# T he Acid Rain Program (ARP), established under Ti tle IV of the 1990 Clean Air Act (CAA) Amendments, requires major emission reductions of SO 2 

## and NO x

## , the primary precursors of acid rain, from the electric pow er industry. The SO 2 

## program sets a permanent cap on the total amount of SO 2 

## that may be emitted by electric gen erating units (EGUs) in the contiguous United States. The program is phased in, with the final 2010 SO 2 

## cap set at 8.95 million tons, a level of about one-half of the emissions from the power sector in 1980. NO x

## reductions under the ARP are achieved through a program that applies to a sub set of coal-fired EGUs and is closer to a traditional, ratebased regulatory system. Since the program began in 1995, the ARP has achieved significant emission reductions. Table 1 shows that between 2004 and 2008, SO 2 

## and NO x 

## emissions fell significantly, while heat input (a surrogate measure of electricity generation) increased slightly. Most of the recent reductions since 2005 are from early reduc tion incentives of the Clean Air Interstate Rule (CAIR) cov ering most eastern states. Over the next several months, EPA will release a series of reports summarizing progress under the ARP. This first re port presents 2008 data on emission reductions, compli 

# At a Glance: ARP Results in 2008 **SO 2**  

### Emissions: 7.6 million tons **SO 2**  

### Compliance: 100% **SO 2**  

### Allowances: Banked allowances increased by almost 2 million from 2007 levels **SO 2**  

### Allowance Prices: Nominal allowance prices declined sharply during the year, from a monthly aver age of $509/ton in January to $179/ton in December **NO x** 

### Emissions: 3.0 million tons **NO x** 

### Compliance: 100%



### July 2009 

## ance results, and SO 2 

## allowance prices. Future reports will evaluate progress under the ARP in 2008 by analyzing emis sion reductions, reviewing compliance results and market activity, and comparing changes in emissions to changes in acid deposition and surface water chemistry. For more in formation on the ARP, please visit: < http://www.epa.gov/ airmarkets/progsregs/arp/index.html >.

Fuel Type 2004 2005 2006 2007 2008 SO 2 

### NOx 

### HI SO 2 

### NOx 

### HI SO 2 

### NOx 

### HI SO 2 

### NOx 

### HI SO 2 

### NOx 

### HI Coal 9,840 3,484 20.49 9,837 3,356 20.77 9,244 3,208 20.44 8,768 3,069 20.75 7,517 2,816 20.25 Oil 377 138 1.00 349 129 0.99 135 63 0.58 149 68 0.61 84 46 0.48 Gas 36 134 4.83 35 142 5.34 8 131 5.70 10 141 6.32 7 129 6.21 Other 3 6 0.03 3 6 0.03 7 7 0.05 7 5 0.05 10 5 0.06 Total 10,256 3,762 26.34 10,223 3,633 27.13 9,393 3,409 26.77 8,933 3,283 27.74 7,617 2,996 26.99 Notes:

Emissions are in thousand tons, and heat input data are in quadrillion Btu (Quads). Totals may not reflect individual rows from rounding. 

## • Fuel type represents primary fuel type; many electric generation units might combust more than one fuel.

EPA data in Table 1 and used elsewhere in this report are current as of July 1, 2009, and may differ from past reports as a result of resubmis 

## • sions by sources and ongoing data quality assurance activities. Source: EPA, 2009 

## Table 1: SO 2 

## , NO x

## , and Heat Input Trends in Acid Rain Program Units, by Fuel Type 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data

