# T he Acid Rain Program (ARP), established under Title IV of the 1990 Clean Air Act Amendments, re quires major emission reductions of sulfur dioxide (SO 2 

### ) and nitrogen oxide (NO x

### ), the primary precursors of acid rain, from the electric power industry. The SO 2 

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

### that may be emitted by electric generating 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 subset of coal-fired EGUs and is closer to a more traditional, rate-based regulatory system. Since the program began in 1995, the ARP has achieved significant emissions reductions. As Figure 1 shows, these reductions have occurred as electricity generation has in creased. 

# 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: Since July 2008, allowance pric es have fallen sharply, with a monthly average nominal price in May 2009 of $71/ton **NO x** 

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

### Compliance: 100%



### September 2009 

## Figure 1: Trends in Electricity Generation, Fossil Energy Use, Prices, and Emissions from the Electric Power Industry, 1990–2008

* Generation from fossil fuel-fired plants. ** Constant year 2000 dollars adjusted for inflation. Source: Energy Information Administration (electricity generation, retail price); EPA (heat input and emissions, representing all affected ARP units), 2009 -60% -40% -20%

0% 20% 40% 60%

1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 2 0 0 8 SO 2 Emissions Heat Input Electricity Generation* NO xEmissions Average Retail Price of Electricity**Percent Change 

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



### 2 

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

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

Source: EPA, 2009 

### Over the next several months, EPA will release a series of reports summarizing progress under the ARP. This second report analyzes 2008 data on emission reductions, reviews compliance results, and summarizes market activity. A future report will compare changes in emissions to changes in acid deposition and surface water chemistry. For more information on the ARP, please visit: < www.epa. gov/airma rkets/p rogsregs/arp/index.html >. 

# SO 2 SO 2

### Emission Reductions The SO 2 

### requirements under the ARP apply to EGUs, fossil fuel-fired combustors that serve a generator which 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; in total, there were 3,572 EGUs subject to the SO 2 

### program in 2008. As Figure 2 shows, ARP units have reduced annual SO 2 

### emissions by 56 per cent 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 of 8.95 million tons. 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. Most of these states are upwind of the areas the ARP was designed to protect, and reductions have resulted in im portant environmental and health benefits over a large re gion. 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 emissions 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 reduced total emissions during this time period by more than 500,000 tons. To view emission data in aninteractive format using Google Earth or a similar threedimensional platform, go to < www.epa.gov/airmarkets/ progress/interactivemapping.html >.

### 3 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Analyses Why SO 2

### Emissions Decreased in 2008 ARP sources decreased SO 2 

### emissions sharply in 2008, with a 15 percent decline from 2007. A portion of this re duction may be attributable to a decrease in utilization, as heat input in 2008 fell by about 3 percent (See Table 1). The larger cause, however, was the large increase in the number of units that employed flue gas desulfurization (or scrubbers). The number of reported scrubbers climbed by 20 percent, from 246 in 2007 to 295 in 2008. This increase led to a decline in the overall SO 2 

### emission rate for ARP units—0.64 lb/mmBtu in 2007 versus 0.56 lb/mmBtu in 2008. It is of historical interest that the ARP allowance al locations for Phase II in 2000 were based on an SO 2 

### emis sion rate of 1.2 lb/mmBtu. With the exception of reductions that might have occurred as a result of enforcement actions, most of the SO 2 

### reduc tions in 2008 are likely to have resulted from early com pliance planning for the Clean Air Interstate Rule (CAIR). Although some states have regulations that will require SO 2 

### reductions in future years (such as North Carolina’s Clean Smokestacks Act in 2009), one reason controls were installed and operated in 2008 was the significant incen tive to bank pre-CAIR vintage SO 2 

### allowances, which could be used on a 1:1 basis under the CAIR annual SO 2 

### program. In contrast, ARP allowances with later vintage years would be subject to increased retirement ratios under CAIR (2:1 in 2010 through 2014, and 2.86:1 in 2015 and thereafter). Going forward, the decision by the U.S. Court of Appeals re manding CAIR for further rulemaking by EPA might affect sources’ compliance planning and the observed trends in SO 2 

### emission reductions.

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 generating 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 Updating the Human Health Benefits of the Acid Rain Program In 2005, a peer reviewed journal article, “A Fresh Look at the Benefits and Costs of the US Acid Rain Program,” 1 

