The NOx Budget Trading Program (NBP) was a market-based cap and trade program created to reduce 

the regional transport of emissions of nitrogen 

oxides (NOx) from power plants and other large combustion sources that contribute to ozone nonattainment in 

the eastern United States. NOx is a major precursor to the 

formation of ground-level ozone, a pervasive air pollution 

problem in many areas in the East. The NBP was designed 

to reduce NOx emissions during the warm summer months, 

referred to as the ozone season, when ground-level ozone 

concentrations are highest.

Over the next several months, EPA will release a series of reports summarizing progress under the NBP. This first report 

presents 2008 data on emission reductions, compliance results, and NOx allowance prices. Future reports will evaluate progress under the NBP in 2008 by analyzing emission 

reductions, reviewing compliance results and market activity, and comparing changes in emissions to changes in ozone 

concentrations. For more information on the NBP, please visit: <www.epa.gov/airmarkets/progsregs/nox/sip.html>. 

Emission Reductions

Ozone Season NOx Reductions under the NBP 

In 2008, NBP sources emitted 481,420 tons of NOx during 

the summer ozone season, an overall decrease of 24,880 

tons from 2007. Emissions in 2008 were 62 percent below 

2000 levels, 75 percent below 1990 levels, and 9 percent 

below the 2008 cap. Figure 1 shows the total ozone season NOx emissions for all affected sources in the NBP region in 2008 compared to pre-NBP baseline years (1990 

and 2000) and prior NBP compliance years (2003 through 

2007). It also presents the allowances allocated for 2008, 

which comprised the cap (the sum of the state budgets) for 

the program (528,453 tons).

Due to litigation, sources in states affected by the NBP had 

three different compliance dates: May 1, 2003 for Ozone 

Transport Commission (OTC) states; May 31, 2004 for 

non-OTC states; and May 1, 2007 for Missouri. To compare emissions year-to-year, the data presented in this report generally include full ozone season emissions for all 

At a Glance: NBP Results in 2008 

Ozone Season Emissions: 481,420 tons

•	 9% below 2008 cap

•	 62% lower than in 2000 (before implementation of 

the NBP)

•	 75% lower than in 1990 (before implementation of 

the 1990 Clean Air Act Amendments)

Compliance: Nearly 100%—only 2 units out of compliance (out of a total 2,568 units)

Allowances: 275,367 unused NBP allowances transferred 

for future use under the Clean Air Interstate Rule (CAIR) 

Allowance Prices: 28% decline in 2008, from $825/ton 

to $592/ton

May 2009

Figure 1: Ozone Season NOx Emissions from All NBP Sources

Notes: 

•	 Data reflect full ozone season emissions in all years for all states. 

The year 2000 baseline value has been adjusted to correct a misprint in Figure 5 of the 2007 NBP report.

•	 The 2008 total state trading budgets include opt-in allowances, 

where applicable (New York, Ohio, and West Virginia). 

Source: EPA, 2009

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2008

NOx Emissions (thousand tons)

Ozone Season

1,924

1990

1,256

2000

849

2003

609

2004

549

2005

508

2006

506

2007

481

528

Total State Trading Budgets 

Ozone Season NOx Emissions

The NOx Budget Trading Program:

2008 Emission, Compliance, and Market Data
2

The NOx Budget Trading Program: 2008 Emission, Compliance, and Market Data

states, rather than “compliance only” emissions based on 

these various compliance deadlines. This approach allows 

for a consistent comparison across all states and all years. 

All data for 2003–2008 in this report were gathered from 

EPA’s data systems as of April 1, 2009.

Affected Units

There were 2,568 affected units under the NBP in 2008, 

including some units that may not have operated nor had 

emissions during the 2008 ozone season. For example, 

some units provide electricity only on peak demand days, 

and may not operate every year. 

Most of the units in the NBP were electric generating units 

(EGUs)—large boilers, turbines, and combined cycle units 

used to generate electricity for sale. Figure 2 shows that 

EGUs constituted 88 percent of all regulated NBP units. 

The program also applied to large industrial units that 

produced electricity or steam primarily for internal use. 

