable power [including wind power] is an economical compliance 

strategy.”36

 

35 See Schiller, S., National Action Plan for Energy Efficiency: Model Energy Efficiency Program Impact 

Evaluation Guide, November 2007, p. 3-17. This document sets forth a parallel analysis with respect to energy 

efficiency. 

36 U.S. Energy Information Administration, Energy Market and Economic Impacts of S. 280, the Climate 

Stewardship and Innovation Act of 2007, July 2007, pp. xiii. 61. 

 17
Misperceptions about Backup Generation 

One of the misperceptions about wind power generation is that the air emission reduction 

benefits are extremely limited because of the need to provide backup fossil fuel generation. 

Some commentators have asserted that each new wind plant requires an equally large addition of 

backup generation from a dispatchable power plant, such as a fossil fuel-fired plant. However, 

wind integration studies contradict this view. 

The stated misperceptions about wind generation generally result from confusion regarding the 

difference between “intermittency” and the concept of “reserve requirements” that are necessary 

to assure the “reliability” of the electric grid. There is no doubt that wind turbines generate 

power on a variable basis. However, the electric power system is specifically designed to meet 

changes in demand and generation. With increased experience in integrating wind generation and 

balancing various sources of electric power over a large power control area, utility grid operators 

have learned how to reduce variability and to limit reserve additions to modest requirements 

when wind generation is brought online. This operational experience has been demonstrated 

most clearly at moderate levels of wind penetration of up to 10% to 20%.37 

A May 2006 assessment prepared by the Utility Wind Integration Group (UWIG) emphasizes 

that the need for additional operating reserves (both spinning and non-spinning reserves) to 

maintain system reliability will likely be modest for wind plants that are broadly distributed over 

a geographic area.38 The UWIG conclusion is based on the fact that wind is used “primarily as 

an energy resource” rather than as a reserve capacity to meet reliability requirements. The revie

cites two major recent studies that indicate that the addition of 1,500 MW and 3,300 MW of 

wind (15% and 10%, respectively, of system peak load) increased reserve requirements by only 8 

MW and 36 MW, respectively, to maintain the same level of reliability (under performance 

standards enforced by the North American Electric Reliability Council).

w 

 

39 

Conclusion 

In summary, one of the important benefits of wind energy is that producing electricity from this 

source involves zero direct emissions of air pollutants. In contrast, fossil fuel-fired electric 

generation from coal, oil, or natural gas results in substantial direct emissions of numerous air 

pollutants that have adverse impacts on public health and the environment. Wind energy 

contributes to the reduction of emissions of various air pollutants, has played a role in improving 

regional air quality, and supports efforts to meet emission caps in a cost-effective manner. 

37 Wind Plant Integration: Costs, Status, and Issues, IEEE Power & Energy Magazine, November/December 2005, 

pp. 38-46. See also Holttinen, H., Lemstrom, B. et al, Design and Operation of Power Systems with Large Amounts 

of Wind Power: State of the Art Report, 2007. The latter report was prepared by an international collaboration of 

experts within the International Energy Agency Implementing Agreement for Wind Energy and coordinated by the 

VTT Technical Research Center of Finland. 

38 Utility Wind Integration Group (in cooperation with the American Public Power Association, the Edison Electric 

Institute, and the National Rural Electric Cooperative Association), Utility Wind Integration: State of the Art, May 

2006, pp. 2-3. The May 2006 UWIG report was prepared in cooperation with the three major electric utility 

associations and summarizes the best worldwide information available on wind energy integration into the electric 

grid. 

39 Id, p. 3. 

 18
Appendices 

Appendix A: List of References 

General 

Bellemare, Bob, “What is a Megawatt?” Utilipoint Issue Alert, June 24, 2003. See 

http://www.utilipoint.com/ 

Brown, M.; DeCesaro, J.; Rewey, C.; The Power Industry and Air Quality, National 

Conference of State Legislatures, July 2005. See http://www.ncsl.org/bookstore/

Clean Air Act, 42 U.S.C. 7401 et seq. 

Domenici, P.; Steyn, J.; & Lyons, B., A Brighter Tomorrow: Fulfilling the Promise of 

Nuclear Power (Rowman & Littlefield Publishers, Inc., 2004). 

 

Jacobson, D., Increasing the Value and Expanding the Market for Renewable Energy 

and Energy Efficiency with Clean Air Policies, 37 ELR 10135, Feb. 2007. 

Maryland Department of Environment, The Basic Science of Air Pollution Transport, 

July 2005. See http://www.mde.state.us/assets/document/BJH%20-

%20Basics%20on%20Ozone%20Transport.ppt 

Miller, P.J. and Van Atten, C., North American Power Plant Emissions, Commission 

on Environmental Cooperation in North America, 2005 (Table 1.1 based on 2002 

data). 

U.S. Environmental Protection Agency, EPA Clean Energy-Environment Guide to 

Action: Policies, Best Practices, and Action Steps for States. See 

http://www.epa.gov/cleanenergy/stateandlocal/guidetoaction.htm

Wooley, D., A Guide to the Clean Air Act for the Renewable Energy Community, 

Issue Brief No. 15, Renewable Energy Policy Project, Feb. 2000. See 

http://www.repp.org/

Health and Environmental Effects 

U.S. Environmental Protection Agency, EPA Air Quality Index: A Guide to Air 

Quality and Your Health, EPA Publication 454/K-03-002, 2003. See 

http://airnow.gov/index.cfm?action=aqibroch.index

U.S. Environmental Protection Agency, Clean Air Mercury Rule: Basic Information, 

2004. See http://www.epa.gov/air/mercuryrule/basic.htm, last updated Oct. 6, 2007. 

 19
U.S. Environmental Protection Agency, Compilation of Air Pollution Emissions 

Factors (AP42), Chapter 1.1m 2007. See 

http://www.epa.gov/ttn/chief/ap42/ch01/final/c01s01.pdf

U.S. Environmental Protection Agency, Fact Sheet: Final Rule to Implement the 8-

Hour Ozone National Ambient Air Quality Standard-Phase 2, Nov. 2005. See 

http://www.epa.gov/ozonedesignations/documents/Nov05/factsheet.htm 

U.S. Environmental Protection Agency, National Ambient Air Quality Standards for 

Ozone, 72 Fed. Reg. 37818 et seq. (July 11, 2007). 