### 2 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data Table 2: Origin of 2008 Allowable SO 2

## Emission Levels

Type of Allowance Allocation Number of Allowances Explanation of Allowance Allocation Type Initial Allocation 9,191,897 Initial allocation is the number of allowances granted to EGUs based on the product of their historical utilization and emission rates speci fied in the Clean Air Act. Allowance Auction 250,000 The allowance auction provides allowances to the market that were set aside in a Special Allowance Reserve when the initial allowance allocation was made. Opt-in Allowances 106,497 Opt-in allowances are provided to units entering the program voluntarily. There were 20 opt-in units in 2008. Total 2008 Alloca - tion 9,548,394 Total Banked Allowances 6,678,688 Banked allowances are those allowances accrued in a facility's account from previous years, which can be used for compliance in 2008 or any future year. Total 2008 Allow able Emissions 16,227,082 Notes: Total banked allowances are adjusted from the 2007 Progress Report to account for additional allowance deductions made after the 2007 reconciliation was completed. Source: EPA, 2009 

# SO 2

# Emission Reductions The SO 2 

## requirements under the ARP apply to EGUs, fossil fuel-fired combustors that serve a generator that provides electricity for sale. The vast majority of ARP SO 2 

## emissions result from coal-fired EGUs, although the program also ap plies to oil and gas units. As Figure 1 shows, ARP units have reduced annual SO 2 

## emissions by 56 percent compared with 1980 levels and 52 percent compared with 1990 levels. Sources emitted 7.6 million tons of SO 2 

## in 2008, well below the current annual emission cap of 9.5 million tons, and already below the statutory annual cap set for compliance in 2010. Reductions in SO 2 

## emissions from other sources not affect ed by the ARP (including industrial and commercial boilers and the metals and refining industries) and use of cleaner fuels in residential and commercial burners contributed to a similar overall decline (56 percent) in annual SO 2 

## emis sions from all sources since 1980. National SO 2 

## emissions from all sources have fallen from nearly 26 million tons in 1980 to about 11.4 million tons in 2008 (see data available at < www.epa.gov/ttn/chief/trends >). The states with the highest emitting sources in 1990 have generally seen the greatest SO 2 

## reductions under the ARP (see Figure 2). Most of these states are upwind of the ar 

## Figure 1: SO 2

## Emissions from Acid Rain Program Sources, 1980 - 2008

Source: EPA, 2009 All Affected Sources Phase II (2000 on) Sources 9 . 4 9 . 3 8 . 7 5 . 3 5 . 4 5 . 5 5 . 3 4 . 9 1 7 . 3 1 6 . 1 1 5 . 7 1 1 . 9 1 2 . 5 1 3 . 0 1 3 . 1 1 2 . 5 1 1 . 2 1 0 . 6 1 0 . 2 1 0 . 6 1 0 . 3 1 0 . 2 9 . 4 8 . 9 7 . 6 8 . 7 8 . 3 7 . 1 7 . 0 1 0 . 0 9 . 6 9 . 5 9 . 5 9 . 5 9 . 5 9 . 5 9 . 5 9 . 5

Phase I (1995-1999) Sources Allowances Allocated 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2 4 6 8 10 12 14 16 18 20SO2Emissions (million tons)

7 . 0

### 3 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data

Scale: Largest bar equals 2.2 million tons of SO 2 

### emissions in Ohio, 1990. Source: EPA, 2009 

## Figure 2: State-by-State SO 2

## Emission Levels for Acid Rain Program Sources, 1990-2008

1 9 9 0 E m i s s i o n s 1995 E m i s s i o n s 2 0 0 0 E m i s s i o n s 2 0 05 Emissions 2 0 08 Emissions



## eas the ARP was designed to protect, and reductions have resulted in important environmental and health benefits over a large region. In addition, from 2007 to 2008, reductions in SO 2 

## emis sions from ARP units in 38 states totaled about 1.3 million tons, or about 15 percent for the year. Five states (Geor gia, Indiana, North Carolina, Ohio, and Pennsylvania) ac counted for most of the one-year reductions from 2007 to 2008, ranging from 119,271 to 244,651 tons of SO 2 

## in each of these states. From 1990 to 2008, annual SO 2 

## emissions in 38 states and the District of Columbia fell by a total of approximately 8.2 million tons. In contrast, annual SO 2 

## emissions increased by a total of 79,309 tons in 10 states from 1990 to 2008. The seven states with the greatest reductions in annual emis sions since 1990 include Ohio, which decreased emissions by over 1.5 million tons, and Illinois, Indiana, Kentucky, Missouri, Tennessee, and West Virginia, each of which re duced total emissions during this time period by more than 500,000 tons. 