### as sessed the human health and welfare benefits of ARP im plementation for the prospective year 2010. The benefits were estimated using modeled emission reductions and ambient air quality expected to be achieved in 2010 under the ARP. The majority of the monetized benefits of ARP implementation are from the prevention of health-related impacts, such as premature death, due to reductions in am bient concentrations of fine particulate matter (PM 2.5 

### ) and ground-level ozone. This study used the Pope et al., 2002, concentration response function to estimate incidences of adult premature mortality as a result of PM 2.5 

### exposure. 2 

### The results of this study estimated the U.S. PM 2.5 

### and ozone health-related benefits of the ARP to be $134 billion and $5.5 billion annually, respectively. 3 

### Since publication of this article, the assumptions used to develop human health effects estimates have changed. For example, EPA now also includes concentration response functions derived from the Laden et al., 2006 study4

### and an expert elicitation to estimate incidences of adult premature mortality as a result of PM 2.5 

### exposure. Additionally, many underlying modeling assumptions have been updated, in cluding population forecasts and baseline incidence rates. A majority of these updated assumptions are discussed in detail in the recent PM 2.5 

### Regulatory Impact Analysis. 5 

### The revised assessment uses the original modeled ambient air quality 6

### and updated health benefits assessment assump tions to update the U.S. PM 2.5 

### and ozone related benefits of ARP implementation.

## Table 2: Estimated PM 2.5

## Health Benefits Due to ARP Implemen tation in 2010 Health Effect Incidences Avoided Monetized Value (millions; 2008$) Adult Mortality7 from PM 2.5 Pope et al., 2002 20,000 $160,000 Laden et al., 2006 50,000 $400,000 Range of Expert Elicitation 7,000 to 66,000 

### $58,000 to $520,000 Infant Mortality from PM 2.5 Woodruff et al. 82 

### $710 Morbidity from PM 2.5 Acute Bronchitis 28,000 

### $2.2 Acute Myocardial Infarction 30,000 

### $3,500 Acute Respiratory Symptoms 12,000,000 

### $790 Asthma Exacerbation 280,000 

### $15 Chronic Bronchitis 12,000 

### $5,800 Emergency Room Visits; Respiratory 18,000 

### $7.2 Hospital Admissions; Cardiovascular 10,000 

### $300 Hospital Admissions; Respiratory 4,800 

### $72 Lower Respiratory Symptoms 290,000 

### $5.6 Upper Respiratory Symptoms 220,000 

### $6.8 Work Loss Days 2,500,000 

### $640 Total Value Pope et al. 

### $170,000 Laden et al. 

### $410,000 Note: Totals may not reflect individual rows from rounding. Source: EPA, 2009



### 4 

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

Figure 3: SO 2

## Emissions and the Allowance Bank, 1995–2008

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)

Source: EPA, 2009 

### The results of the revised assessment show an increase in the estimated value of U.S. PM 2.5 

### and ozone health benefits expected from ARP implementation in 2010. Depending on whether the Pope or Laden function is used as the pri mary estimate of incidences of adult mortality avoided, the monetized PM 2.5 

### benefit increase ranges from 25 to 204 percent more than was estimated in the 2005 article not 

## Table 3: Estimated Ozone Health Benefits Due to ARP Imple mentation in 2010 Health Effect Incidences Avoided Monetized Value (millions; 2008$) Mortality Mortality, Non-Accidental (Ito et al., 2005) 1,900 

### $17,000 Mortality, Non-Accidental (Schwartz, 2005) 660 

### $5,700 Mortality, Non-Accidental (Bell et al., 2004) 430 

### $3,700 Mortality, All Cause (Levy et al., 2005) 2,000 

### $17,000 Mortality, All Cause (Bell et al., 2005) 1,400 

### $12,000 Mortality, Cardiopulmonary (Huang et al., 2005) 720 

### $6,200 Morbidity Hospital Admissions, Respiratory (age 65 and up) 3,000 

### $75 Hospital Admissions, Respiratory (age 0-2) 2,500 

### $26 Emergency Room Visits, Respiratory 1,900 

### $0.74 School Loss Days 910,000 

### $87 Acute Respiratory Symptoms 2,600,000 

### $170 Total Value Range 

### $4,100 - $17,000 Note: Totals may not reflect individual rows from rounding. Source: EPA, 2009 (compiled from papers listed in endnote 8)

### 5 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Analyses ed above (see Table 2). Using updated methods to assess ground-level ozone benefits results in total benefits rang ing from 75 to 319 percent of those previously predicted (see Table 3). These updated benefits do not include hu man welfare benefits due to better ecological conditions, such as improved visibility and reduced acidification of lakes and streams. 