U.S. Environmental Protection Agency, Clean Air Markets Division, Reducing 

Regional Transport of Emissions and Helping States Achieve the PM 2.5 and Ozone 

NAAQS, May 2005. See 

http://www.epa.gov/airmarkets/presentations/docs/epri05/epri_cair.ppt#262,2,Slide2

 

U.S. Environmental Protection Agency, Fact Sheet: Final Clean Air Particle Matter 

Implementation Rule for Implementation of the 1997 PM 2.5 Standard, March 29, 

2007. See http://www.epa.gov/pmdesignations/documents/Mar07/factsheet.htm 

U.S. Environmental Protection Agency, Green Book, August 2007. See 

http://www.epa.gov/oar/oaqps/greenbk/map8hrnm.html

U.S. Environmental Protection Agency, Green Book, October 2007. See 

http://www.epa.gov/oar/oaqps/greenbk/mappm25o3.html

Databases and Methodologies for Analysis of Avoided Emissions 

Biewald, B.; Using Electric System Operating Margins and Build Margins in the 

Quantification of Carbon Emission Reductions Attributable to Grid Connected CDM

Projects, 2005. See http://www.synapse-energy.com 

Chambers, A., Diem, A. and Vimmerstedt, L., Comparison of Methods for Estimating 

the Emissions Impacts of Energy Efficiency and Renewable Energy: Shreveport 

Louisiana Case Study, 2005. See http://www.nrel.gov/docs/fy05osti/37721.pdf 

High, C., and Hathaway, K. 2006. Final Report: Estimation of Nitrogen Oxide 

Avoided Emission Rates Resulting from Renewable Electric Power Generation in the 

New England, New York, and PJM Interconnection Power Market Areas, June 2006. 

(Report prepared by Resource Systems Group Inc. for Environmental Resources 

Trust and Connecticut Smart Power.) See http://www.rsginc.com/energy/publications

High, C., and Hathaway, K. 2006. Avoided Emissions of the Redington Mountain 

Wind Farm, 2006. (Report prepared by Resource Systems Group Inc. for the 

Independent Energy Producers of Maine and the Conservation Law Foundation and 

presented as testimony in the Maine Land Use Regulatory Commission Hearing on 

 20
the Redington Mountain Wind Farm, August 4, 2006.) See 

http://www.rsginc.com/energy/publications

Independent System Operator New England, 2004 New England Marginal Emission 

Rate Analysis, 2005. See http://www.isone.com/genrtion_resrcs/reports/emission/2004_mea_report.pdf

Natural Resources Defense Council, Benchmarking Emissions of the 100 Largest 

Power Producers in the U.S. for 2004, 2005. 

Schiller, S. National Action Plan for Energy Efficiency: Model Energy Efficiency 

Program Impact Evaluation Guide, November 2007. See 

http://www.epa.gov/cleanenergy/actionplan/resources.htm#resource 

U.S. Environmental Protection Agency, Climate Leaders Guidance on Purchases of 

Green Power and Renewable Energy Certificates, Discussion Draft. December 2007, 

Appendix IIIa., p. 16. See 

http://www.epa.gov/stateply/documents/greenpower_guidance.pdf and 

http://www.epa.gov/stateply/resources/option-module.html 

U.S. Environmental Protection Agency, Emissions & Generation Resource Integrated 

Database (eGRID). See http://www.epa.gov/cleanenergy/energyresources/egrid/index.htm

U.S. Environmental Protection Agency, Compilation of Air Pollutant Emission 

Factors (AP42), 2007 Update. See http://www.epa.gov/ttn/chief/efpac/index.html

 

World Resources Institute and World Business Council for Sustainable Development, 

Guidelines for Quantifying GHG Reductions from Grid-Connected Electricity 

Projects, 2007. See http://www.wri.org/climate/pubs_description.cfm?pid=4277

Incorporating Wind Generation in Emissions Cap and Trade Programs

Bird, L.; Holt, E.; Carroll, G., Implications of Carbon Regulation for Green Power 

Markets, NREL Report No. TP-640-41076, 2007. See 

http://www.nrel.gov/docs/fy07osti/41076.pdf 

Bluestein, J.; Salerno, L.; Bird, L.; and Vimmerstedt, L., Incorporating Wind 

Generation in Cap and Trade Programs, NREL Report No. TP-500-40006, July 

2006. See http://www.nrel.gov/docs/fy06osti/40006.pdf 

National Association of Clean Air Agencies, Alternative NOx Allowance Allocation 

Language for the Clean Air Interstate Rule, August 2005. See 

http://www.4cleanair.org/PublicationDetails.asp 

 21
Holt, E., Support for Renewable Energy Marketing Claims in State Carbon Policies, 

Presentation at the 12th Renewable Energy Marketing Conference, October 22, 2007. 

See http://www.renewableenergymarketing.net/

Regional Greenhouse Gas Initiative, Model Rule, August 15, 2006. See 

http://www.rggi.org/modelrule.htm 

State of New Jersey, et al., v. Environmental Protection Agency, No. 05-1097, slip 

op. (D.C. Cir. Feb. 8, 2008). 

U.S. Energy Information Administration, Energy Market and Economic Impacts of S. 

280, the Climate Stewardship and Innovation Act of 2007, July 2007, pp. xiii, 61. See 

http://www.eia.doe.gov/oiaf/servicerept/csia/pdf/sroiaf(2007)04.pdf 

U.S. Environmental Protection Agency, Finding of Significant Contribution and 

Rulemaking for Certain States in the Ozone Transport Assessment Group Region for 

Purposes of Reducing Regional Transport of Ozone (NOx SIP Call), October 1998. 

 

U.S. Environmental Protection Agency, Climate Protection Partnerships Division, 

Office of Atmospheric Programs, Office of Air and Radiation, Draft Report on State 

Set-Aside Programs for Energy Efficiency and Renewable Energy Projects Under the 

NOx Budget Trading Program: A Review of Programs in Indiana, Maryland, 

Massachusetts, Missouri, New Jersey, New York, and Ohio, September 2005. See 

http://www.epa.gov/cleanenergy/stateandlocal/guidance.htm

 

U.S. Environmental Protection Agency, Final Rule to Reduce Interstate Transport of 

Fine Particulate Matter and Ozone (Clean Air Interstate Rule), 70 Fed. Reg. 25162 

(May 12, 2005). 

