# Acid Rain and Related Programs

2006 PROGRESS REPORTi Acid Rain and Related Programs: 2006 Progress Report 

# Contents **Introduction .....................................................................1**  **Summary ..........................................................................3**  **Origins of the Acid Rain Program ..................................7**
**SO 2**  

## Emission Reductions ................................................8
SO 2 

### Program Compliance .......................................................... 

## 11
SO 2 

### Allowance Market

............................................................... 

## 12 **NO X**  

## Emission Reductions and Compliance .................13 **Emission Monitoring and Reporting ...........................15 Status and Trends in Air Quality, Acid Deposition,**  **and Ecological Effects ...................................................19** Understanding the Monitoring Networks ................................... 

## 19 Enhancing Mercury Monitoring Capabilities ............................... 

## 23 Air Quality ................................................................................. 

## 24 Acid Deposition ......................................................................... 

## 30 Improvements in Surface Water ................................................. 

## 33 **Understanding Clean Air Rules ....................................37** Rule Background ....................................................................... 

## 37 How the New Trading Programs Work ....................................... 

## 39 CAIR Allowance Market and State Activity ................................. 

## 41
CAMR ....................................................................................... 

## 43 The Mercury Trading Program and State Activity ........................ 

## 43
CAVR ........................................................................................ 

## 44 Analyzing the Impacts of Rule Implementation .......................... 

## 46 **Online Information, Data, and Resources ...................51 Endnotes ........................................................................53**  

# Acid Rain and Related Programs

2006 PROGRESS REPORT

# The Acid Rain Program was designed to reduce the adverse effects of acid deposition through reductions in annual emissions of SO 2 

# and NO X 

# .Introduction1 Acid Rain and Related Programs: 2006 Progress Report 

# T he U.S. Environmental Protection Agency (EPA) publishes an annual report to update the public on compliance with the Acid Rain Program (ARP), its status of implementation, and progress toward achieving environmental goals.

The Acid Rain and Related Programs 2006 Progress Report updates data reported in previous years, specifi cally:

Sulfur dioxide (SO • 2 ) emissions, allowance market

information, and program compliance.

Nitrogen oxides (NO • X ) emissions and program

compliance. Status and trends in acid deposition, air quality, • and ecological effects.

New programs, such as the Clean Air Interstate • Rule (CAIR), that are building on the ARP to further

improve environmental quality.
In this year’s report, EPA incorporates early CAIR compliance planning into the fi ndings associated with the ARP, including contributions to a signifi cant SO 2 emission decrease in 2006, and other relationships between the ARP, CAIR, and other new air quality rules.
For more information on the ARP, CAIR, and related programs, including additional information on SO 2 and NO X emissions, acid deposition monitoring, environmental effects of acid deposition, and detailed unit-level emission data, please visit EPA’s Clean Air Markets Web site at <www.epa.gov/airmarkets>. 

# Introduction

**Key Findings**

Total SO • 2 emissions fell below 10 million

tons for the fi rst time under ARP.

NO • X emissions in 2006 were 3.3 million

tons below 1990 levels.
Acid deposition has declined signifi cantly • from levels measured before ARP,

with corresponding water quality improvements in lakes and streams.
Estimated public health benefi ts from ARP • emission reductions exceed program costs

by a margin of more than 40 to 1.Summary3 Acid Rain and Related Programs: 2006 Progress Report 

# Summary

Sulfur dioxide (SO 2 ) and nitrogen oxides (NO X ) are the key pollutants involved in the formation of acid rain. These pollutants also contribute to the formation of fi ne particles (sulfates and nitrates) that are associated with signifi cant human health effects and regional haze. Sulfates and nitrates are transported and deposited at levels harmful to sensitive ecosystems in many areas of the country. Additionally, NO X combines with volatile organic compounds (VOCs) to form ground-level ozone (smog). The U.S. electric power industry accounts for approximately 70 percent of total U.S. SO 2 emissions and 20 percent of total U.S. NO X emissions from man-made sources. 1
The Acid Rain Program (ARP) was created under Title IV of the 1990 Clean Air Act Amendments (CAAA) to reduce the adverse effects of acid deposition through reductions in annual emissions of SO 2 and NO X . The Act calls for SO 2 reductions of 10 million tons from 1980 emission levels, largely achieved through a market-based cap and trade program, which utilizes emission caps to permanently limit SO 2 emissions from power plants. NO X reductions under the ARP are achieved through a program closer to a more traditional, rate-based regulatory system. The NO X program is designed to limit NO X emission levels to 2 million tons less than those projected for the year 2000 without implementation of Title IV.

Since the start of the ARP in 1995, reductions in SO 2 and NO X emissions from the power sector have contributed to signifi cant improvements in air quality and environmental and human health. The SO 2 program affected 3,520 electric generating units (EGUs) in 2006 (with most emissions produced by 1,062 coal-fi red units). The NO X program applied to a subset of 982 operating coal-fi red units in 2006.
The 2006 compliance year marked the 12 th year of the program. During this period, the ARP has:

Reduced SO • 2 emissions by more than 6.3 million tons

from 1990 levels, or about 40 percent of total power sector emissions.

SO • 2 emissions from ARP units fell sharply, declining 830,000 tons from 2005 levels. Reduced energy demand, decreased oil use because of fuel prices, and early Clean Air Interstate Rule (CAIR) compliance all appear to be factors in this decline.

Total SO • 2 emissions fell below 10 million tons for the fi rst time under the ARP. Sources emitted approximately 9.4 million tons of SO 2 in 2006, below the emission cap of 9.5 million tons. 

# Summary4 Acid Rain and Related Programs: 2006 Progress Report With nearly 6.1 million unused (banked) • allowances from prior years, SO 2 emissions were 40 percent below the total 2006 allowable SO 2 emissions of 15.7 million tons.

Cut NO • X emissions by 3.3 million tons from 1990 levels, so that emissions in 2006 were less than half the level anticipated without the program. Other efforts, such as the NO X Budget Trading Program (NBP) in the eastern United States, also contributed to this reduction.

Led to signifi cant decreases in acid deposition. For • example, between the 1989-1991 and 2004-2006

observation periods, wet sulfate deposition decreased 35 percent in the Northeast and 33 percent in the Midwest. These reductions have resulted in positive changes in environmental indicators, including improved water quality in lakes and streams.

Provided the most complete and accurate emission • data ever developed and made those data available

through comprehensive electronic data reporting and Web-based tools for agencies, researchers, affected sources, and the public.

Delivered pioneering e-government results, • automating administrative processes, reducing

paper use, and providing online systems for doing business with EPA.

Achieved extremely high compliance levels, with • 100 percent compliance with the allowance

holding requirements for SO 2 in 2006, and a single unit out of compliance for NO X . Reduced implementation costs by allowing sources • to choose cost-effective compliance strategies. After 12 years of implementation, monitoring, and assessment, the ARP has proven to be an effective and effi cient means of meeting emission reduction goals under the Clean Air Act (CAA). A 2005 study estimated the program’s benefi ts at $122 billion annually in 2010, while cost estimates are around $3 billion annually (in 2000$). 2 Despite the program’s historic and projected benefi ts, EPA analyses of recent studies of human health, data from long-term monitoring networks, and ecological assessments have revealed the need for additional emission reductions to protect human health and continue ecological recovery and protection. EPA recognized the need for further SO 2 and NO X controls on the power industry to address pollutant transport problems many states face in efforts to attain National Ambient Air Quality Standards (NAAQS) for ozone and fi ne particles. The success of the acid rain trading and NO X emission reduction programs, along with the need for further reductions, provided the impetus for a suite of new rules promulgated in 2005: CAIR, the Clean Air Visibility Rule (CAVR), and the Clean Air Mercury Rule (CAMR).
Building on the ARP model, EPA promulgated CAIR in the spring of 2005 to address transport of fi ne5 Acid Rain and Related Programs: 2006 Progress Report particles and ozone in the eastern United States, CAVR to improve visibility in national parks and wilderness areas, and CAMR to reduce nationwide mercury emissions from coal-fi red power plants. Starting in 2009 and 2010, CAIR establishes regional caps on SO 2 and NO X emissions. Annual SO 2 emissions for affected eastern states are capped at 3.7 million tons in 2010 and 2.6 million tons in 2015. Annual NO X emissions for affected eastern states are capped at 1.5 million tons in 2009 and 1.3 million tons in 2015. CAIR will operate concurrently with the ARP.