### SO 2

### Program Compliance In 2008, all ARP facilities complied with the requirement to hold enough allowances to cover SO 2 

### emissions. EPA al located 9.5 million SO 2 

### allowances under the ARP for 2008. Together with 6.7 million unused allowances carried over (or banked) from prior years, there were 16.2 million allow ances available for use in 2008 (see Figure 3). 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). As a result, between 2007 and 2008 the bank increased by nearly two million allowances to 8.6 million, a 28 percent increase. In 2010, the total number of Title IV allowances allocated an nually will drop to 8.95 million and remain statutorily fixed at that annual level. 

### 2008 SO 2

### Allowance Market Figure 4 shows the cumulative volume of SO 2 

### allowances transferred under the ARP. The figure differentiates be tween allowances transferred in private transactions and those annually allocated and transferred to source ac counts by EPA. Private transactions are indicative of both market interest and use of allowances as a compliance strategy. Of the near ly 379 million allowances transferred since 1994, about 68 percent were traded in private transactions. In December 2001, parties began to use a system developed by EPA to allow online allowance transfers. In 2008, account hold ers registered over 99 percent of all private allowance transfers through EPA’s online transfer system. Allowance transfers are posted and updated daily on < www.epa.gov/ airmarkets >. 

## Figure 4: Cumulative SO 2

## Allowances Transferred under the ARP (through 2008)

Source: EPA, 2009Allowances (millions)

1998 1999 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 2 2 0 0 1 2 0 0 0 50 100 150 200 250 300 350 400

EPA Transfers to Account Holders Private Transactions 1997 1996 1995 1994



## Figure 5: SO 2

## Allowances Transferred under the ARP

Source: EPA, 2009

5 10 15 20 25

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 Trades Between Distinct Entities (significant transfers)Allowances (millions)

Trades Between Related Entities 30

1 9 94 0.9 1.9 4.4 7.9 9.5 6.2 12.7 12.6 11.6 8.1 7.5 10.0 9.5 9.1 5.9 9.2 16.7

8.2 15.2 13.5 18.7 25.0 22.5 21.4 16.5 15.3 19.9 22.4 16.9 13.9

### 6 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Analyses In 2008, 3,236 private allowance transfers involving ap proximately 13.9 million allowances of past, current, and future vintages were recorded in EPA’s Allowance Man agement System (AMS). About 5.9 million allowances (42 percent) were transferred in economically significant transactions (i.e., between economically unrelated par ties). Transfers between economically unrelated parties are “arm’s length” transactions and are considered a better indicator of an active, functioning market than are transac tions among the various facility and general accounts as sociated with a given company. In the majority of all private transfers, allowances were acquired by power companies. Figure 5 shows the annual volume of SO 2 

### allowances trans ferred under the ARP (excluding allocations, retirements, and other transfers by EPA) since official recording of transfers began in 1994. Over the first decade of the Acid Rain Program, allowance prices were stable and significantly lower than projected. When CAIR was proposed in late 2003, allowance prices were influenced by the more stringent CAIR SO 2 

### cap and new compliance deadline. After CAIR was finalized in March 2005, allowance prices continued to trend upward. CAIR was the most significant driver of the price adjust ment that began in 2004 and culminated with prices in the $1,600 range for a short time in December 2005. The Acid Rain SO 2 

### market essentially became the CAIR SO 2 

### market. In 2008, the SO 2 

### allowance market experienced a 65 per cent price decline; the monthly average fell from $509 per ton in January to $179 per ton by December. 9 

### That decline has continued in 2009, with the allowance price falling to an average of $71 per ton by May. Together with the price decline, the volume of significant transactions fell sharply in 2008. Market observers should not confuse temporary high prices in the market response to major regulatory 