Virginia Clean Air Interstate Rule- NOx Annual Trading Program, 9 VAC 5-140-

1420.G.8 (2007). See http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+9VAC5-

140-1420 

Virginia Clean Air Interstate Rule – NOx Ozone Season Trading Program, 9 VAC 5-

140-2420G.8 (2007). See http://leg1.state.va.us/cgibin/legp504.exe?000+reg+9VAC5-140-2420

Emission Reduction Credit in State Implementation Plans 

Metropolitan Washington Council of Governments, Plan to Improve Air Quality in 

the Washington, DC-MD-VA Region: State Implementation Plan for the 1-Hour 

Ozone Standard, February 19, 2004, pp. 7-77 to 7-80 and Appendix J-71 to J-76. See 

http://www.mwcog.org/committee/committee/archives.asp?COMMITTEE_ID=14

and scroll down to February 19, 2004, Plan to Improve Air Quality in the 

Washington, DC-MD-VA Region, pp. 7-77 to 7-80 and Appendix J, pp. J-71 to J-76. 

 22
Metropolitan Washington Air Quality Committee, Plan to Improve Air Quality in the 

Washington, DC-MD-VA Region: State Implementation Plan for the 8-Hour Ozone 

Standard, May 23, 2007, pp.6-62 to 6-65 and Appendix H- RSG Avoided Emissions 

Report. See 

http://sharepoint.mwcog.org/airquality/Shared%20Documents/Chapter%206%20Cont

rol%20Measures%20Final.pdf

National Association of Counties, Achievement Award to Montgomery County, 

Maryland, 2005. 

U.S. Department of Energy, Improving Regional Air Quality with Wind Power: Wind 

Powering America Fact Sheet Series, Oct. 2004, p. 2. See 

http://www.eere.energy.gov/windandhydro/windpoweringamerica/pdfs/wpa/sips_imp

roving_air_overview.pdf 

U.S. Environmental Protection Agency, Guidance on State Implementation Plan 

(SIP) Credits for Emission Reductions from Electric-sector Energy Efficiency and 

Renewable Energy Measures, Aug. 2004. See 

http://www.epa.gov/cleanenergy/stateandlocal/guidance.htm 

U.S. Environmental Protection Agency, Approval and Promulgation of Air Quality 

Implementation Plans; Maryland and Virginia; Non-Regulatory Voluntary Emission 

Reduction Program Measures, 70 Fed. Reg. 24987, May 12, 2005. 

Wind Integration into Utility Grid Systems 

Holttinen, H., Lemstrom, B. et al, Design and Operation of Power Systems with 

Large Amounts of Wind Power: State of the Art Report, 2007. This report was 

prepared by an international collaboration of experts within the International Energy 

Agency Implementing Agreement for Wind Energy and coordinated by the VTT 

Technical Research Center of Finland. See 

http://www.vtt.fi/pdf/workingpapers/2007/W82.pdf 

Interview with Karl Pfirrmann, Interim President and CEO of PJM Interconnection, 

PJM and Wind, E-Cubed Publication of Penn Future, December 5, 2007. See 

http://www.pennfuture.org/media_e3_detail.aspx?MediaID=843&Home=Y

Pluger, A., Director of Energy Technology, International Energy Agency, 

Presentation to the Phase II Conference of the American Council on Renewable 

Energy, November 29, 2007. See http://www.acore.org/pdfs/AntonioPflueger.pdf

Smith, C.; Demeo, E.; Smith, S., Integrating Wind Generation into Utility Systems, 

North American Windpower, Sept. 2006. See http://www.uwig.org/WindIntegrationNAW92006.pdf 

 23
Utility Wind Integration Group (in cooperation with the American Public Power 

Association, the Edison Electric Institute, and the National Rural Electric Cooperative 

Association), Utility Wind Integration: State of the Art, May 2006. See 

http://www.uwig.org/UWIGIntSummary.pdf 

Wind Plant Integration: Costs, Status, and Issues, IEEE Power & Energy Magazine, 

November/December 2005, pp. 38-46. 

 24
Appendix B: Energy Generation and Air Emissions Terminology40

Terms Used in Measuring Electric Power and Generation 

It is difficult to understand issues relating to air emissions without understanding the 

terms used in measuring electric power and generation. The reader often sees the words 

“watt” (w), “kilowatt” (kW), or “megawatt” (MW). So what do these terms mean? Each 

of these terms is a measure of power — the rate at which an appliance consumes 

electricity or a measure of the rate at which a power plant delivers electricity to the grid. 

The basic yardstick for measuring electric power is the watt. For example, a 100-watt 

light bulb will use 100 watts of power when it is turned on. If this light bulb were turned 

on for 4 hours, it would use a total of 400 watt-hours (Wh) of energy. Thus, watts 

measure instantaneous power while watt-hours measure the total amount of energy used 

during a period of time. 

For electric power plants, two other concepts also are very important. These concepts are 

capacity and capacity factor (also known as capacity value). Capacity is the maximum 

power output of the plant. To keep the grid running smoothly, grid operators must have 

sufficient power plant capacity that can be reliably dispatched to meet total power 

demand. 

So what is a kilowatt or a megawatt? A kilowatt is 1,000 watts, and a megawatt is 1 

million watts. Both terms are frequently used in the electric power industry when 

describing electric power consumption. Large modern coal-fired power plants typically 

produce electrical power at a rate of 1,000 MW, and the rated capacity of a large wind 

farm is often 100 to 200 MW. 

The capacity factor is the ratio of a power plant’s average production to its rated capacity. 

For example, a wind farm with a rated capacity of 100 MW will produce less power than 

its rated amount because the wind is not blowing at adequate speeds all of the time. As a 

result of varying wind speeds, a wind farm may only average 30 MW of power 

production over the course of a year. Thus, its capacity factor is 30% (30 MW of average 

production divided by 100 MW of rated capacity). 

Coal plants also do not operate at 100% capacity throughout the year, even though their 

capacity factor is generally far higher than a typical wind plant. For example, a 1000-MW 

coal plant may have a capacity factor of 75% because it averages 750 MW of production 

over the course of the year. The plant will not operate at full capacity for the entire year 

 

40 This discussion relies primarily on the following documents: Bellemare, Bob, “What is a Megawatt?,” 

Utilipoint Issue Alert, June 24, 2003; Brown, M.; DeCesaro, J.; Rewey, C.; The Power Industry and Air 

Quality, National Conference on State Legislatures, July 2005; and World Resources Institute and World 

Business Council for Sustainable Development, Guidelines for Quantifying GHG Reductions from GridConnected Electricity Projects, 2007. The discussion also incorporates information from the following 

document: The President’s Committee on Advisors on Science and Technology, Powerful Partnership: The 

Federal Role in International Cooperation on Energy Innovation, June 1999. 

 25
because it will shut down for maintenance from time to time, and it may operate at less 

than its rated capability when other generation sources (e.g., wind energy) can produce 

less expensive power. 

Terms Used in Measuring Emissions 

The emissions rate refers to the amount of emissions produced per megawatt-hour of 

electricity generated. Generally, emission rates are measured in pounds and tons. 