## SO 2

## Program Compliance For 2008, EPA allocated 9.5 million SO 2 

## allowances under the ARP (see Table 2). Together with 6.7 million unused al lowances carried over (or banked) from prior years, there were 16.2 million allowances available for use in 2008. ARP sources emitted approximately 7.6 million tons of SO 2 

## in 2008, less than the allowances allocated for the year, and far less than the total allowances available (see Figure 3). In 2010, the total number of Title IV allowances allocated annually will drop to 8.95 million and remain statutorily fixed at that annual level. Table 2 explains in more detail the origin of the allowances that were available in 2008, and Table 3 shows how those allowances were used. Approximately 7.6 million allowanc es were deducted from sources’ accounts in 2008 to cover emissions. From 2007 to 2008, the number of banked al lowances increased by nearly two million allowances to 8.6 million, a 28 percent increase. In 2008, all ARP facilities complied with the requirement to hold enough allowances to cover SO 2 

## emissions.

### 4 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data Figure 3: SO 2

## Emissions and the Allowance Bank, 1995-2008

Source: EPA, 2009 

## Table 3: SO 2

## Allowance Reconciliation Summary, 2008

Total Allowances Held (1995 - 2008 vintages) 16,227,082 Affected Facility Accounts 12,210,477 Other (General and Non-Affected Facility Accounts) 4,016,605 Allowances Deducted* 7,602,693 Penalty Allowance Deductions ( 2009 Vintage) 

### 0 Banked Allowances 

### 8,624,389

Affected Facility Accounts 

### 4,607,784 Other (General and Non-Affected Facility Accounts) 

### 4,016,605 * Includes 3,315 allowances deducted from opt-in sources for re duced utilization. Additionally, allowances deducted for emissions are about 14,000 tons less than the total emissions used elsewhere in this report, which reflect data reported as of July 1, 2009. This is a result of rounding differences, any changes in reported emis sion data after reconciliation, and resolution of petitions, including emissions for one facility (WH Zimmer in OH) that has not been reconciled due to a monitoring petition. When this facility is rec onciled the number of allowances deducted will go up and the amount of banked allowances will decrease. Source: EPA, 2009 

## Figure 4: Average Monthly SO 2

## Allowance Price, August 1994 - May 2009

Source: CantorCO2e Market Price Index, 2009 8 . 7 1 1 . 7 1 3 . 4 1 5 . 0 1 6 . 6 2 1 . 6 1 9 . 9 1 8 . 8 1 8 . 2 1 7 . 1 1 6 . 4 1 5 . 7 1 5 . 8 1 6 . 2

5 . 3 5 . 4 5 . 5 5 . 3 4 . 9 1 1 . 2 1 0 . 6 1 0 . 2 1 0 . 6 1 0 . 3 1 0 . 2 9 . 4 8 . 9 7 . 6 5 1 0 1 5 2 0 2 5

1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 04 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 Allowances Allocated Unused Allowances from Previous Years Actual Emissions from Affected SourcesSO2(million tons)

$ 0 $ 2 0 0 $ 4 0 0 $ 6 0 0 $ 8 0 0 $ 1 , 0 0 0 $ 1 , 2 0 0 $ 1 , 4 0 0 $ 1 , 6 0 0 $ 1 , 8 0 0Nominal Price ($/ton) Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 