CAVR addresses SO 2 and NO X power sector emissions from non-CAIR states located in the West and parts of New England. Affected sources under CAVR must reduce SO 2 and NO X emissions that impair visibility in national parks and wilderness areas. Notably, EPA allows states to establish additional regional cap and trade programs to accomplish these reductions from power plants and other stationary sources.
CAMR establishes a national cap on mercury emissions beginning in 2010 and utilizes a market-based cap and trade program. Additionally, new coal-fi red power plants will be required to meet standards of performance that limit mercury emissions. These programs will serve as a key component of strategies to protect human health and the environment across the United States into the next decade.

# From 2005 to 2006 ARP sources reduced SO 2 

# emissions below 10 million tons for the fi rst time under the program, and NO X 

# emissions fell to 3.4 million tons, a decrease of nearly 50 percent from 1990 levels.Emission Reductions7 Acid Rain and Related Programs: 2006 Progress Report Acid deposition, more commonly known as acid rain, occurs when emissions of sulfur dioxide (SO 2 ) and nitrogen oxides (NO X ) react with water, oxygen, and oxidants in the atmosphere to form various acidic compounds. Prevailing winds transport these compounds hundreds of miles, often across state borders, where they impair air quality and damage public health, acidify lakes and streams, harm sensitive forests and coastal ecosystems, degrade visibility, and accelerate the decay of building materials.
The Acid Rain Program (ARP), established under Title IV of the 1990 Clean Air Act Amendments (CAAA), requires major reductions of SO 2 and NO X emissions from the electric power industry. The SO 2 program 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 fi nal 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.

As seen in Figure 1, emissions of both SO 2 and NO X have decreased markedly under the ARP while combustion of fossil fuels, measured as “heat input,” for electricity generation has increased signifi cantly.
Using a market-based cap and trade mechanism to reduce SO 2 emissions allows fl exibility for individual combustion units to select their own methods of compliance. Currently, one allowance provides a

-60% -40% -20%

0% 20% 40% 60%



### Year**Percent Change**

Electricity Generation* SO 2 Emissions NO X Emissions Average Retail Price of Electricity

2006 2004 2002 2000 1998 1996 1995 1990 ** Heat Input 

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

* Generation from fossil fuel-fi red plants. ** Constant year 2000 dollars adjusted for infl ation.
**Source:** Energy Information Administration (electricity generation, retail price); EPA (heat input and emissions, representing all affe cted ARP units), 2007 

# Origins of the Acid Rain Program8 Acid Rain and Related Programs: 2006 Progress Report regulated unit limited authorization to emit one ton of SO 2 . The Clean Air Act (CAA) allocates allowances to regulated units based on historic fuel consumption and specifi c emission rates prior to the start of the
program. 3 The total allowances allocated for each year equal the SO 2 emission cap. The program encourages early reductions by allowing sources to bank unused allowances in one year and use them in a later year.
The ARP adopts a more traditional approach to achieve NO X emission reductions. Rate-based limits apply to most of the coal-fi red electric utility boilers subject to the ARP. An owner can meet these NO X limits on an individual unit basis or through averaging plans involving groups of its units.
The ARP is composed of two phases for SO 2 and NO X . Phase I applied primarily to the largest coalfi red electric generation sources from 1995-1999 for SO 2 and from 1996-1999 for NO X . Phase II for both pollutants began in 2000. In 2006, the SO 2 Phase II requirements applied to 3,520 units, with most of the emissions produced by 1,062 coal-fi red units. The Phase II NO X requirements applied to 982 of those units that have a generation capacity of 25 megawatts (MW) or more and burned coal between 1990 and 1995.


# SO 2 

# Emission Reductions Electric power generation is by far the largest single source of SO 2 emissions in the United States, accounting for approximately 70 percent of total SO 2 emissions nationwide. 4
As shown in Figure 2, ARP sources have reduced annual SO 2 emissions by 46 percent compared to 1980 levels and 40 percent compared to 1990 levels. Reductions in SO 2 emissions from other sources not affected by the ARP (including industrial and commercial boilers and the metals and refi ning industries) and use of cleaner fuels in residential and commercial burners have contributed to a similar overall decline (47 percent) in annual SO 2 emissions from all sources since 1980. National SO 2 emissions from all sources have fallen from nearly 26 million tons in 1980 to less than 14 million tons in 2006 (see <www.epa.gov/ttn/chief/trends>).



### Figure 2: SO **2** 

### Emissions from Acid Rain Program Sources

**Source:** EPA, 2007 **9.4 9.3**  **8.7**

**5.3 5.4 5.5**  **5.3 4.9**  **9.4 17.3**  **16.1 15.7** 

**11.9 12.5**  **13.0 13.1**  **12.5 11.2**  **10.6 10.2**  **10.6 10.3**  **10.2**

**8.7 8.3**  **7.1 7.0 7.0**  **9.6 9.5**  **9.5 9.5 9.5 9.5 10.0** 

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006**SO 2** **Emissions (million tons)** 

### All Affected Sources Phase II (2000 on) Sources Phase I (1995-1999) Sources Allowances Allocated



### Year9 Acid Rain and Related Programs: 2006 Progress Report For 2006, EPA allocated over 9.5 million SO 2 allowances under the ARP. Together with more than 6.1 million unused allowances carried over (or banked) from prior years, there were 15.7 million allowances available for use in 2006. Sources emitted approximately 9.4 million tons of SO 2 in 2006, less than the allowances allocated for the year, and far less than the total allowances available (see Figure 3). 5 The number of banked allowances grew, from 6.1 million available for 2006 compliance to 6.3 million available for 2007 and future years. In the next several years, industry anticipation of stringent emission requirements under CAIR is expected to encourage sources to pursue additional reductions. While these reductions will result in an increase in banked allowances, tighter retirement ratios under CAIR (that**SO 2** **(million tons)**

15.7 16.4 17.1 18.2 18.8 19.9 21.6

16.6 15.0 13.4 11.7

8.7

5.3 5.4 5.5 5.3 4.9 11.2 10.6 10.2 10.6 10.3 10.2 9.4

0 5 10 15 20 25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

### Year Allowances allocated Unused allowances from previous years
Actual emissions from affected sources 

### Figure 3: SO **2** 

### Emissions and the Allowance Bank, 1995-2006

**Source:** EPA, 2007

SO 2 Emissions in 1990

SO 2 Emissions in 2006 SO 2 Emissions in 1995
SO 2 Emissions in 2000

Scale: Largest bar equals 2.2 million tons of SO 2 emissions in Ohio, 1990 

### Figure 4: State-by-State SO **2** 

### Emission Levels, 1990-2006

**Source:** EPA, 200710 Acid Rain and Related Programs: 2006 Progress Report in effect lower the SO 2 emission cap) will lead to depletion of the bank and further reduce emissions. In 2010, the total number of Title IV allowances allocated annually will drop to 8.95 million and remain statutorily fi xed at that annual level. Because of the retirement ratios in the CAIR region, EPA projects that emissions will be signifi cantly lower than this statutory cap. Table 1 explains in more detail the origin of the allowances that were available for use in 2006, and Table 3 shows how those allowances were used.

From 2005 to 2006, reductions in SO 2 emissions from ARP units in 35 states and the District of Columbia totaled 873,000 tons. Modest increases in 13 states totaled 43,000 tons, resulting in a net national decrease of 830,000 tons, or more than 8 percent, for the year. Among the states with large reductions, 12 states (Florida, Illinois, Indiana, Kansas, Kentucky, Massachusetts, North Carolina, Nevada, New York, Ohio, Pennsylvania, and Virginia) decreased emissions by more than 25,000 tons each. The largest reduction was in Ohio, where ARP units reduced emissions by more than 123,000 tons from 2005 levels.
The states with the highest emitting sources in 1990 have seen the greatest SO 2 reductions during the ARP (see Figure 4 on page 9). Most of these states are upwind of the areas the ARP was designed to protect, and reductions have resulted in important environmental and health benefi ts over a large region.

For the 32 states and the District of Columbia that reduced annual SO 2 emissions from 1990 to 2006, total annual SO 2 emissions were approximately 6.7 million tons lower in 2006 than they were in 1990. For the 16 states where annual emissions increased from 1990 to 2006, total emissions were up by only about 328,000 tons from 1990 levels. In contrast, the 2006 emissions were more than 100,000 tons less than 1990 levels in each of 13 states: Florida, Georgia, Illinois, Indiana, Kentucky, Massachusetts, Missouri, New York, Ohio, Pennsylvania, Tennessee, West Virginia, and Wisconsin. The six states with the greatest annual reductions include Ohio, which decreased emissions by 1.3 million tons, and Illinois, Indiana, Missouri, Tennessee, and West Virginia, each of which reduced emissions by more than 500,000 tons per year. Type of Allowance Allocation Number of SO 2 Allowances Explanation of Allowance Allocation Type Initial Allocation 9,191,897 The initial allocation of allowances is granted to units* based on the product of their historical utilization and emission rates specifi ed in the CAA. 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 97,678 Opt-in allowances are provided to units entering the program voluntarily. There were eight opt-in units in 2006. Total 2006 Allocation 9,539,575

Total Banked Allowances** 6,116,062 Banked allowances accrue in accounts from previous years. These allowances were available for compliance in 2006 or any future year. Total 2006 Allowable Emissions 15,655,637

**Source:** EPA, 2007 

### Table 1: Origin of 2006 Allowable **SO 2**  

### Emission Levels

* In this report, the term “unit” means a fossil fuel-fi red combustor that serves a generator that provides electricity for sale. The vast majority of SO 2 emissions under the program result from coal-fi red generation units, but oil and natural gas units are also included in the program.