Even though emissions are gaseous, a pound of emissions literally weighs one pound.

One ton of emissions equals 2,000 pounds. 

The U.S. Environmental Protection Agency requires owners and operators of most large 

power plants (and their individual units) to operate continuous emission monitors 

(CEMs). These monitors measure the amount of specified pollutants (e.g., sulfur dioxide, 

oxides of nitrogen) in pounds or tons, as appropriate. 

 26
Appendix C: Air Quality Nonattainment and State Implementation Plans: 

The Basics 

Section 110 of the Clean Air Act requires each of the areas in the country that have failed 

to meet the national air quality standards for certain “criteria” pollutants (see Figure 2) to 

develop a State Implementation Plan (SIP) outlining actions (control measures) to bring 

the state into attainment with the air quality standards for each pollutant.41 The Clean Air 

Act requires the U.S. Environmental Protection Agency (EPA) to compile and evaluate 

the latest scientific knowledge available to assess the health and welfare effects of criteria 

pollutants every 5 years and to revise the air quality standards for such pollutants 

(including ozone and fine particulate matter) in accordance with this evaluation.42

The EPA required the submission of revised SIPs by June 2007 to demonstrate action to 

meet the agency’s new “8-hour ozone standard.”43 EPA has also mandated that states 

make further revisions to their SIPs by April 2008 to meet the air quality standard for 

“fine particulate matter,” also known as PM2.5.44 

Moreover, it is expected that EPA will require states to undertake additional actions 

beginning in 2013 to meet a more stringent ground-level ozone standard. In July 2007, 

EPA proposed revisions to the national air quality standards for ground-level ozone based 

on a review of new scientific data.45 EPA’s new proposed standards would tighten the 

existing standard for ground-level ozone to ensure public health protection and to prevent 

environmental damage, consistent with the new scientific information. 

In recent years, EPA has formally recognized that wind energy purchases — combined 

with necessary action under state emissions trading rules — will qualify for emissions 

reduction credit in a SIP under specified circumstances. EPA approved the first wind 

purchase in the nation for such credit in 2005 (see Wind Energy Purchases in the MidAtlantic Region textbox in the section titled State Air Quality Plans Can Recognize Air 

Emission Reductions Resulting from Wind Energy).46 

 

41 42 U.S.C. 7410 et seq. (2007). 

42 42 U.S.C. 7409(d)(2007). 

43 U.S. Environmental Protection Agency, Fact Sheet: Final Rule to Implement the 8-Hour Ozone National 

Ambient Air Quality Standard- Phase 2, November, 2005. 44 U.S. Environmental Protection Agency, Fact Sheet: Final Clean Air Particle Matter Implementation 

Rule for Implementation of the 1997 PM 2.5 Standard, March 29, 2007. 45 72 Fed. Reg. 37818 (July 11, 2007). 

46 See 70 Fed. Reg. 24987 (May 12, 2005) for the EPA approval and see Metropolitan Washington Council 

of Governments, Plan to Improve Air Quality in the Washington, DC-MD-VA Region: State 

Implementation Plan for the 1-Hour Ozone Standard, February 19, 2004, pp. 7-77 to 7-80 and Appendix J71 to J-76 for the proposed plan. 

 27
To obtain approval for an emission reduction credit from a renewable energy source, the 

EPA requires a state to demonstrate that the emission reductions are: 

• Quantifiable: The emission reductions are subject to measurement. 

• Surplus: Reductions cannot already be included in the state’s baseline emission 

inventory. Thus, reductions already required because of a state emissions cap 

cannot be double-counted, and the emissions cap must be reduced further through 

the wind developer’s retirement of NOx allowances from future use or other 

action. 

• Enforceable: The state is responsible for ensuring that the reductions credited in 

the SIP actually occur. The state needs to make a SIP commitment (enforceable 

by EPA) to monitor and report on the emission reductions resulting from the wind 

purchase and to remedy any shortfalls from projected emission reductions in a 

timely manner. 

• Permanent: The reductions must be permanent throughout the term of the state 

air quality plan, unless necessary emission reductions can be secured from other 

measures later in the term.47 

 

47 U.S. Environmental Protection Agency, Guidance on State Implementation Plan (SIP) Credits for 

Emission Reduction Measures from Electric-sector Energy Efficiency and Renewable Energy Measures, 

August 2004, pp. 4-7. 

 28
Appendix D: Emissions Trading (Cap and Trade) Background 

The goal of emissions trading is to lower the overall costs to regulated industries and the 

national economy of reducing air pollution. The idea is that entities that can easily reduce 

their emissions will do so and will choose to sell their unused emissions allowances, 

whereas entities that face more expensive pollution control challenges will choose to 

purchase allowances in lieu of installing costly pollution control equipment. This system 

is designed to lower the total costs of emissions control to the economy as compared to 

the traditional air pollution control approach, known as “command and control,” in which 

all regulated entities must reduce their emissions to specified levels, regardless of the 

variable costs to individual entities. 

Emissions trading was first implemented in the United States under Title IV of the Clean 

Air Act Amendments of 1990 (CAA Amendments).48 These provisions were designed to 

address the problem of acid rain by reducing emissions of sulfur dioxide (SO2). The 

United States expanded emissions trading to reduce nitrogen oxide emissions (NOx) — a 

precursor to ground-level ozone — in the Eastern states in the late 1990s under the socalled NOx SIP Call.49 

In 2005, the U.S. EPA issued the Clean Air Interstate Rule (CAIR), which reduced the 

emissions cap for SO2 previously established by the 1990 CAA Amendments. CAIR also 

reduced the emissions cap for NOx established under the EPA’s NOx SIP Call. CAIR 

applies to 28 states in the Eastern half of the country and the District of Columbia, and it 

is designed to help address non-attainment problems for ozone and fine particulate 

matter. The first phase of the cap is effective in 2010, and the second phase is effective in 

2015. Allowance allocations begin under the CAIR program in 2009.50

 

48 42 U.S.C. 7651 et seq. (2007). 

49 U.S. Environmental Protection Agency, Finding of Significant Contribution and Rulemaking for Certain 

States in the Ozone Transport Assessment Group Region for Purposes of Reducing Regional Transport of 

Ozone (NOx SIP Call), October, 1998. 

50 70 Fed. Reg. 25162 et seq. (May 12, 2005). 