Examples of these units are boilers and turbines at heavy 

manufacturing facilities, such as paper mills, petroleum 

refineries, and iron and steel production facilities. These 

units also included steam plants at institutional settings, 

such as large universities or hospitals. Some states included other types of units, such as petroleum refinery process 

heaters and cement kilns. 

Ozone season NOx emissions decreased substantially, by 

43 percent, between 2003 and 2008, even while energy 

demand (as measured by heat input) remained essentially 

flat during the same period. Table 1 shows that emission 

reductions have occurred because the overall average 

ozone season NOx emission rate has declined significantly, 

by about 45 percent, since the NBP began in 2003.

Figure 2: Number of Units in the NBP by Type in 2008

Notes: 

• The three “unclassified” units represent units in long-term shutdown or other non-operating status that remained identified as 

affected units under the NBP and that had not retired prior to the 

2008 ozone season. 

• Percentages add up to more than 100 due to rounding. 

Source: EPA, 2009

Units by 

Fuel Type

Ozone Season NOx Mass Emissions 

(thousand tons)

Ozone Season Heat Input 

(billion mmBtu)

Ozone Season NOx Emission Rate 

(lb/mmBtu)

2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008

Coal 800 564 494 475 475 456 4.91 4.91 5.10 5.06 5.15 4.93 0.32 0.23 0.19 0.19 0.18 0.18

Oil 26 25 32 14 13 9 0.27 0.25 0.31 0.17 0.17 0.13 0.19 0.20 0.20 0.16 0.15 0.14

Gas 24 20 23 19 19 16 0.59 0.70 0.85 0.87 0.99 0.85 0.08 0.06 0.05 0.04 0.04 0.04

Total 849 609 549 508 506 481 5.77 5.86 6.27 6.10 6.30 5.91 0.29 0.21 0.18 0.17 0.16 0.16

Notes:

•	 Tons are rounded to the nearest 1,000, and the heat input values are rounded to the nearest 10 million mmBtus. Totals in final row may not 

equal the sum of individual rows due to rounding.

•	 The average emission rate is based on dividing total reported ozone season NOx emissions for each fuel category by the total ozone season 

heat input reported for that category, and then rounding the emission rate to the nearest 0.01 lb/mmBtu. The average emission rate expressed for the total uses total NOx mass divided by total heat input to represent the heat input-weighted average for the three fuel categories.

•	 Fuel type, as shown here, is based on the monitoring plan primary fuel designation submitted to EPA; however, many units burn multiple 

fuels. Also, one primary wood-fired boiler is classified with the coal-fired units based on its secondary fuel.

Source: EPA, 2009

Table 1: Comparison of Ozone Season NOx Emissions, Heat Input, and NOx Emission Rates for All NBP Sources, 2003–2008

Unclassified EGUs 

3 (<1%) 

Gas EGUs

1,098 (43%)

Industrial Units 

319 (12%)

Coal EGUs

715 (28%)

Oil EGUs

433 (17%)
3

The NOx Budget Trading Program: 2008 Emission, Compliance, and Market Data

State-by-State NOx Reductions

Ozone season NOx emissions have decreased from levels in baseline years in all states participating in the NBP. 

EPA projects that the Clean Air Interstate Rule (CAIR) NOx 

ozone season program, which started this year, will bring a 

continued decline in emissions across the region (as shown 

in Figure 3).

Figure 3: State-level Ozone Season NOx Emissions from NBP to 

CAIR, 1990–2010

strategy. See Appendix A at the end of this document for 

individual state emission and budget data. Subsequent 2008 

reports will analyze these state-specific results in further 

detail. In addition, detailed unit-level data are available 

in Appendix 1, online at <www.epa.gov/airmarkets/

progress/progress-reports.html>. To view emission 

data in an interactive file format using Google Earth or a 

similar three-dimensional platform, go to <www.epa.gov/

airmarkets/progress/interactivemapping.html>.

Compliance

2008 Compliance Results

There were 2,568 units affected under the NBP in 2008. 

Of those units, only two units at separate facilities did not 

hold sufficient allowances to cover their emissions (63 

tons total). Because 2008 was the last official year of the 

NBP, affected facilities have transitioned to the CAIR NOx

ozone season program, which began on May 1st for the 

2009 ozone season. Accordingly, the two units out of compliance automatically surrendered first year (2009) CAIR 

NOx ozone season program allowances on a 3:1 basis, or 

189 allowances total. Table 2 summarizes the allowance 

reconciliation process for 2008.