** Total banked allowances are adjusted from the 2005 Progress Report to account for additional deductions made for electronic data reporting (EDR) resubmissions after 2005 reconciliation was completed.11 Acid Rain and Related Programs: 2006 Progress Report 

## SO 2 

## Program Compliance Approximately 9.4 million allowances were deducted from sources’ accounts in 2006 to cover emissions. Table 3 displays these allowance deductions, as well as the remaining banked allowances from 1995 through 2006. In 2006, all ARP facilities were in compliance with the SO 2 allowance holding requirements. Title IV set a penalty of $2,000 per ton in 1990, which is adjusted annually for infl ation. The 2006 penalty level was set at $3,152 per excess ton. The ARP’s cap and trade approach offers emission sources the fl exibility to comply with regulations using their choice of the most cost-effective strategies available. Since the program’s inception, the compliance rate has consistently been extraordinarily high.

Fuel Type 2004 2005 2006 SO 2 NO X HI SO 2 NO X HI SO 2 NO X HI Coal 9,839 3,484 20.48 9,836 3,356 20.77 9,243 3,208 20.44
Oil 378 139 1.00 350 130 1.00 135 64 0.58
Gas 37 133 4.84 34 142 5.34 7 130 5.70
Other 3 6 0.03 3 6 0.03 7 7 0.05 Total 10,256 3,762 26.35 10,223 3,633 27.14 9,392 3,409 26.78 Notes: All emission data are in thousand tons and all heat input data are in billion mmBtu. Totals may not refl ect individual rows due to rounding. Fuel type represents primary fuel type, and many units may combust more than one fuel.

**Source:** EPA, 2007 

### Table 2: SO **2** 

### , NO **X** 

### , and Heat Input Trends in **Acid Rain Program Units, by Fuel Type** Total Allowances Held (1995-2006 Vintages)* 15,655,637 Facility Accounts** 12,483,262 General Accounts*** 3,172,375 Allowances Deducted for Emissions  9,392,922 Penalty Allowance Deductions (2007 Vintage) 0 Banked Allowances 6,262,715 Facility Accounts 3,090,340 General Accounts 3,172,375 

### Table 3: SO ** 2** 

### Allowance Reconciliation **Summary, 2006**

* The allowance transfer deadline is March 1 of the year following

the compliance year. At this point, facility accounts are frozen, and no further transfers of allowances are recorded. The freeze on accounts is removed when the annual reconciliation is complete.

** From 1995 through 2005, EPA reconciled emissions and allowances for compliance under the ARP separately for each unit. In 2006, EPA began reconciling emissions and allowances at the facility level for compliance purposes.

*** General accounts that are not subject to reconciliation can be established in the Allowance Tracking System (ATS) by any utility, individual, or other organization.

  Includes 489 allowances deducted from opt-in sources for reduced utilization.

** Source:** EPA, 2007 

## Why SO 2 

## Emissions Decreased Sharply in 2006

For the fi rst time under the ARP, SO 2 emissions in 2006 fell below 10 million tons. Overall reductions from 2005 were over 830,000 tons (see Table 2). This decrease stemmed from a number of factors:

Heat input (measured in million British thermal units (mmBtu)) • dropped for oil-fi red units, with a comparable increase in heat input from gas-fi red units as well as much less oil use at dual fuel units classifi ed as gas-fi red units. Switching from oil to gas reduces SO 2 because oil is higher in sulfur content than natural gas. Fuel switching resulted in about a 243,000-ton SO 2 reduction from oil and gas units combined.

Emissions from coal-fi red units decreased by about 593,000 tons. • Reductions came from both uncontrolled units and those with

installed fl ue gas desulfurization equipment (scrubbers).
Reductions in heat input and the SO • 2 emission rate of units

without scrubbers resulted in a decrease of about 412,000 tons of SO 2 emissions. Overall heat input for these units was down 2.1 percent, but the overall emission rate was down even more, about 3.5 percent. The emission rate decline may be partially attributable to early CAIR compliance planning.
Units equipped with scrubbers (either in both 2005 and 2006, or • just 2006) caused a decrease in SO 2 emissions of about 182,000

tons. Heat input to these units declined by less than 1 percent, but their emission rate dropped nearly 11 percent, refl ecting the addition of several scrubbers on previously uncontrolled units. Some of the scrubber installations were expected as a result of existing state or federal actions. Others appear to be part of an early compliance response to CAIR.
Overall, about 650 coal units had at least some decrease in mass • emissions due to reduced heat input, reduced emission rate, or both.12 Acid Rain and Related Programs: 2006 Progress Report 0 50 100 150 200 250 300 350

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006


### Year**Allowances (millions)**

EPA Transfers to Account Holders
Private Transactions 

### Figure 5: Cumulative SO **2** 

### Allowances Transferred through 2006

**Source:** EPA, 2007 

## SO 2 

## Allowance Market Figure 5 shows the cumulative volume of SO 2 allowances transferred under the ARP. The fi gure differentiates between allowances transferred in private transactions and those annually allocated and transferred to sources’ accounts by EPA. Private transactions are indicative of both market interest and use of allowances as a compliance strategy. Of the nearly 330 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 2006, account holders registered about 94 percent of all private allowance transfers through EPA’s online transfer system. 6
In 2006, nearly 6,400 private allowance transfers (moving roughly 22.4 million allowances of past, current, and future vintages) were recorded in the EPA Allowance Tracking System (ATS). About 9.5 million (42 percent) were transferred in economically signifi cant transactions (i.e., between economically unrelated parties). Transfers between economically unrelated parties are “arm’s length” transactions and are considered a better indicator of an active, functioning market than are transactions among the various units of a given company. In the majority of all private transfers, allowances were acquired by power companies. Figure 6 shows the annual volume of SO 2 allowances transferred under the ARP (excluding allocations, retirements, and other transfers by EPA) since offi cial recording of transfers began in 1994. Note that the volume of private transfers recorded in 2006 rose for the second straight year and returned to levels not seen since 2000-2001. Market liquidity had declined due to an overall contraction in the related electricity markets following disruptions precipitated by events such as the collapse of Enron in late 2001.13 Acid Rain and Related Programs: 2006 Progress Report 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

0.0 5.0 10.0 15.0 20.0 25.0 30.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

### Year

Trades Between Related Entities Trades Between Distinct Entities (Significant Transfers)**Allowances (millions)** 

### Figure 6: SO **2** 

### Allowances Transferred under the Acid Rain Program



# NO X 

# Emission Reductions and Compliance

Title IV requires NO X emission reductions for certain coal-fi red EGUs. Unlike the SO 2 program, Congress applied rate-based emission limits based on a unit’s boiler type to achieve NO X reductions (see Table 4). The NO X emission limit is expressed as pounds of NO X per unit of heat input (lbs/mmBtu) for each boiler subject to a NO X limit. Owners can meet the NO X limits for each individual unit or meet group NO X limits through averaging plans for groups of units that share a common owner and designated representative. In 2006, all but one unit met its NO X emission requirements under the ARP. The ARP seeks to attain a 2 million ton annual reduction in NO X emissions from all ARP sources relative to the NO X emission levels that were projected to occur in 2000 absent the ARP (8.1 million tons). This goal was fi rst achieved in 2000 and has been met every year thereafter, including 2006. Figure 7 on page 14 shows that NO X emissions from all ARP sources were 3.4 million tons in 2006. This level is 4.7 million tons less than the projected level in 2000 without the ARP, or more than double the Title IV NO X emission reduction objective. These reductions have been achieved even though the amount of fuel burned to produce electricity (as measured by heat input) at all ARP units in 2006 has increased 37 percent since 1990. While the ARP

Coal-Fired Boiler Type Title IV Standard NO X Emission Limits (lb/mmBtu) # of Units Phase 1 Group 1 Tangentially Fired 0.45 132 Phase 1 Group 1 Dry Bottom, Wall-Fired 0.50 113 Phase II Group 1 Tangentially Fired 0.40 301 Phase II Group 1 Dry Bottom, Wall-Fired 0.46 295 Cell Burners 0.68 37 Cyclones > 155 MW 0.86 54 Wet Bottom > 65 MW 0.84 24 Vertically Fired 0.80 26 Total All Units n/a 982 