 29
Figure 3: States covered by the U.S. EPA Clean Air Interstate Rule.51

 

51 U.S. Environmental Protection Agency. 

 30
Appendix E: Allowance Allocation to Wind Energy under the Clean Air 

Interstate Rule 

Each state covered by the U.S. Environmental Protection Agency’s (EPA’s) Clean Air 

Interstate Rule (CAIR) is required to submit a CAIR State Implementation Plan (SIP) 

indicating how the state will meet the requirements of the EPA CAIR. Otherwise, the 

state will be subject to the CAIR Federal Implementation Plan (FIP) and the FIP rules. 

The state CAIR rules contained in the state’s CAIR SIP (or the provisions of the FIP 

rules) will replace any existing state rule for NOx emissions trading for electric 

generating units. 

Under the previous NOx emissions trading rules, most states allocated all NOx 

allowances (authorization to emit 1 ton of NOx) only to fossil fuel generators.52

However, seven states did set aside a specific percentage of such allowances to provide 

incentives for renewable energy, including wind energy. These states are Indiana, 

Maryland, Massachusetts, Missouri, New Jersey, New York, and Ohio.53

Under CAIR, each state has authority to allocate NOx allowances as it chooses,54 and 

many states have issued regulations that allocate a portion of their allowances to 

renewable energy generators, including wind energy generators. Table 2 and Table 3 on 

the next pages summarize the treatment of renewable energy projects in the 28 states (as 

well as the District of Columbia) covered by the Clean Air Interstate Rule (see Appendix 

D above for a map of these states). Table 2 highlights the fact that nearly one-half of 

these states have adopted proposed or final regulations that allocate NOx allowances to 

renewable energy projects, including wind energy projects. 

 

52 U.S. Environmental Protection Agency, Climate Protection Partnerships Division, Office of Atmospheric 

Programs, Office of Air and Radiation, Draft Report on State Set-Aside Programs for Energy Efficiency 

and Renewable Energy Projects Under the NOx Budget Trading Program: A Review of Programs in 

Indiana, Maryland, Massachusetts, Missouri, New Jersey, New York, and Ohio, September 2005. 

53 Ibid. 54 The National Association of Clean Air Agencies (NACAA) issued a publication that listed options that 

states could choose for allocating allowances to promote clean technologies. NACAA, Alternative 

Allocation Language for the Clean Air Interstate Rule, August 2005. 

 31
Table 2: State Allocation of Nitrogen Oxide Allowances to Energy Efficiency and 

Renewable Energy (EE/RE) Under Clean Air Interstate Rule* 

StateA,B

Annual 

or 

Ozone 

Season 

Rule 

Type of 

Allocation to 

EE/RE 

Percentage 

of EE/RE 

Set-Aside 

Number of 

Allowances 

for EE/RE 

Phase 1 

Number of 

Allowances 

for EE/RE 

Phase 2 

Allocation 

Rate 

(lb/MWh) 

Phase 1 

Allocation 

Rate 

(lb/MWh) 

Phase 2 

CT Ozone Set-aside 10% 268 268 1.5 1.25 

IL Ozone Set-aside 12% 3684 3479 2.0 2.0 

IL Annual Set-aside 12% 9149 7625 2.0 2.0 

IN Ozone Set-aside ~1% 1115 C 500C 1.5 1.5 

IN Annual Set-aside ~0.5% 545 454 1.5 1.5 

MA Ozone Set-aside 10% 791.4 665.6 1.5 1.5 

MD Ozone Set-aside 5% 641.7 534.7 1.5 1.5 

MD Annual Set-aside 5% 1836 1155 1.5 1.5 

MI Ozone Set-aside ~0.7% 200 200 1.0 1.0 

MO Annual Set-aside ~0.5% 300 300 1.5 1.5 

NJ Ozone Set-aside 5% 333 277 1.5 1.25 

NJ Annual Set-aside 5% 634 528 1.5 1.25 

NY Ozone Set-aside 10% 2063.2 1719.3 1.5 1.25 

NY Annual Set-aside 10% 4561.7 3801.4 1.5 1.25 

OH Ozone Set-aside 1% 494.6 494.6 1.5 1.5 

PA Both Output-based -- -- -- -- -- 

VA Ozone Set-aside 1% 160 133 1.5 1.25 

VA Annual Set-aside 1% 361 301 1.5 1.25 

WI Both Output-based -- -- -- -- -- 

* Most state allocations covered by this chart apply to renewable energy (including wind energy) and 

energy efficiency. However, certain states, such as Michigan, limit their set-aside to renewable energy. 

A

 Rules are designated by regular font if they have received final approval by the U.S. EPA. Otherwise, the 

rules are identified in bold type. The information reflects the status as of 11/1/07. The final rules may differ 

from the proposed rules summarized here. Check state Web sites for updates (see Web links below). 

B

 States adopting regulations that do not include an allocation of NOx allowances to renewable energy 

projects include AL, AR, DE, FL, GA, IA, KY, LA, MN, MS, NC, SC, TN, TX, WV. The District of Columbia 

will not have a set-aside for its 2009 allocation but is seeking to implement a set-aside by 2010. In addition, 

Michigan has no set-aside for its annual rule, and Missouri has no set-aside for its ozone season rule. 

C Indiana's EE/RE allocation set-aside for ozone is 1,115 tons in 2009 and 500 tons in 2010 and thereafter. 

 32
Table 3: Details of State Energy Efficiency and Renewable Energy (EE/RE) Set-Asides for 

NOx Allowances Under Clean Air Interstate Rule* 

State Annual or Ozone 

Season Rule 

Maximum Period of 

Allocation to EE/RE 

1st Application 

Deadline 

Over Subscription 

Policy for EE/RE 

CT Ozone 5 years 2/1/09 pro-rata basis 

IL Ozone 8 seasons 5/1/09 pro-rata basis 

IL Annual 8 years 5/1/09 pro-rata basis 

IN Ozone Unlimited 5/1/09 pro-rata basis 

IN Annual Unlimited 5/1/09 pro-rata basis 

MA Ozone Unlimited 8/1/09 pro-rata basis 

MD Ozone 4 seasons Not specified first-come/firstserved 

MD Annual 4 years Not specified first-come/firstserved 

MI Ozone 3 seasons 3/1/10 pro-rata basis 

MO Annual Varies D 3/31/08 E Varies F

NJ Ozone Unlimited 10/30/09 pro-rata basis 

NJ Annual Unlimited 1/30/10 pro-rata basis 

NY Ozone Unlimited 1/1/09 no provision 

NY Annual Unlimited 1/1/09 no provision 

OH Ozone 5 years 11/15/08 no provision 

PA Both Unlimited Not specified G pro-rata basis 

VA Ozone Unlimited 4/1/09 pro-rata basis 

VA Annual Unlimited 7/1/09 pro-rata basis 

WI Both Unlimited 5/1/09 pro-rata basis 

* Most state allocations covered by this chart apply to renewable energy (including wind energy) and energy 

efficiency. However, certain states, such as Michigan, limit their set-aside to renewable energy. 