Table 2: NOx Allowance Reconciliation Summary for the NOx

Budget Trading Program in 2008

Total Allowances Held for Reconciliation 

(2003 through 2008 Vintages)

755,684

Allowances Held in Compliance or Overdraft Accounts 673,336

Allowances Held in Other Accounts* 82,348

Allowances Deducted in 2008 482,476

Allowances Deducted for Actual Emissions 481,147

Additional Allowances Deducted under Progressive Flow 

Control (PFC)

1,329

Banked Allowances (Carried into 2009 CAIR NOx Ozone 

Season Program)

273,208

Allowances Held in Compliance or Overdraft Accounts 188,003

Allowances Held in Other Accounts** 85,205

Penalty Allowances Deducted*** (from 2009 CAIR NOx Ozone 

Season Program Allocations)

189

Notes:

 * “Other Accounts” refers to general accounts in the NOx Allowance 

Tracking System (NATS) that can be held by any source, individual, or other organization, as well as state accounts. 

 ** Total includes 2,857 unused new unit allowances returned to 

state holding accounts. 

*** These penalty deductions are made from 2009 vintage year CAIR 

NOx ozone season allowances, not 2008 allowances. 

Source: EPA, 2009

Scale: Largest bar equals 241,000 tons of NOx emissions in Ohio, 

1990.

Note: Projected emissions in 2010 represent estimated reductions 

due to the implementation of CAIR.

Source: EPA, 2009

In the 2008 ozone season, the total emissions from NBP 

sources were 47,033 tons (9 percent) below the regional 

emission cap. Fourteen states and the District of Columbia 

had emissions below their allowance budgets, collectively 

by 70,960 tons. Another six states (Alabama, Indiana, Kentucky, Michigan, Ohio, and Pennsylvania) exceeded their 

2008 budgets by a total of 23,927 allowances, indicating 

that some sources within those states covered a portion of 

their emissions with allowances banked from earlier years 

or purchased from the market. 

In any given year, emission control programs experience 

variation in emissions from individual units due to a wide 

range of conditions, including weather, grid demand, 

transmission constraints, fuel costs, and compliance 

1990 Emissions

2000 Emissions

2008 Emissions

2010 Projection
4

The NOx Budget Trading Program: 2008 Emission, Compliance, and Market Data

Banking in 2008

Figure 4 shows the allowances allocated each year, the 

allowances banked from the previous year, and the total 

ozone season emissions subject to allowance holding requirements for NBP sources from 2003 to 2008. The bank 

has grown each year since the program began in 2003, with 

this trend continuing through the NBP’s final ozone season. After completion of the 2008 reconciliation process, 

the bank increased to 273,208 NBP allowances, as shown 

in Table 2. Additionally, 2008 marked the fifth of six compliance years in which sources achieved more reductions 

Figure 5: NOx Allowance Spot Price (Prompt Vintage), January 

2008–November 2008

Note: Prompt vintage is the vintage for the “current” compliance 

year. For example, 2008 vintage allowances were considered the 

prompt vintage until the true-up period closed at the end of November 2008.

Source: CantorCO2e’s Market Price Indicator (MPI), 2009; see 

<www.emissionstrading.com>

Figure 4: NOx Allowance Allocations and the Allowance Bank, 

2003–2008

0

100

200

300

400

500

600

700

Tons (in thousands)

Banked Allowances from Previous Year

Allowances Allocated for Current Year*

Ozone Season Emissions**

Year

2003 2004 2005 2006 2007 2008

Notes:

 * Allowances allocated may include those issued by states from base 

budget, compliance supplement pool (CSP) (available only for the 

first two years of compliance), and opt-in allowances. Not all budgeted allowances were necessarily issued by the states each year.

** This graph represents only those emissions from states who were 

subject to compliance each year. Thus, the 2003 total ozone season emissions includes emissions only from OTC states. The 2004 

total represents emissions from non-OTC states in the NBP (except Missouri) during a shortened control period (May 31 to September 30) and OTC states during the full control period (May 1 to 

September 30). The 2005 and 2006 emissions represent the full 

ozone season for all participating NBP states, except Missouri. The 

2007 data is the first year in which the ozone season emissions 

represent all NBP states, including Missouri.