### Table 4: NO **X** 

### -Affected Title IV Units by Boiler Type and NO **X** 

### Emission Limit

**Source:** EPA, 2007 **Source:** EPA, 200714 Acid Rain and Related Programs: 2006 Progress Report 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 0 1 2 3 4 5 6 7

1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

### Year**NO x** **Emissions (million tons)** 

NO
x Program Affected Sources Title IV Sources Not Affected for NO
x 6.7 6.1 5.9 5.5 6.0 6.0 5.1 4.7 4.5 4.2 3.8 3.6 3.4 

### Figure 7: NO **X** 

### Emission Trends for Acid Rain Program Units, 1990-2006

**Source:** EPA, 2007

Scale: Largest bar equals 500 thousand tons of NO
x emissions in Ohio, 1990 Note: NBP states shaded in gray NO
x Emissions in 1990 NO
x Emissions in 1995 NO
x Emissions in 2000 NO
x Emissions in 2006 

### Figure 8: State-by-State NO **X** 

### Emission Levels for Acid Rain Program Sources, 1990-2006

**Source:** EPA, 200715 Acid Rain and Related Programs: 2006 Progress Report was responsible for a large portion of these annual NO X reductions, other programs—such as the Ozone Transport Commission (OTC), NO X Budget Trading Program (NBP) under EPA’s NO X State Implementation Plan (SIP) Call, and other regional NO X emission control programs—also contributed signifi cantly to the NO X reductions achieved by sources in 2006.

From 2005 to 2006, NO X emissions from ARP units dropped by 224,000 tons, a net decrease of more than 6 percent. Thirty-six states and the District of Columbia reduced 2006 NO X emissions by 247,000 tons below 2005 levels. Of these states, Alabama, Florida, Iowa, Louisiana, Nevada, New York, and Ohio reduced their NO X emissions by more than 10,000 tons each from 2005 levels. Twelve states had modest increases in NO X emissions in 2006, totaling 23,000 tons above 2005 levels.

As with SO 2 , the states with the highest NO X -emitting sources in 1990 tended to see the greatest power plant NO X emission reductions (see Figure 8). The sum of reductions in the 41 states and the District of Columbia that had lower annual NO X emissions in 2006 than in 1990 was approximately 3 million tons, while the sum of increases in the seven states that had higher annual NO X emissions in 2006 than in 1990 was much smaller, about 37,000 tons. Nine of the 13 states with NO X emission decreases of more than 100,000 tons were in the Ohio River Basin. 

# Emission Monitoring and Reporting The ARP requires program participants 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 effi cient means of monitoring emissions from the large universe of units with lower overall mass emissions. Figures 9 and 10 on page 17 show 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.
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 monitor quality assurance and control requirements, and reported hourly emission data in quarterly electronic reports to EPA. Using automated software audits, EPA rigorously 

## Role of Seasonal NO X 

## Control Programs in Reducing Annual Emissions

States subject to EPA’s 1998 NO X SIP Call have achieved signifi cant 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 CAAA, with many of them reducing their emissions by more than half since 1990. A signifi cant portion of these decreases in NO X emissions has been achieved since 2000, largely as a result of reductions under the OTC program and NBP. With the CAIR ozone season NO X program taking effect in 2009, further emission declines will occur across the region through the year 2020. For NBP compliance reports, see: <www.epa.gov/airmarkets/progress/progress-reports.html>.16 Acid Rain and Related Programs: 2006 Progress Report 

## Emissions Collection and Monitoring Plan System (ECMPS)

CAMD is reengineering the way the regulated community maintains, evaluates, and submits monitoring plans, quality assurance (QA) certifi cations, and quarterly emission data. An important tool in this effort is the Emissions Collection and Monitoring Plan System (ECMPS). ECMPS will replace the current processes and multiple software tools used for evaluating, submitting, and receiving the data. ECMPS will be available for use in 2008, but will be required for all sources beginning in 2009.
CAMD’s goals for the ECMPS project include:

Creating a single desktop tool for authorized users • to import and evaluate their data and to submit it to CAMD.
Creating a new data reporting format based on the • fl exible XML (Extensible Markup Language) standard.
Creating a centralized database at CAMD for receiving • and maintaining submitted data. The desktop tool has direct access to this database.
Providing users with the ability to assure the quality • of data prior to submission and receive one set of evaluation results (feedback).
Maintaining select data outside of the electronic data • report.
Developing and implementing new security • requirements. checks the completeness, quality, and integrity 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 <http://camddataandmaps.epa.gov/gdm/>. The site also provides access to other data associated with emission trading programs, including reports, queries, maps, charts, and fi le downloads covering source information, emissions, allowances, program compliance, and air quality.
The emission monitoring requirements for the ARP arefound in 40 CFR Part 75. These provisions are also required for participation in the NBP. The Part 75 requirements will also be used in the future to implement CAIR and CAMR.17 Acid Rain and Related Programs: 2006 Progress Report Coal Units w / CEMS Gas Units w / CEMS Oil Units w / CEMS Other Fuel Units w / CEMS Gas Units w /o CEMS Oil Units w /o CEMS Other Fuel Units w /o CEMS 

### 1,062

168
46 2,158

8 1 13 **Figure 9: SO 2**  

### Monitoring Methodology for the Acid Rain Program, Number of Units

**Figure 10: Monitoring Methodology for the Acid Rain Program, Total SO 2**  

### Mass Note: “Other fuel units” include units that in 2006 combusted primarily wood, waste, or other non-fossil fuel. The total number of units in Figure 9 excludes 64 affected units that did not operate in 2006.

**Source:** EPA, 2007

Note: Percentages do not add to 100 percent due to rounding.

**Source:** EPA, 2007 Coal Units w / CEMS All Other Units w / CEMS All Other Units w /o CEMS 

### 98.41% 0.40% 1.18%

# Emission reductions attributed to the ARP have helped reduce wet sulfate acid deposition by up to 35 percent since the late 1980s in some eastern regions of the United States.Environmental Results19 Acid Rain and Related Programs: 2006 Progress Report The emission reductions achieved under the ARP have led to important environmental and public health benefi ts. These include improvements in air quality with signifi cant benefi ts to human health; reductions in acid deposition; the beginnings of recovery from acidifi cation in fresh water lakes and streams; improvements in visibility; and reduced risk to forests, materials, and structures. Table 5 on page 20 shows the regional changes in key air quality and atmospheric deposition measurements linked to the ARP’s SO 2 and NO X emission reductions. 

## Understanding the Monitoring Networks To evaluate the impact of emission reductions on the environment, scientists and policymakers use data collected from long-term national monitoring networks such as the Clean Air Status and Trends Network (CASTNET) and the National Atmospheric Deposition Program/National Trends Network (NADP/ NTN). These complementary, long-term monitoring networks provide information on a variety of indicators necessary for tracking temporal and spatial trends in regional air quality and acid deposition (see Table 6 on page 21).
CASTNET provides atmospheric data on the dry deposition component of total acid deposition, ground-level ozone, and other forms of atmospheric pollution. Established in 1987, CASTNET now consists of 87 sites across the United States. EPA’s Offi ce of Air and Radiation operates most of the monitoring stations; the National Park Service (NPS) funds and operates approximately 30 stations in cooperation with EPA. Many CASTNET sites have a continuous 20-year data record, refl ecting EPA’s commitment to long-term environmental monitoring. Information and data from CASTNET are available at <www.epa.gov/castnet>.
NADP/NTN is a nationwide, long-term network tracking the chemistry of precipitation. NADP/NTN offers data on hydrogen (acidity as pH), sulfate, nitrate, ammonium, chloride, and base cations. The network is a cooperative effort involving many groups, including the State Agricultural Experiment Stations, U.S. Geological Survey, U.S. Department of Agriculture, EPA, NPS, the National Oceanic and Atmospheric Administration (NOAA), and other governmental and private entities. NADP/NTN has grown from 22 stations at the end of 1978 to more than 250 sites spanning the continental United States, Alaska, Puerto Rico, and the Virgin Islands. Information and data from NADP/NTN are available at <http://nadp.sws.uiuc.edu>. 