D

 Up to seven consecutive control periods for projects located in Missouri, and up to five consecutive control 

periods for projects located outside Missouri. 

E

 Sponsors of new renewable energy projects must submit a request for “pre-application” project review by 

March 31 of the year prior to the control period for which set-aside awards will be claimed (e.g., March 31, 

2008 deadline for 2009 control period allowances). The first full application will be due March 1, 2010. 

F

 The first 150 allowances in the 300 allowance set-asides must be awarded to projects located in Missouri, 

as follows: Up to the first 60 allowances must be awarded for energy efficiency projects in the order that the 

projects first achieved eligible status. The remaining allowances must be awarded for all eligible projects, 

including renewable energy projects, located in Missouri in the order the projects first achieved eligible 

status. Regardless of project location, the remaining allowances in the set-aside shall be awarded for eligible 

projects on a pro-rata basis in proportion to total remaining claims for awards. 

G The deadline for 2011 and 2012 vintage year allowance allocations for wind energy will be prescribed by 

the Pennsylvania Department of Environmental Protection when the regulation is finalized. 

 33
Web Links on State CAIR Regulations and EPA Review Status 

U.S. Environmental Protection Agency Review of State CAIR Submissions 

EPA Web Site: http://www.epa.gov/airmarkets/progsregs/cair/rulemakingactions.html

State Web Sites on CAIR Regulatory Development 

Connecticut: 

http://www.ct.gov/dep/cwp/view.asp?a=26848&q=331234&depNav_GID=1619

Illinois: http://www.ipcb.state.il.us/SLR/IPCBandIEPAEnvironmentalRegulationsTitle35.asp

Indiana: http://www.in.gov/idem/programs/air/workgroups/mercury/index.html

Massachusetts: http://mass.gov/dep/air/laws/regulati.htm#cair

Maryland: 

http://www.mde.state.md.us/ResearchCenter/laws_regs/propreg_26_11_28_070607.asp 

Michigan: http://www.michigan.gov/deq/0,1607,7-135-3310-122941--,00.html

Missouri: http://dnr.mo.gov/env/apcp/cair_camr/cair_camr.htm

New Jersey: http://www.nj.gov/dep/rules/adoptions/2007_0716cair.pdf

New York: http://www.dec.ny.gov/regulations/32119.html

Ohio: http://www.epa.state.oh.us/dapc/regs/3745-109/3745_109.html

Pennsylvania: http://www.dep.state.pa.us/dep/deputate/airwaste/aq/regs/regs.htm

Virginia: http://www.deq.virginia.gov/air/regulations/air140.html

Wisconsin: http://www.legis.state.wi.us/rsb/code/nr/nr432.pdf

A number of options are available to states that choose to grant NOx allowances to wind 

energy projects, and state CAIR regulations incorporate different policy design 

approaches. The elements of the various state regulations that allocate NOx allowances to 

wind energy projects are summarized in Tables 2 and 3 (above), and the reader can utilize 

the above complete listing of links to the state Web sites to review the complete 

regulations text and determine the current status of the state rules. 

The major design elements that apply to the distribution of NOx allowances to wind 

energy projects and that are highlighted in the columns in Tables 2 and 3 are explained 

below:55 

• Annual or Seasonal Rule: Under the EPA’s Clean Air Interstate Rule, most states 

are required to issue regulations setting two separate caps limiting NOx emissions: (1) 

the annual rule sets a cap limiting emissions over the course of an entire year, and (2) 

the seasonal rule sets a cap limiting emissions during the summer ozone season (May 

1 to September 30). A more stringent cap is set for the summer season due to the 

contribution of NOx emissions to dangerous ground-level ozone on hot summer days. 

 

55 These design features are more fully described in a July 2006 report issued by the National Renewable 

Energy Laboratory. See Bluestein, J.; Salerno, L.; Bird, L.; and Vimmerstedt, L., Incorporating Wind 

Generation in Cap and Trade Programs, NREL Report No. TP-500-40006, July 2006. 

 34
A separate annual limit is necessary to control NOx emissions that contribute to the 

formation of fine particulate matter in the fall, winter, and spring, as well as the 

summer. 

Most states that have issued regulations distributing allowances to renewable energy 

projects have done so under both the ozone season rule and the annual rule. This twofold approach is more favorable to wind energy. However, a few states (such as 

Michigan and Missouri) have only included renewable energy projects under one of 

the rules (see Table 2). 

• Allocation Type: Several alternative approaches are available to states to distribute 

allowances to renewable energy projects. The two most common approaches are 

renewable energy set-asides and direct allocation. 

Under a set-aside, the state regulatory agency allocates a percentage of the total 

emissions allowances to support specific energy technologies.56 Many state set-asides 

allow renewable energy projects to qualify for allowances only during a limited 

number of years – thereby eliminating the value of the set-aside after several years. 

Most state clean energy set-asides have distributed allowances to both renewable 

energy and energy efficiency projects. However, some states, such as Michigan, only 

have distributed allowances from the set-aside to renewable energy projects. 

The most common alternative to a set-aside for distributing allowances to wind 

energy projects is called a direct allocation. Under a direct allocation, the state 

regulatory agency directly allocates allowances to renewable energy projects based on 

the quantity of electric generation output (in MWh) provided by wind generation 

relative to other qualifying renewable energy and energy efficiency sources and 

qualifying fossil fuel-fired electric generation. 

Under a direct allocation program, generating units (and qualifying energy efficiency 

sources) receive allowances based on their proportion of generation output (or energy 

savings), as calculated during a baseline period. The benefit of a direct allocation for 

renewable energy projects is that this approach provides a long-term, stable stream of 

allowances and simplifies the allocation process.57

• Percentage Allocation: A set-aside does not increase the overall level of the cap. 

Instead, it reserves a percentage of the pool of total allowances for specified 

technologies, such as renewable energy and energy efficiency.58 In Table 2, the 

column titled Percentage of EE/RE Set-Aside indicates the percent of the total 

allowances that are contained in the renewable energy set-aside or combined energy 

efficiency/renewable energy set-aside. This percentage ranges from 0.5% of total 

 

56 Bluestein, J.; Salerno, L.; Bird, L.; and Vimmerstedt, L., Incorporating Wind Generation in Cap and 

Trade Programs, NREL Report No. TP-500-40006, July 2006, p. 15. 57 Id., p. 25. 58 Id., p. 17. 