Source: EPA, 2009

than required under the NBP and were able to bank allowances for use in future years. 

In 2009, the NBP transitioned to the CAIR NOx ozone season program. As part of this process, EPA transferred NBP 

banked allowances and some previously unallocated allowances held by states to corresponding CAIR accounts. 

In total, 275,367 allowances were transferred from the 

NBP to the CAIR NOx ozone season program. In addition, 

while the NBP flow control provisions resulted in 1,329 

additional allowances being deducted from the allowance 

bank as part of the 2008 reconciliation process (see Table 

2), flow control no longer applies in 2009 and beyond with 

the transition to CAIR. Thus, the transferred allowances 

may be used under CAIR with no restrictions or time limits 

on a straight 1:1 basis.

Market Activity

NOx Allowance Trading in 2008

The 2008 NOx allowance market experienced a 28 percent 

price decline – beginning the year at $825 per ton in January and climbing as high as $1,400 during the middle of the 

year before falling to a period-end closing price in November of $592 per ton (see Figure 5). NBP reports released 

in the next few months will investigate allowance market 

activity for 2008 in more detail.

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

Nominal Price ($/ton)

Jan

Date

Feb Mar Apr May Jun Jul Aug Sep Oct Nov
5

The NOx Budget Trading Program: 2008 Emission, Compliance, and Market Data

Appendix A: Ozone Season NOx Emissions (Tons) from NBP Sources, 1990–2008, and 2008 State 

Trading Budgets

State 1990 2000 2003 2004 2005 2006 2007 2008

2008 

Budget

AL 89,758 84,560 50,895 40,564 33,632 27,812 28,744 30,221 25,497

CT 11,203 4,697 2,070 2,191 3,022 2,514 2,152 1,721 4,477

DC 576 134 72 35 279 115 76 133 233

DE 13,180 5,256 5,414 5,068 6,538 4,763 5,454 4,285 5,227

IL 124,006 119,460 48,917 40,976 37,843 36,343 35,630 34,126 35,557

IN 218,333 145,722 100,772 68,375 57,249 55,510 56,374 57,838 55,729

KY 153,179 101,601 63,057 40,394 36,730 37,461 40,210 39,386 36,109

MA 40,367 14,324 9,265 7,481 8,269 5,464 3,666 3,230 12,861

MD 54,375 28,954 19,257 19,944 20,989 18,480 16,521 10,667 15,466

MI 120,132 80,425 45,614 39,848 42,157 40,353 34,354 34,358 31,247

MO 64,272 34,058 29,407 16,190 18,809 15,917 12,961 12,777 13,459

NC 92,059 73,082 51,943 39,821 32,888 30,387 28,390 27,105 34,703

NJ 44,359 14,630 11,003 10,807 11,277 8,692 7,773 7,139 13,022

NY 84,485 43,583 34,815 34,157 36,633 26,339 24,728 20,934 41,385

OH 240,768 159,578 133,043 67,304 54,335 52,817 57,862 54,644 49,842

PA 199,137 87,329 51,530 52,140 51,125 52,806 57,615 56,747 50,843

RI 1,099 288 209 177 253 181 187 161 936

SC 56,153 39,674 34,624 25,377 18,193 18,376 18,418 17,552 19,678

TN 115,348 69,641 55,376 31,399 25,718 23,930 23,261 21,711 31,480

VA 51,866 40,043 32,766 25,448 22,309 20,491 22,957 19,596 21,195

WV 149,176 109,198 69,171 41,333 30,401 28,852 28,967 27,089 29,507

All NBP States 1,923,831 1,256,237 849,220 609,029 548,649 507,603 506,300 481,420 528,453

Notes:

•	 Emissions for Alabama, Michigan, and Missouri are for units in the portion of the state that became subject to the NBP in 2004 (Alabama and 

Michigan) and 2007 (Missouri).

•	 The 2008 state budget values include opt-in allowances, where applicable (New York, Ohio, and West Virginia).

•	 Emissions for prior years reflect emission resubmissions as of April 1, 2009, and may differ slightly from numbers that appear in previous 

progress reports.

Source: EPA, 2009