# Status and Trends in Air Quality, Acid Deposition, and Ecological Eff ects20 Acid Rain and Related Programs: 2006 Progress Report Measurement Region Average 1989-1991 Average 2004-2006 Percent Change Ambient SO 2 Concentration (μg/m 3 ) Mid-Atlantic 12.2 7.5 -39 Midwest 10.0 5.1 -49 Northeast 6.7 2.8 -58 Southeast 5.2 3.3 -37 Wet Sulfate Concentration (mg/L) Mid-Atlantic 2.3 1.6 -31 Midwest 2.2 1.5 -33 Northeast 1.9 1.1 -40 Southeast 1.3 1.1 -18 Ambient Sulfate Concentration (μg/m 3 ) Mid-Atlantic 6.2 4.4 -29 Midwest 5.4 3.6 -34 Northeast 3.8 2.4 -37 Southeast 5.4 4.1 -24 Wet Sulfate Deposition (kg/ha) Mid-Atlantic 26.8 19.2 -28 Midwest 22.3 14.9 -33 Northeast 22.2 14.5 -35 Southeast 18.1 14.3 -21* Wet Inorganic Nitrogen Deposition (kg/ha) Mid-Atlantic 5.9 5.0 -16* Midwest 5.9 5.4 -9* Northeast 5.5 4.1 -25* Southeast 4.3 4.1 -5* Wet Nitrate Concentration (mg/L) Mid-Atlantic 1.5 1.0 -30 Midwest 1.5 1.2 -17 Northeast 1.4 0.8 -38 Southeast 0.8 0.7 -10 Ambient Nitrate Concentration (μg/m 3 ) Mid-Atlantic 0.8 0.7 -1* Midwest 2.1 1.7 -18 Northeast 0.4 0.4 3* Southeast 0.6 0.7 17 Total Ambient Nitrate Concentration (Nitrate + Nitric Acid) (μg/m 3 ) Mid-Atlantic 3.2 2.5 -20* Midwest 4.0 3.2 -20* Northeast 1.9 1.4 -26* Southeast 2.2 2.0 -7* 

### Table 5: Regional Changes in Air Quality and Deposition of Sulfur and Nitrogen, **1989-1991 versus 2004-2006 (From Rural Monitoring Networks)**

*Percent change is estimated from raw measurement data, not rounded; refi ned techniques for measuring and calculating percentages yield values that are at or below the sensitivity of the method may n ot be signifi cant due to the combination of margin of error and spatial averaging. **Source:** CASTNET and NADP/NTN, 2007 While CASTNET provides ambient air quality data, EPA also uses data from other ambient monitoring networks, including the State and Local Ambient Monitoring and National Ambient Monitoring Systems (SLAMS/NAMS). These networks are used to document National Ambient Air Quality Standards (NAAQS) attainment and show trends in ambient air quality over time.21 Acid Rain and Related Programs: 2006 Progress Report Chemical

Name Chemical Symbol Measured In: Why are these measured by the networks? Ambient Air Wet Deposition

Sulfur Dioxide SO 2 X Primary precursor of wet and dry acid deposition; primary precursor to fi ne particles in many regions.

Sulfate Ion SO 4 2- X X Major contributor to wet acid deposition; major component of fi ne particles in the Midwest and East; can be transported over large distances; formed from reaction of SO 2 in the atmosphere.

Nitrate Ion NO 3 - X X Contributor to acid and nitrogen wet deposition; major component of fi ne particles in urban areas; formed from reaction of NO X in the atmosphere.

Nitric Acid HNO 3 X Strong acid and major component of dry nitrogen deposition; formed as a secondary product from NO X in the atmosphere.

Ammonium Ion NH 4 + X X Contributor to wet and dry nitrogen deposition; major component of fi ne particles; provides neutralizing role for acidic compounds; formed from ammonia gas in the atmosphere.

Ionic Hydrogen H + X Indicator of acidity in precipitation; formed from the reaction of sulfate and nitrate in water.

Calcium Magnesium Potassium Sodium Ca 2 + Mg 2 + K + Na + X X X X X X X X These base cations neutralize acidic compounds in precipitation and the environment; also play a major role in plant nutrition and soil productivity. 

### Table 6: Air Quality and Acid Deposition Measures

**Source:** EPA, 200722 Acid Rain and Related Programs: 2006 Progress Report 

## Accountability and the ARP: Assessing Ecological Response

To determine the effectiveness of the ARP, EPA must be able to track, assess, and report on the trends and conditions in the environment as they respond to program implementation and emission reductions.
The data collected through air monitoring networks, such as CASTNET and NADP, provide a picture of changes in air quality and pollutant deposition as a result of emission reductions achieved by the ARP (see Figure 11). However, to assess the ecological impact of the ARP, EPA must go a step further and look at how changes in pollutant deposition correspond to changes in ecosystem conditions. This step requires examining the trends and conditions of ecosystems that are susceptible to changes in pollutant deposition and, specifi cally, studying a few key ecological indicators that can be used to represent ecosystem response and recovery.
EPA’s Temporally Integrated Monitoring of Ecosystems (TIME) and Long-Term Monitoring (LTM) programs are designed to detect trends in the chemistry of lakes or streams in regions sensitive to acid deposition. TIME/LTM monitors a total of 145 lakes and 147 streams, representing all of the major acid sensitive regions of the northern and eastern United States (New England; Adirondack Mountains; northern Appalachian Plateau, including the Catskill Mountains; and the Ridge/Blue Ridge Provinces of Virginia) (see Figure 11). TIME/LTM measures a variety of important chemical characteristics, including acid neutralizing capacity (ANC), pH, sulfate, nitrate, major cations (e.g., calcium and magnesium), and aluminum. The TIME program is the most coherent individual regional dataset for this kind of analysis. In addition, the U.S. Geological Survey has been measuring surface water quality at several research watersheds throughout the United States, where sample collection during hydrologic events and ancillary data on other watershed characteristics have been used to assess the watershed processes controlling acidifi cation of surface waters. To determine whether decreased emissions have had the intended effect of reducing impacts of acid deposition on ecosystems, EPA links emission trends with data from the CASTNET and NADP networks and the TIME/LTM programs. Combining these links in the “chain of accountability” allows EPA to determine whether emission reductions, and consequent reductions in pollutant deposition, translate into ecological response (i.e., changes in surface water quality necessary to protect fi sh and other aquatic organisms). This integration of data enables EPA to assess the effectiveness of the ARP in meeting its goal of protecting ecosystems by reducing the adverse effects of acid deposition.
Without long-term monitoring of atmospheric deposition and lake and stream chemistry, EPA would not be able to assess the ecological response to the emission reductions achieved by the ARP. Such monitoring networks are critical for tracking the progress made in restoring and/or protecting sensitive ecosystems under regulatory programs and informing future policy decisions.

**Reports to Congress and Public How do emission reductions correlate**  **with decreases in deposition?** 

### •
**Are surface waters recovering?**



### • • **Are we meeting the goals?**



### • **Are additional reductions necessary? ARP**  **Development & Implementation**

**Accountability/Monitoring Total Acid Deposition** 



### • **Spatial Patterns**



### • **Long-term Trends**

Surface Water Monitoring National Deposition Monitoring **CAAA Title IV Emission Reductions**  

### Figure 11: National Deposition and Surface Water Monitoring Sites

**Source:** EPA, 200723 Acid Rain and Related Programs: 2006 Progress Report 

## Enhancing Mercury Monitoring Capabilities In March 2005, EPA promulgated CAMR to reduce mercury emissions from power plants by 2010. In conjunction with CAIR, mercury emission reductions under CAMR are expected to reduce atmospheric concentrations and deposition of mercury. Cutting mercury emissions would also translate to reductions in methylmercury contamination in fi sh, particularly in mercury-sensitive watersheds throughout many parts of the United States. This reduction wouldimprove the health of people and wildlife that consume fi sh from these waters. These reductions will be achieved through implementation of a combination of independently operated state programs plus an interstate emission cap and trade program modeled after the ARP.

In order to assess the effi cacy of these emerging regulatory programs, scientifi c information is needed, including a more complete understanding of the fate of mercury emissions with respect to total (i.e., wet and dry) deposition, a quantifi able assessment of the sources contributing to mercury deposition (especially coal-fi red power plant emissions), and an assessment as to whether or not mercury “hotspots” exist or may develop over the course of implementing the mercury rules. At present, EPA lacks the ambient mercury concentration and deposition data, particularly on dry deposition in source-impacted areas, to adequately assess the atmospheric mercury changes anticipated from the regulatory programs. In addition, mercury atmospheric data are needed to evaluate and improve mercury model estimates and to facilitate source apportionment analyses.

To meet some of these data needs, EPA is collaborating with NADP, as well as other federal agencies, states, tribes, academic institutions, industry, and other organizations to establish a new, coordinated network for monitoring atmospheric mercury species. The network will measure air concentrations of mercury in its gaseous and particulate forms, event-based mercury wet deposition, and meteorological and land-cover variables needed for estimating dry deposition fl uxes. When fully implemented, the network will serve many functions, including:

Facilitate the calculation of wet, dry, and total • mercury deposition.