 35
allowances in Missouri to 12% in Illinois. A larger percent allocation is more 

favorable to wind energy because it lessens the likelihood that the set-aside will be 

over-subscribed. As a result, a larger percentage increases the certainty that wind 

energy developers will obtain their expected share of allowances and increases the 

value of the program to wind energy companies. 

• Allocation Rate: Trading programs typically distribute allowances to fossil fuel-fired 

generating units based on the heat input (from the combustion process) times an 

allocation factor or “allocation rate.” The allocation rate is usually the nominal value 

on which the cap is based.59 For example, the current cap for most states under the 

NOx SIP Call program is based on emissions of 0.15 lb/MMBtu.60 

However, renewable generators cannot use the approach described above because 

they do not have a combustion process nor any related heat input. Therefore, a 

common approach used in state CAIR programs is to convert the heat-input-based 

allocation rate (in lb/MM British Thermal Units) to an output-based rate (based on 

lb/MWh) and apply the converted allocation rate to the amount of renewable 

generation.61 

The most typical allocation rate applied to renewable energy projects in state CAIR 

programs is 1.5 lb/MWh of electric generation. This allocation rate is calculated by 

converting 0.15 lb/MMBtu to 1.5 lb/MWh using a typical fossil fuel-fired plant heat 

rate of 10,000 Btu/kWh. 

Higher allocation rates are more favorable to renewable energy developers than lower 

rates because they result in the allocation of a greater number of allowances to the 

renewable energy projects. 

• Maximum Allocation Period: States often limit the number of years that a 

renewable energy project can receive allowances from the set-aside. By establishing a 

maximum period of allocation, states ensure that projects are cycled in and out of the 

program — making room for new projects.62 Depending on the state, a renewable 

energy project may receive allowances for up to 5 years or more but must re-apply 

each year. 

• First Application Deadline: Each state has established application deadlines for 

renewable energy project developers (or other parties) to request allowances under 

their CAIR program. Allowance allocations for most state CAIR programs begin in 

2009, and renewable energy generators generally must submit applications for the 

seasonal and/or annual program by a specified date during the first year of the 

program and every year thereafter. Some application deadlines occur in 2010 because 

of delays in the state rulemaking process. 

 

59 Ibid. 

60 Ibid. 

61 Ibid. 

62 Ibid. 

 36
 37

 

• Over-Subscription Policy: Set-aside programs distribute a small share of the total 

allowances to renewable energy generators. This share is often sufficient to cover 

existing and near-term renewable energy generation, but it may not be sufficient to 

keep up with longer-term growth. An over-subscription policy is often detailed in the 

state’s CAIR regulations (specific rules for distributing allowances to renewable 

energy generators if applications for allowances exceed the amount available in the 

renewable energy set-aside). 

The most frequent approach in state CAIR regulations is to distribute a pro-rata share

of the available allowances to renewable energy applicants based on the proportion of 

their share of allowances to the total amount of allowances in the renewable energy 

set-aside. Another approach is to distribute allowances on a first-come, first-served 

basis. The pro-rata distribution approach is the most equitable approach to address 

over-subscription of the set-aside. 

The state agency Web sites listed above provide links to the actual language of the State 

Clean Air Interstate Rules, and this language should be consulted for current information.

The importance of state policies that distribute allowances to the owners and operators of 

wind energy projects is that the value and/or market share for wind energy is likely to 

increase when such allowances are granted to wind projects. Market value and/or market 

share increases because wind generators can participate in a number of emission markets 

(without purchasing allowances), including the following: 

• Selling the renewable energy or a Renewable Energy Certificate (REC) bundled 

with the NOx allowances to a state or municipality that plans to retire the 

allowances and receive emissions reduction credit in its State Implementation 

Plan (SIP credit) 

• Selling the allowance directly into the NOx emissions market to receive 

additional revenue63

• Bundling the NOx allowance with RECs for sale into the voluntary market for 

“green power” 

• Bundling the NOx allowance to meet the REC compliance requirements in a state 

with a Renewables Portfolio Standard that requires that all “environmental 

attributes” be included with the REC.64

Of course, these approaches are mutually exclusive. However, the key point is that a 

wind generator cannot participate in any of these markets unless the state regulations 

provide authority to allocate NOx allowances to renewable energy generators. If such 

provisions are not included in the state rules, a wind generator only could participate in 

these markets if it purchased allowances — a financial obstacle that is unlikely to be 

overcome. 

63 In this case, the generator cannot claim a reduction in NOx emissions. 

64 Letter from Elizabeth Salerno, American Wind Energy Association to Kathleen McGinty, Secretary, 

Pennsylvania Department of the Environment, June 16, 2006.
Appendix F: Avoided Emission Rates 

Table 4: Examples of Avoided Emission Rates for Wind Power in Selected U.S. Regions* 

AREA NITROGEN 

OXIDE 

(lb/MWh)A

SULFUR 

DIOXIDE 

(lb/MWh) 

CARBON 

DIOXIDE 

(lb/MWh)B

NOTESC SOURCE 

New England 0.54 2.24 1,102 Uses ISO New England 

Data 

ISO New England

Maine 0.74 2.7 1,210 Based on Data for Power 

Market 

Maine 

LURC 

Testimony66

PJM Power Market 

2.05 __ __ Based on Data for Power 

Market 

Resource 

Systems 

Group67

Shreveport, LA 

2.0 to 4.6 __ __ Comparison of three 

methodologies 

National 

Renewable Energ

Lab68

Metropolitan Washington, D.C.69

1.7 

__ __ Regional 

Air Quality 

Plan

Metropolitan 

Washington 

COG70

65 Independent System Operator New England, 2004 New England Marginal Emission Rate Analysis, 2005. 66 High, C. and Hathaway, K. 2006. Avoided Emissions of the Redington Mountain Wind Farm, 2006. (Report prepared by Resource Sy

Independent Energy Producers of Maine and the Conservation Law Foundation and presented as testimony in the Maine Land Use RegHearing on the Redington Mountain Wind Farm, August 4, 2006.) 

67 High, C. and Hathaway, K. 2006. Final Report: Estimation of Nitrogen Oxide Avoided Emission Rates Resulting from Renewable Ele

in the New England, New York, and PJM Interconnection Power Market Areas, June 2006. (Report prepared for Environmental ResourSmart Power with funding support from the U.S. Department of Energy.) 

68 Chambers, A., Diem, A. and Vimmerstedt, L., Comparison of Methods for Estimating the Emissions Impacts of Energy Efficiency an

Shreveport Louisiana Case Study, 2005 (National Renewable Energy Laboratory Report NREL T/P710-37721). 