## 2008 SO 2

## Allowance Market In 2008, the SO 2 

## allowance market experienced a 65% price decline; the monthly average price fell from $509 per ton in January to $179 per ton by December (see Figure 4). That decline has continued in 2009, falling to $71/ton by May. ARP reports released in the coming months will ana lyze allowance market activity in more detail.5 . 5 5 . 4 5 . 4 5 . 5 5 . 3 4 . 8 4 . 5 4 . 1 4 . 0 3 . 8 3 . 4 3 . 3 3 . 1 3 . 0 2 . 7 6 . 7 6 . 1 5 . 9 6 . 0 6 . 0 5 . 5 5 . 1 4 . 7 4 . 5 4 . 2 3 . 8 3 . 6 3 . 4 3 . 3 3 . 0



### 1 2 3 4 5 6 7 8

1 9 9 0 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8NOxEmissions (million tons)

NO xProgram Affected Sources Title IV Sources Not Affected for NO x



### 5 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data 

# NO x

# Emission Reductions Title IV requires NO x

## emission reductions for certain coalfired EGUs by limiting the NO x

## emission rate (expressed in lb/mmBtu). Congress applied these rate-based emission limits based on a unit’s boiler type (see Table 4). The goal of the NO x

## program is to limit NO x

## emission levels from the affected coal-fired boilers so that their emissions are at least 2 million tons less than the projected level for the year 2000 without implementation of Title IV. Figure 5 shows that NO x

## emissions from all ARP sources were 3.0 million tons in 2008. This level is 5.1 million tons less than the projected level in 2000 without the ARP, or more than double the Title IV NO x

## emission reduction ob jective. While the ARP was responsible for a large portion of these annual NO x

## reductions, other programs—such as the Ozone Transport Commission (OTC), the NO x

## Budget Program under EPA’s NO x

## State Implementation Plan (SIP) Call, and other regional and state NO x

## emission control programs—also contributed significantly to the NO x

## re ductions achieved by sources in 2008. From 1995 to 2008, annual NO x

## emissions from ARP units dropped by about 3.1 million tons, a net decrease of 51 per cent. Forty-two states and the District of Columbia reduced NO x

## emissions during this period versus six states that ac counted for only about 15,600 tons of increased NO x

## emis sions during the same period (see Figure 6). 

## Table 4: NO x

## -Affected Title IV Units by Boiler Type and NO x 

## Emission Limit Coal-Fired Boiler Type Title IV Standard NOx 

### Emission Limits

(lb/mmBtu) Number of Units Phase I Group 1 Tangentially Fired 0.45 133 Phase I Group 1 Dry Bottom, Wall-fired 0.50 107 Phase II Group 1 Tangentially Fired 0.40 300 Phase II Group 1 Dry Bottom, Wall-fired 0.46 294 Cell Burners 0.68 37 Cyclones > 155 MW 0.86 54 Wet Bottom > 65 MW 0.84 20 Vertically Fired 0.80 24 Total All Units 

### 969 Source: EPA, 2009 

## NOx

## Compliance The ARP NO x

## Program does not impose a cap on NO x

## emis sions and does not rely on allowance trading. The programallows affected sources to comply either by meeting a unitspecific emission rate or by including two or more units in an emission rate averaging plan. These options provide af

## Figure 5: NO x

## Emission Trends for All Acid Rain Program Units, 1990-2008

Source: EPA, 2009

### 6 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Data

Figure 6: State-by-State NO x

## Emission Levels for Acid Rain Program Sources, 1990 - 2008

Scale: Largest bar equals 500,000 tons of NO x

### emissions in Ohio, 1990. Note: Area shaded in gray represents the NO x

### Budget Program geographic region. Source: EPA, 2009 1 9 9 0 E m i s s i o n s 1995 E m i s s i o n s 2 0 0 0 E m i s s i o n s 2 0 05 Emissions 2 0 08 Emissions 

## fected sources with the flexibility to meet the NO x

## emission reduction requirements in the most cost-effective manner. In 2008, all 969 units that were subject to the ARP NO x

## Pro gram achieved compliance.