Provide data for evaluating predictive and • diagnostic models and for assessing sourcereceptor relationships.

Build a data set for analyzing spatial and temporal • trends of ambient mercury concentrations and wet

deposition in selected locations.
The network will consist of monitoring stations with a broad range of classifi cations, including rural, suburban, and urban; near-source/high-emissions; sensitive ecosystems; and regionally representative. Stations will adopt standard operational procedures based on methods developed from EPA and other research efforts. Data will be quality-assured and accessible online. For more information about this effort, please visit the NADP mercury initiative Web site at <http://nadp.sws.uiuc.edu/mtn/>.24 Acid Rain and Related Programs: 2006 Progress Report 

## Emerging Issues: Remote Assessment Methods

Satellite observations and other remote sensing technologies are emerging as potentially useful new techniques for understanding atmospheric chemistry and analyzing changes in atmospheric pollutant concentrations. For example, the NASA EOS Aura orbiting satellite platform launched in 2004 includes the Ozone Monitoring Instrument (OMI). 7 Researchers have developed an algorithm using the output of this instrument to observe from space the signal of SO 2 gases in the atmosphere near the ground. Using weekly, monthly, or annual average SO 2 concentrations observed by this instrument, maps of degassing and air pollution stationary sources can be generated. SO 2 emissions have been measured by OMI over known sources of air pollution, such as the Ohio River Valley (see Figure 12).

A wealth of data, such as information used in a recent NOAA report on NO 2 observations, 8 as well as the emerging data in the scientifi c literature on a number of air pollutants, is currently available from satellite observation, 9 and the potential of these sources for analyzing atmospheric chemistry and changes in pollutant emissions provides exciting new opportunities for program assessments. 

### Figure 12: Two-Year Average SO **2** 

### Burdens over the Ohio River Valley 

## Air Quality

**SO 2**  Data collected from monitoring networks show that the decline in SO 2 emissions from the power industry has improved air quality. 10 Based on EPA’s latest air emission trends data located at <www. epa.gov/airtrends/index.html>, the national composite average of SO 2 annual mean ambient concentrations decreased 53 percent between 1990 and 2006 as shown in Figure 13. The largest single-year reduction (21 percent) occurred in the fi rst year of the ARP, between 1994 and 1995.

These trends are consistent with the ambient trends observed in the CASTNET network. During the late 1990s, following implementation of Phase I of the ARP, dramatic regional improvements in SO 2 and ambient sulfate concentrations were observed at CASTNET sites throughout the eastern United States, due to the large reductions in SO 2 emissions from ARP sources. Analyses of regional monitoring data from CASTNET show the geographic pattern of SO 2 and airborne sulfate in the eastern United States. Three-year mean annual concentrations of SO 2 and sulfate from CASTNET long-term monitoring sites are compared from 1989-1991and 2004-2006 in both tabular form and graphically in maps (see Table 5 on page 20 and Figures 17a through 18b on page 28).
The map in Figure 17a shows that from 1989-1991, prior to implementation of Phase I of the ARP, the highest ambient concentrations of SO 2 in the East were observed in western Pennsylvania and along the Ohio River Valley. Figure 17b indicates a signifi cant decline in those concentrations in nearly all affected areas after implementation of the ARP and other programs.
Before the ARP, in 1989-1991, the highest ambient sulfate concentrations, greater than 7 micrograms per cubic meter (μg/m 3 ), were also observed in25 Acid Rain and Related Programs: 2006 Progress Report western Pennsylvania, along the Ohio River Valley, and in northern Alabama. Most of the eastern United States experienced annual ambient sulfate concentrations greater than 5 μg/m 3 . Like SO 2 concentrations, ambient sulfate concentrations have decreased since the program was implemented, with average concentrations decreasing 35 percent in all regions of the East (see Table 7 on page 27). Both the size of the affected region and magnitude of the highest concentrations have dramatically declined, with the largest decreases observed along the Ohio River Valley (see Figures 18a and 18b on page 28).

1990 0.04

National Ambient Air Quality Standard 0.03

0.02

0.01

0.00

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

### Year**SO 2** **Ambient Concentration, ppm**

10% of sites have concentrations below this line. AVERAGE 10% of sites have concentrations above this line. 

### Figure 13: National SO **2** 

### Air Quality, 1990-2006 (Based on Annual Arithmetic **Average)**

**Source:** EPA, 200726 Acid Rain and Related Programs: 2006 Progress Report 

### Emerging Issues: Trends in Sulfate **Concentrations**

Since SO 2 is a precursor to the formation of sulfate, reductions in SO 2 emissions under the ARP were expected to translate into similar reductions in sulfate. Although there is an observed downward trend in the ambient concentration of sulfate since the implementation of the ARP, these reductions have not been as dramatic as those observed for SO 2 emissions and ambient SO 2 concentrations.
The ARP was established to reduce emissions of the two key contributors to the formation of acid deposition, SO 2 and NO X . As discussed earlier, SO 2 and NO X emissions can react in the atmosphere to form fi ne particulates which are harmful to the human respiratory system and damaging to sensitive ecosystems. Sulfate particles are formed after gaseous SO 2 is emitted and oxidized by hydroxyl radical ions. Sulfate particles can then be deposited on the surface (dry deposition) or the particles can react with H 2 0 2 or O 3 in clouds or fog to form sulfuric acid (H 2 SO 4 ). Sulfuric acid in wet deposition is known as acid rain. In order to assess environmental results of the ARP, air quality monitoring networks, such as CASTNET, were established to measure ambient concentrations of SO 2 and sulfate. These data, combined with SO 2 emission data from CEMS at ARP-affected sources, provide an idea of how emission reductions under the ARP are translating into reductions in acid deposition over time (see Figures 14 through 16 and Table 7).

Pre CAAA: 1985 Pre-ARP: 1990 Phase I: 1996-1999 Phase II: 2003-2006 **Regional SO 2**  **Emissions (tons) from CEMS Measurements** 

6,400 tons 

### Figure 14: Trends in Regional Annual SO **2** 

### Emissions (Coal-fi **red, Acid Rain Program Units)**

Pre CAAA: 1987-1990 Pre-ARP: 1993-1994 Phase I: 1996-1999 Phase II: 2003-2006 **Regional SO 2**  **Concentrations (ug/m3) from CASTNET Measurements** 

7 ug/m3 

### Figure 15: Trends in Regional SO **2** 

### Ambient **Concentrations (CASTNET Sites)**

**Source:** EPA, 2007 **Source:** EPA, 200727 Acid Rain and Related Programs: 2006 Progress Report Further study is necessary to understand the cause of annual changes in ambient sulfate concentrations. A study of meteorological data and multiple species data, such as ozone and ammonia ion concentrations, might provide insight into the factors infl uencing the rate of sulfate formation and what, if any, additional sources or pollutants might be responsible for the trends in sulfate concentrations in air quality.

Region Change in SO 2 Emissions Change in SO 2 Concentration Change in Sulfate Concentration

1985*

versus 2003-2006 1987-1990
versus 2003-2006 1987-1990
versus 2003-2006

Northeast -79% -64% -43%

Midwest -68% -50% -38%

Mid-Atlantic -58% -44% -33%

Southeast -66% -40% -29%
Total Change in East -67% -50% -35% 

### Table 7: Summary of Regional Trends Data (SO **2** 

### Emissions and Ambient SO **2** 

### and Sulfate Concentrations)

* Data are not available for 1987-1989; therefore, 1985 is used for this comparison.

**Source:** EPA, 2007; CASTNET, 2007 Pre CAAA: 1987-1990 Pre-ARP: 1993-1994 Phase I: 1996-1999 Phase II: 2003-2006 **Average Regional SO 4**  **Concentrations (ug/m3) from CASTNET Measurements** 

7 ug/m3 

### Figure 16: Trends in Regional Ambient **Sulfate Concentrations (CASTNET Sites)**

**Source:** EPA, 200728 Acid Rain and Related Programs: 2006 Progress Report **Source:** CASTNET 

### Figure 17a: Annual Mean Ambient SO **2** 

### Concentration, 1989-1991

**Source:** CASTNET 

### Figure 17b: Annual Mean Ambient SO **2** 

### Concentration, 2004-2006

**Source:** CASTNET 

### Figure 18a: Annual Mean Ambient Sulfate **Concentration, 1989-1991**

**Source:** CASTNET 

### Figure 18b: Annual Mean Ambient Sulfate **Concentration, 2004-2006**

Note: For maps depicting these trends for the entire continental United States, see maps available at <www.epa.gov/castnet/mapi ndex.html>.29 Acid Rain and Related Programs: 2006 Progress Report 

### NO **X** Although the ARP has met its NO X emission reduction targets, emissions from other sources (such as motor vehicles and agriculture) have led to increased ambient nitrate concentrations in some areas. NO X levels can also be affected by emissions transported via air currents over wide regions. 11 From 2004 through 2006, reduced ozone season NO X emissions from power plants under the NO X SIP Call led to more signifi cant region-specifi c improvements in some indicators than have been seen in previous years. For instance, annual mean ambient nitrate concentrations for 2004-2006 decreased in the Midwest by nearly 20 percent from the annual mean concentration in 1989-1991 (see Figures 19a and 19b). While these improvements may be partly attributed to added NO X controls installed for compliance with the NO X SIP Call, the fi ndings at this time are not conclusive.