69 The analysis is based on the PJM power market area. 70 Metropolitan Washington Air Quality Committee, Plan to Improve Air Quality in the Washington, DC-MD-VA Region: State Implem

Hour Ozone Standard, May 23, 2007, pp. 6-62 to 6-65 and Appendix H (Resource Systems Group -RSG Avoided Emissions Report). 

 38
 39

AREA NITROGEN 

OXIDE 

(lb/MWh)

A

SULFUR 

DIOXIDE 

(lb/MWh) 

CARBON 

DIOXIDE 

(lb/MWh)

B

NOTES

C SOURCE 

CA Power Market (CAMX – WECC CA)

D

__ __

1,267.74 

Based on 

eGrid Data

E EPAF

Part of TX Power Market (ERCT – ERCOT All) D

__ __ 

1,328.91 

Based on 

eGrid Data

E EPAF

ISO New England Power Market (NEWE-) D

__ __ 

1,399.17 

Based on 

eGrid Data

E EPAF

Part of PJM Power Market (RFCE – RFC East) D

__ __ 1816.48 

Based on 

eGrid 

Data

E

EPAF

*See text on Pages 13 to 17 for a discussion of the extent to which avoided emissions at individual fossil fuel-fired generating units maemission reductions below the level of an emissions cap under an emissions trading (cap and trade) program, and see Page 18 for a disbenefits of wind energy in helping to meet emission caps. A Avoided emission rates for NOx are average rates for the entire ozone season. Emission rates for SO2 are annual averages. The avoid

and SO2 are based on available emission rate data for existing units operating at the margin (at the time the study was conducted). B Emission rates for CO2 are annual averages. These avoided emission rates for CO2 are based on available emission rate data for exist

and/or units operating at the margin (at the time the study was conducted). 

C There are significant differences in the methodologies used in the studies cited. D Abbreviations are for the National Electric Reliability Council (NERC) subregions. Only the U.S. portions of these subregions are inc

regional definitions, refer to www.nerc.com/regional/. The subregions have been selected only as examples. The selection of the geogra

area subject to analysis is an important methodological decision in the calculation of the avoided emissions rate. 

E U.S. Environmental Protection Agency, Climate Leaders Guidance on Purchases of Green Power and Renewable Energy Certificates

December 2007, Appendix IIIa., p. 16. The Climate Leaders Program obtained this information from the EPA’s Emissions & Generati

Database (eGRID2006, Version 2.1, April 2007). The eGrid data also includes non-baseload emission rates for nitrogen oxides, sulfur 

F U.S. Environmental Protection Agency, Climate Leaders Guidance on Purchases of Green Power and Renewable Energy Certificates

Appendix IIIa., p. 16.
Table 5: Variation in Fossil Fuel Air Emissions Rates for Major U.S. Electric Power Generating 

Companies* 

Pollutant Lowest and Highest Emission Rate 

Sulfur Dioxide 0.002 - 23.4 lb/MWh 

Nitrogen Oxide 0.18 – 5.5 lb/MWh 

Carbon Dioxide 862 – 2470 lb/MWh 

Mercury 0.007 – 0.113 lb/GWh 

* Natural Resources Defense Council, Benchmarking Emissions of the 100 Largest Power Producers in the U.S. for 

2004, 2005. The data in this report are based on information from EPA’s Acid Rain Emissions Reporting Program, 

the EPA Toxics Release Inventory, and the Form 920 Reports of the Energy Information Administration. It should 

be noted that the EPA’s eGrid data is derived, in part, from data reported under EPA’s Acid Rain Emissions 

Reporting Program. 

The data in this table reflect average emission rates for the fleet of plants of an entire electric power company. For 

example, the high end of the range shows the emissions rate for the company with the highest average emission rates 

across its fleet of plants. However, individual plants may have far higher or lower emission rates. 

 40
F1146-E(09/2007) 

REPORT DOCUMENTATION PAGE Form Approved 

OMB No. 0704-0188

The public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, 

gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this 

collection of information, including suggestions for reducing the burden, to Department of Defense, Executive Services and Communications Directorate (0704-0188). Respondents 

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PLEASE DO NOT RETURN YOUR FORM TO THE ABOVE ORGANIZATION.

1. REPORT DATE (DD-MM-YYYY)

February 2008 

2. REPORT TYPE

Subcontract report 

3. DATES COVERED (From - To)

August 1, 2007 - December 31, 2007 

5a. CONTRACT NUMBER

DE-AC36-99-GO10337 

5b. GRANT NUMBER

4. TITLE AND SUBTITLE

Wind Energy and Air Emission Reduction Benefits: A Primer 

5c. PROGRAM ELEMENT NUMBER

5d. PROJECT NUMBER

NREL/SR-500-42616 

5e. TASK NUMBER

WER84001 

6. AUTHOR(S)

D. Jacobson and C. High 

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

DJ Consulting LLC 

1703 Fairveiw Ave. 

McLean, VA 22101 

8. PERFORMING ORGANIZATION 

REPORT NUMBER

LAM-7-77553-014 

10. SPONSOR/MONITOR'S ACRONYM(S)

NREL 

9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES)

National Renewable Energy Laboratory 

1617 Cole Blvd. 

Golden, CO 80401-3393 11. SPONSORING/MONITORING 

AGENCY REPORT NUMBER

NREL/SR-500-42616 

12. DISTRIBUTION AVAILABILITY STATEMENT

National Technical Information Service 

U.S. Department of Commerce 

5285 Port Royal Road 

Springfield, VA 22161 

13. SUPPLEMENTARY NOTES

NREL Technical Monitor: L. Bird 

14. ABSTRACT (Maximum 200 Words)

The purpose of this document is to provide a user-friendly summary of the impact of wind energy development on the 

air emissions of various pollutants. The core document addresses the key facts relating to the analysis of emission 

reductions from wind energy development. It is intended for use by a wide variety of parties with an interest in this 

issue ranging from state environmental officials to renewable energy stakeholders. The appendices provide basic 

background information for the general reader, as well as detailed information for those seeking a more in-depth 

discussion of various topics. 

15. SUBJECT TERMS

wind energy; wind power; emissions; emissions reduction; Clean Air Interstate Rule; air quality; climate change; 

fossil fuel plants; cap and trade; wind integration 

16. SECURITY CLASSIFICATION OF: 19a. NAME OF RESPONSIBLE PERSON 

a. REPORT 

Unclassified 

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Unclassified

c. THIS PAGE 

Unclassified

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OF ABSTRACT

UL 

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