# How Are Allowances Traded and Tracked? Once allowances have been auctioned and allocat ed, utilities can buy, sell, trade, or save them to meet their compliance needs. Along with the utilities that hold allowances for compliance purposes, other ac tors such as brokers, environmental groups, and private citizens maintain accounts in EPA’s AMS. The AMS database records account balances and transaction records, and allows public access to the trading history of each allowance until it is finally retired. EPA does not maintain any sensitive busi ness data, such as the price associated with allow ance transfers. Allowance brokers and other mar ket participants generally maintain a market price index (MPI) to track trends in prices over time and provide market signals similar to other commodity markets.Most allowance transactions take place in the overthe-counter market, where prices are determined by each day’s bids and offers, and immediate settlement cash trades are enacted bilaterally or through brokers. Once trading parties agree on a price, they generally complete the transaction using standard contracts developed by trade associations or other market players (see, for example, the sample contract available at < www. environmentalmarkets.org >). EPA provides a list of brokers and environmental groups that may be interested in facilitating trades or in helping parties retire allowances voluntarily (see < www.epa. gov/airmarkets/trading/buying.html >). At some point after a transaction is complete, the account representative of the transferring or selling party will usually register the transfer of allowances with EPA. The representative can submit a paper form or transfer the allowances online using the CAMD Business System (see < www.epa.gov/airmarkets/ business/transfer.html >). Outside of the spot market, utilities and inves tors have developed a range of more sophisticated structures to manage risk, including forward settle ments, options, and swaps. However, these allow ance trading strategies generally apply to market participants who have significant interests in al lowance holdings or who are active investors in the market; such strategies are not necessary for trans ferring allowances for basic compliance needs. 

## Table 4: SO 2

## Allowance Market in Brief (close of 2008)

Total Value of the SO 2Allowance Market $2.9 billion*

Average Nominal Price $179 per ton Total Allowance Volume (Allowable Emissions) 16,227,082 2008 Private Transactions 3,236 transactions moving 13.9 million allowances 42 percent of allowances transferred between economically unrelated parties * Total value of allowance market is a snapshot based on the average nominal price as of December 2008 ($179/ton) and total allowance volume available for 2008 compliance. Source: EPA, 2009

### 7 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Analyses changes (more or less regulation), where buyers and sell ers are searching for a new equilibrium based on available information they have from consultants and various ser vices, with price volatility. EPA and market analysts have identified these regulatory forces—the CAIR emission caps and compliance deadlines, followed by the rule changes resulting from the July 2008 CAIR court decision—as the primary factor affecting current market conditions in the period from 2004 to 2008 and not inherent volatility in cap and trade programs due to shifts in other variables that influence the market. For further analysis see < www.epa. gov/airmarkets/resource/docs/marketassessmnt.pdf>. 

### SO 2

### Allowance Auction EPA’s 2009 annual ARP allowance auction was held on March 24. The annual auction provides an opportunity for power plants, brokers, and private citizens to buy and sell allowances. Title IV mandates that a limited number of allowances allocable to existing sources be withheld and auctioned. The auctions help ensure that new electric gen erating plants have a source of allowances beyond those allocated initially to existing units. Proceeds from the auc tions are returned to sources in proportion to the allow ances withheld. The auction includes two “vintages” of allowances. Vintage describes the earliest year an allowance may be applied against SO 2 

### emissions. In addition to year 2009 allowanc es, the Clean Air Act mandated that EPA auction additional allowances seven years in advance to help provide stability in planning for capital investment. These advance allow ances will be usable first in 2016. Complete results of the annual SO 2 

### Allowance Auction are available at < www.epa. gov/airmarkets/trading/auction.html >. 

# NOx NOx

### 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. The goal of the NO x 

### pro gram is to limit NO x

### emission levels from the affected coalfired 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 6, on page 8, shows that NO x

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

### emission reduc tion objective. While the ARP was responsible for a large 

# Sources Achieved 100 Percent NOx 

# Compliance in 2008, Using a Variety of NOx 

# Compliance Plan Options **Standard Limitation.** A unit with a standard limit meets the applicable individual NO x

### limit prescribed for its boil er type under 40 CFR Parts 76.5, 76.6, or 76.7 (290 units used this option in 2008). **Alternative Emission Limit (AEL).** A utility can petition for a less stringent AEL if it properly installs and oper ates the NO x

### emission reduction technology prescribed for that boiler, but is unable to meet its standard limit. EPA determines whether an AEL is warranted based on analyses of emission data and information about the NO x 

### control equipment (six units used this option in 2008). **Emissions Averaging.** Many companies meet their NO x 

### emission reduction requirements by choosing to become subject to a group NO x

### limit, rather than by meeting in dividual NO x

### limits for each unit. The group limit is es tablished at the end of each calendar year. The group rate must be less than or equal to the Btu-weighted group rate units would have had if each had emitted at their stan dard limit rate (673 units used this option in 2008). **Note:** Unit counts do not include those with a retired unit exemption. 