**Source:** CASTNET 

### Figure 19a: Annual Mean Total Nitrate **Ambient Concentration, 1989-1991**

**Source:** CASTNET 

### Figure 19b: Annual Mean Total Nitrate **Ambient Concentration, 2004-2006**

Note: For maps depicting these trends for the entire continental United States, see maps available at <www.epa.gov/castnet/mapi ndex.html>.30 Acid Rain and Related Programs: 2006 Progress Report NADP/NTN monitoring data show signifi cant improvements in some deposition indicators. For example, wet sulfate deposition (sulfate that falls to the earth through rain, snow, and fog) has decreased since the implementation of the ARP in much of the Ohio River Valley and northeastern United States. Some of the greatest reductions have occurred in the mid-Appalachian region, including Maryland, New York, West Virginia, Virginia, and most of Pennsylvania. Other less dramatic reductions have been observed across much of New England, portions of the southern Appalachian Mountains, and some areas of the Midwest. Between the 1989-1991 and 2004-2006 observation periods, average decreases in wet deposition of sulfate averaged around 30 percent for the eastern United States (see Table 5 on page 20 and Figures 20a and 20b). Along with wet sulfate deposition, wet sulfate concentrations have also decreased signifi cantly. Since the 1989-1991 period, average levels decreased 40 percent in the Northeast, 31 percent in the Mid-Atlantic, and 33 percent in the Midwest. A strong correlation between large-scale SO 2 emission reductions and large reductions in sulfate concentrations in precipitation has been noted in the Northeast, one of the areas most affected by acid deposition. **Source:** NADP 

### Figure 20a: Annual Mean Wet Sulfate **Deposition, 1989-1991**

**Source:** NADP 

### Figure 20b: Annual Mean Wet Sulfate **Deposition, 2004-2006** 

## Acid Deposition

Note: For maps depicting these data for the entire continental United States, see maps available at <www.epa.gov/castnet/mapindex.html>.31 Acid Rain and Related Programs: 2006 Progress Report A principal reason for reduced concentrations of sulfate in precipitation in the Northeast is a reduction in the long-range transport of sulfate from emission sources located in the Ohio River Valley. The reductions in sulfate documented in the Northeast, particularly across New England and portions of New York, were also affected by SO 2 emission reductions in eastern Canada. NADP data indicate that similar reductions in precipitation acidity, expressed as hydrogen ion (H + ) concentrations, occurred concurrently with sulfate reductions, but have not decreased as dramatically due to a simultaneous decline in acid-neutralizing base cations, which act to buffer acidity.
Reductions in nitrogen deposition recorded since the early 1990s have been less pronounced than those for sulfur. As noted earlier, emission trends from source categories other than ARP sources signifi cantly affect air concentrations and deposition of nitrogen. Inorganic nitrogen deposition decreased modestly in the Mid-Atlantic and Northeast but remained virtually unchanged in other regions (see Figures 21a and 21b). **Source:** NADP 

### Figure 21a: Annual Mean Wet Inorganic **Nitrogen Deposition, 1989-1991**

**Source:** NADP 

### Figure 21b: Annual Mean Wet Inorganic **Nitrogen Deposition, 2004-2006**

Note: For maps depicting these data for the entire continental United States, see maps available at <www.epa.gov/castnet/mapindex.html>.32 Acid Rain and Related Programs: 2006 Progress Report 

## Emerging Issues: Using Critical Loads to Assess Ecosystem Health

A critical load is a quantitative estimate of the exposure to one or more pollutants below which signifi cant harmful effects on specifi c sensitive elements of the environment do not occur according to present knowledge.

-From the 1988 United Nations Economic Commission for Europe (UNECE) Protocol Concerning the Control of Nitrogen Oxides or Their Transboundary Fluxes. Accepted by the United States in July 1989.
Recommendations in separate reports of the National Research Council (NRC) and the federal Clean Air Act Advisory Committee (CAAAC) urge EPA to expand its ecosystem protection capacities by exploring issues such as the use of critical loads in the development of secondary NAAQS.
The NRC formed a Committee on Air Quality Management to examine the role of science and technology in the implementation of the CAA and to recommend ways in which the scientifi c and technical foundations for air quality management in the United States can be enhanced. In its fi ndings and recommendations to EPA, the NRC Committee pointed out the need for alternative air quality standards to protect ecosystems and recommended investigating the use of critical loads as a potential mechanism to address this need. 12 CAAAC echoed the recommendation to examine critical loads as a useful tool for ecosystem protection in its 2005 report to EPA. 13
Critical loads provide a science-based tool for managers and policymakers to assess the progress made by federal air emission reduction programs, evaluate the impact of potential new emission sources in federally protected areas, and manage sensitive natural resources where air pollution and other disturbances occur. Critical loads were fi rst developed and applied in Europe to address the impacts of acid deposition associated with SO 2 and NO X emissions. The UNECE Convention on Long-Range Transboundary Air Pollution was signed in 1979. Critical loads were adopted in 1988 as part of the protocol process to address the effects of air pollution on ecosystems, human health, and cultural resources.
In North America, the concept of critical loads was applied in the 1960s with the fi rst Great Lakes Water Quality Agreement, which set lake phosphorus loading limits to reduce eutrophication. Canada established the fi rst critical load for air pollution in the 1980s (for wet sulfate deposition) as part of a U.S.-Canada memorandum on transboundary air pollution. Although the United States was a signatory to the memorandum, critical loads were not used in the United States until 1989, when the U.S. Forest Service applied the critical loads concept as a screening tool to protect air quality in Class I areas.
Over the past fi ve years, there has been renewed interest in critical loads in the United States. Recent critical loads initiatives include the Conference of New England Governors and Eastern Canadian Premiers project to map forest sensitivity to sulfur and nitrogen deposition; the Federal Land Managers Air Quality Report , which articulated a commitment to fostering the development of critical loads; a series of meetings known as the “Riverside Meetings”convened by the U.S. Forest Service; and a 2006 multiagency Critical Loads Workshop.

For more information on EPA’s assessment-related activities, go to <www.epa.gov/airmarkets>. See also <http://nadp. sws.uiuc.edu/clad/>.33 Acid Rain and Related Programs: 2006 Progress Report Acid rain, resulting from SO 2 and NO X emissions, is one of many large-scale anthropogenic effects that negatively affect the health of lakes and streams in the United States. Since the implementation of the ARP, scientists have observed measurable improvements in some lakes and streams in four regions of the eastern United States—New England, the Adirondack Mountains, the northern Appalachians (including the Catskill Mountains), and the southern Appalachians (including the Blue Ridge)—and found signs of recovery in many, but not all, of those areas (see Figure 22). 14
The long-term monitoring networks that exist in these regions provide information on the chemistry of lakes and streams, and a look at how water bodies are responding to changes in emissions. The data presented here show regional trends in acidifi cation from 1990 to 2005 (see Figure 22). For each lake or stream in the network, measurements of various indicators of recovery from acidifi cation were taken. These measurements were plotted against time, and trends for the given lake or stream during the 15-year period were then calculated as the change in each of the measurements per year (e.g., change in concentration of sulfate per year). Using the trends calculated for each water body, median regional changes were determined for each of the measures of recovery. A negative value of the “slope of the regional trend” means that the measure has been declining in the region, while a positive value means it has been increasing. The greater the value of the trend, the greater the yearly change. Movement 

## Improvements in Surface Water

No. Appalachian Streams (n=9) So. Appalachian Streams (n=69) -2.5 -2.0 -1.5 -1.0 Slope of Regional Trend Sulfate ( μ eq/L/yr)

Nitrate ( μ eq/L/yr)

ANC ( μ eq/L/yr)

Hydrogen Ion ( μ eq/L/yr)

Base Cations ( μ eq/L/yr)

New England Lakes (n=31) Adirondack Lakes (n=49) -0.5 0.0 0.5 1.0 

### Figure 22: Regional Trends in Eastern Lakes and Streams, 1990-2005

**Note:** Bars show the magnitude of the regional trend for each variable in each region.

**Source:** EPA, 200734 Acid Rain and Related Programs: 2006 Progress Report toward recovery is indicated by positive trends in acid neutralizing capacity (ANC) and negative trends insulfate, nitrate, hydrogen ion (measured in microequivalents per liter per year [ μ eq/L/yr]), and aluminum (measured in micrograms per liter per year [ μ g/L/ yr]). Negative trends in base cations (which are weak acid cations in soils, such as calcium, magnesium, and potassium) and positive trends in organic acids can balance out the decreasing trends in sulfate and nitrate and prevent ANC from increasing. The results of these regional trend analyses are shown in Figure 22 on page 33 and Table 8.