### portion of these annual NO x

### reductions, programs such as the NO x

### Budget Program under EPA’s NO x

### State Imple mentation Plan (SIP) Call and other regional and state NO x 

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

### reductions 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 percent. During this period, forty-two states and the Dis trict of Columbia reduced NO x

### emissions, while six other states accounted for only about 15,600 tons of increased NO x

### emissions. 

### Seasonal NOx

### Control Programs States subject to EPA’s 1998 NO x

### SIP Call have achieved significant reductions in ozone season NO x

### emissions since the baseline years 1990 and 2000. All of these states have achieved reductions since 1990 as a result of programs implemented under the 1990 Clean Air Act Amendments, with many of them reducing their emissions by more than half since 1990. A significant portion of these decreases in NO x 

### emissions has been achieved since 2000, largely as a

### 8 

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

result of reductions under ozone season NO x

### trading pro grams implemented by the OTC, from 1999-2002, and un der the NO x

### SIP Call, from 2003-2008. For reports about these programs, see < www.epa.gov/airmarkets/progress/ progress-reports.html >. Even with these other programs, further reductions in an nual NO x

### emissions were achieved in 2008. Possible rea sons for this decline could include:

• 8 new selective catalytic reduction systems (SCR) and

7 new selective noncatalytic reduction systems (SNCR) were installed in 2008. • Sources might have taken advantage of incentives for

generation of early action (compliance supplement pool) allowances intended for use under the CAIR an nual NO x

### program that began in January 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 ARP NO x 

### Program, however, provides compliance flexibility achieved through an approach that is designed to maximize NO x 

### emission reductions and ensure that those reductions are sustained. Under the ARP, EPA allows affected sources to comply by either meeting a unit-specific emission rate or including two or more units in an emission rate averaging plan (see text box on page 7). These options provide affected 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. 

# Emission Monitoring and Reporting The ARP requires regulated sources to measure, record, and report emissions using continuous emission monitoring systems (CEMS) or an approved alternative measurement method. The vast majority of emissions are monitored with CEMS, while the alternatives provide an efficient means of monitoring emissions from the large universe of units with lower overall mass emissions. Table 5 shows the number of units with and without SO 2 

### CEMS for various fuel types, as well as the amount of SO 2 

### emissions monitored using CEMS. Although only 32 percent of units use CEMS, 99 per cent of all SO 2 

### emissions from ARP sources are monitored in this fashion. CEMS and approved alternatives are a cornerstone of the ARP’s accountability and transparency. Since the program’s inception in 1995, affected sources have met stringent monitoring quality assurance and control requirements, and have reported hourly emission data in quarterly elec tronic reports to EPA. Using automated software audits, EPA rigorously checks the completeness, quality, and in Source: EPA, 2009 

## Figure 6: NO x

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

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

### 9 

# Acid Rain and Related Programs: 2008 Emission, Compliance, and Market Analyses Table 5: Units and SO 2

## Emissions Covered by Monitoring Method for the Acid Rain Program Number of

Units Percentage of Units Percentage of SO 2

### Emissions Coal CEMS 1,055 29.74 98.68 Gas CEMS 19 0.54 0.03 Non-CEMS 2,259 63.69 0.06 Oil CEMS 42 1.18 0.21 Non-CEMS 159 4.48 0.88 Other CEMS 12 0.34 0.13 Non-CEMS 1 0.03 0.00 Note: “Other fuel units” include units that in 2008 combusted pri marily wood, waste, or other nonfossil fuel. The total number of units in the table excludes 25 affected units that did not operate in 2008. Source: EPA, 2009 

### tegrity of these data. All emission data are available to the public on the Data and Maps web site maintained by EPA’s Clean Air Markets Division (CAMD) at < camddataandmaps. epa.gov/gdm/ >. The site also provides access to other data associated with emission trading programs, including re ports, queries, maps, charts, and file downloads covering source information, emissions, allowances, program com pliance, and air quality. The emission monitoring requirements for the ARP are found in 40 CFR Part 75. Compliance with these provisions is also required for sources participating in the CAIR trad ing programs. 

### ECMPS CAMD recently reengineered the process that the regulated community uses to maintain, evaluate, and submit moni toring plans, quality assurance certifications, and quarterly emission data. An important tool in this effort is the Emis sions Collection and Monitoring Plan System (ECMPS). Be ginning with reports submitted in April 2009, ECMPS has replaced the processes and multiple software tools used previously for evaluating, submitting, and receiving com pliance-related information. Data submitted via ECMPS must meet a basic level of quality. If an evaluation generates a “critical” error, sources are able to submit data to meet the regulatory deadline but must then resolve the errors and resubmit the data. ECMPS also has an expanded set of data validation checks that assist EPA in implementing improved auditing as sources begin to comply with CAIR. ECMPS incorporates the following components: • A single desktop tool, made available by EPA, for au thorized users to import and evaluate their data and submit it to CAMD. • A new data reporting format based on the flexible Extensible Markup Language (XML) standard. • A centralized database at CAMD for receiving and maintaining submitted data, which can be accessed directly through the desktop tool. • Tools and procedures for the quality assurance of data prior to submission, including the consolidation of evaluation results (feedback) into one set. • The ability to maintain select data outside of the elec tronic data report. • New security requirements.

### 10 

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

# Endnotes 1 Chestnut, L. G., and Mills, D. M. 2005. A fresh look at the benefits and costs of the US Acid Rain Program, Journal of Environmental Manage ment , 77(3): 252-266. 2 Pope C.A., Burnett R.T., Thun M.J., Calle E.E., Krewski D., Ito K., and Thurston G.D. 2002. Lung cancer, cardiopulmonary mortality, and longterm exposure to fine particulate air pollution, JAMA , 287(9):1132-1141. 3 Year 2008$ inflated from $108 billion and $4.384 billion 2000$ using CPI inflation calculator. 4 Laden F., Schwartz J., Speizer F.E., Dockery D.W. 2006. Reduction in fine particulate air pollution and mortality: Extended Follow-up of the Harvard Six Cities Study, American Journal of Respiratory and Critical Care Medicine, 173 (2006) 667-672. 5 See EPA’s Regulatory Impact Analysis for the 2006 PM 2.5 National Ambient Air Quality Standards, available at: < www.epa.gov/ttn/ecas/

ria.html >. 6 The original air quality estimates were based on a regulatory air quality modeling platform that has been substantially updated since 2005. The updates include (1) major changes to base year and future case emissions and meteorological inputs, (2) a new air quality model with improved chemistry and other scientific features, and (3) new methods for projecting future air quality relative to current measured data. The effects of these improvements on the benefits from the ARP have not been quantified. 7 Valuation includes 3% discount rate for future incidences of premature mortality avoided. 8 **O 3**  **Mortality, Non-Accidental** Ito, K., De Leon, S.F., and Lippmann, M. 2005. Associations between ozone and daily mortality: analysis and meta-analysis. Epidemiology 16(4): 446-57. Schwartz, J. 2005. How sensitive is the association between ozone and daily deaths to control for temperature? American Journal of Respira tory and Critical Care Medicine171 (6): 627-31. Bell, M.L., McDermott, A., Zeger, S.L., Samet, J.M., and Dominici, F. 2004. Ozone and short-term mortality in 95 US urban communities, 1987- 2000. JAMA 292(19): 2372-8. **O 3**  **Mortality, All Cause** Levy, J.I., Chemerynski, S.M., and Sarnat, J.A. 2005. Ozone exposure and mortality: an empiric bayes metaregression analysis. Epidemiology 16(4): 458-68. Bell, M.L., Dominici, F., and Samet, J.M. 2005. A meta-analysis of time-series studies of ozone and mortality with comparison to the national morbidity, mortality, and air pollution study. Epidemiology 16 (4): 436-45. **O 3**  **Mortality, Cardiopulmonary** Huang, Y., Dominici, F., and Bell, M. L. 2005. Bayesian hierarchical distributed lag models for summer ozone exposure and cardio-respirato ry mortality. Environmetrics 16: 547–562. 9 Based on the Market Price Index (MPI) that uses trade, bid, and offer price as tracked by CantorCO2e.