Trends in surface water from 1990 to 2005 include:

Sulfate concentrations are declining substantially • in all but one of the regions. In the southern

Appalachians, however, sulfate concentrations are increasing. This region is unusual because its soils can store large amounts of sulfate deposited from the atmosphere. Only after large amounts of sulfate have accumulated in the soils do stream water sulfate concentrations begin to increase, remaining elevated until the stored sulfur is depleted. This phenomenon is now being observed in the southern Appalachians, despite decreasing sulfate in atmospheric deposition. Still, due to inclusion of the latest data, the magnitude and direction of the trends in this region are substantially changed from the 2005 Acid Rain Program Progress Report

.

Chemical Variable New England Lakes (n = 31) Adirondack Lakes (n = 49) No. Appalachian Streams (n = 9) So. Appalachian Streams (n = 69) Sulfate (μeq/L/yr) -1.42 -2.07 -2.30 +0.09 Nitrate (μeq/L/yr) -0.03 -0.37 -0.31 -0.10 Acid Neutralizing Capacity (μeq/L/yr) +0.15 +0.93 +0.80 +0.08
Base Cations (μeq/L/yr) -0.93 -1.19 -2.25 +0.17 Hydrogen Ion (μeq/L/yr) -0.01 -0.24 +0.01 -0.01 Organic Acids (μeq/L/yr) +0.04 +0.15 -0.06 insuffi cient data Aluminum (μg/L/yr) insuffi cient data -4.72 insuffi cient data insuffi cient data 

### Table 8: **Results of Regional Trend Analyses on Lakes and Streams, 1990-2005***

* Values show the slope of the regional trend (the median value for the trends in all of the sites in the region). Regional trend s that

are statistically signifi cant are shown in bold.

**Source:** EPA, 200735 Acid Rain and Related Programs: 2006 Progress Report

Trend estimates using previous data (through the early 2000s) were heavily infl uenced by gypsy moth defoliation of trees in most of the region’s watersheds, particularly affecting trends in ANC, sulfate, and nitrate. As ecosystems have recovered from the impacts of this defoliation event, the extent of deposition impacts on this region appear less severe than in past years.

Nitrate concentrations are decreasing signifi cantly • in all of the regions. This trend does not appear to

refl ect changes in emissions or deposition in these areas and is likely a result of ecosystem factors.

The acidity of lake and stream water, as indicated • by ANC trends, is decreasing in three of the four

regions as a result of declining sulfate (and to some extent nitrate).

Base cations are decreasing in the northern • Appalachians, Adirondack Lakes, and New England

Lakes. This may be a concern because, although base cation concentrations in lakes and streams are expected to decrease when rates of atmospheric deposition decline, if they decrease too much, they limit recovery in pH and ANC.

Concentrations of organic acids, natural forms of • acidity, are currently increasing in many parts of the

world, but the cause is still being debated. Increases in organic acids over time can limit the amount of recovery observed. Only the New England and Adirondack regions are showing signifi cant increases in organic acids, which may be responsible for 10-15 percent less recovery (in ANC) than expected.

Aluminum is a critical element because it increases • when lakes and streams acidify, and is very toxic to

fi sh and other wildlife. The one region where good aluminum data exist (the Adirondacks) is showing strong declines in the most toxic form of aluminum (inorganic monomeric aluminum).

# CAIR will reduce SO 2 

# emissions by approximately 70 percent and NO X 

# emissions by approximately 60 percent from 2003 levelsRelated Programs37 Acid Rain and Related Programs: 2006 Progress Report 

## Rule Background Building on the ARP and NBP, EPA fi nalized CAIR in 2005, requiring further SO 2 and NO X emission reductions in 28 eastern states and the District of Columbia. CAIR will reduce region-wide SO 2 emissions by approximately 70 percent and NO X emissions by approximately 60 percent from 2003 levels to prevent signifi cant contribution to nonattainment in downwind ozone and PM 2.5 nonattainment areas. CAIR includes emission budgets for each jurisdiction based on application of highly cost-effective controls to fossil fuel-fi red EGUs in model cap and trade programs with two phases of reductions. However, states have discretion in deciding which sources tocontrol to meet the budget, and whether to participate in the federally run cap and trade programs delineated in the model rules.



## Rules and Programs to Ensure Further Improvements
A combination of well-established, existing programs, and new regulations that will soon begin implementation, are in a position to address the interstate transport of ozone, fi ne particles, and mercury deposition. Together, these rules and programs will help ensure further improvements in human health and environmental protection. Along with the ARP, the NO X SIP Call in the eastern United States and the Tier 2 mobile source and diesel rules establish programs that will help states achieve the ozone and fi ne particle NAAQS. In the spring of 2005, EPA promulgated a suite of air quality rules designed to achieve additional reductions of SO 2 , NO X , and mercury from power plants. These rules include CAIR, CAMR, and CAVR. 15 See Figure 23 for a fl ow-chart showing how the power sector rules are connected.



### Figure 23: Key Clean Air Rules Related to Electric Power Industry

**Source:** EPA, 2007 Clean Air Act (CAA)

Title I Title IV

Section 110 - State Implementation Plans (SIPs) Section 111(d) (State Plans for Non-Criteria

Pollutants from Existing Sources) Sections 169A and 169B (Visibility SIPs)

CAVR (2013/2014) CAMR (2010 – forward) CAIR (2009 – forward) NO X Budget Trading Program

(2003 – 2008) Acid Rain Program (1995 – forward) Parts C and D (New Source

Review) Section 111 (New Source Performance Standards) 

# Understanding Clean Air Rules38 Acid Rain and Related Programs: 2006 Progress Report To address their contribution to unhealthy levels of fi ne particles in downwind states, CAIR requires 25 eastern states and the District of Columbia to reduce and cap annual SO 2 and NO X emissions.
In addition, CAIR requires 25 eastern states and the District of Columbia to reduce and cap ozone season (May through September) NO X emissions to address their contribution to unhealthy levels of 8-hour ozone. As shown in Figure 24, most states covered under CAIR are required to address contributions to both PM 2.5 and ozone nonattainment, and therefore reduce annual SO 2 and NO X emissions as well as seasonal NO X emissions. These reductions will help states attain the NAAQS for ozone and fi ne particles in most areas that were designated as being in nonattainment as of April 2006 (see Figure 25). All the states covered under CAIR have chosen to participate in the trading programs for SO 2 and NO X . Some states also have direct control programs that complement the trading programs.
Generally, the CAIR model rules include fossil fuel-fi red boilers and combustion turbines serving an electric generator with a nameplate capacity greater than 25 MW and producing electricity for sale. These are generally the same types of sources as covered under the ARP and NO X SIP Call. However, the universe of CAIR sources is somewhat more inclusive in two ways. First, CAIR affects some sources that either permanently (e.g., simple-cycle turbines and certain cogeneration units) or temporarily (e.g., independent power producers, or IPPs, with power-purchase agreements in effect) were exempt from the ARP. EPA included these units because they were designed and



### Figure 24: States Covered under CAIR/CAVR/CAMR for SO **2** 

### , NO **X** 

### , and Mercury

**Source:** EPA, 2007 All states, plus 2 tribes and the District of Columbia, are covered by CAMR. **CAIR Emission Caps*** (million tons)

**2009/2010 2015** 

Annual SO 2 3.7 2.6

(2010)

Annual NO X 1.5 1.3

(2009)

Seasonal NO X 0.6 0.5

(2009) *for the affected regions **CAMR Annual Emission Caps*** (tons)

**2010 2018**

Mercury 38 15

**CAVR Outside of CAIR Region — BART** 39 Acid Rain and Related Programs: 2006 Progress Report operated to be in the business of producing electricity for sale and were part of the universe of sources that EPA demonstrated could reduce emissions in a highly cost-effective manner for purposes of CAIR.
Second, CAIR affects some power-generating sources that were not regulated under the NO X SIP Call because the CAIR defi nition of “fossil-fuel-fi red” is consistent with the defi nition used in the ARP (i.e., combusting any fossil fuel is considered “fossil fuel-fi red”). The NO X SIP Call defi nition only considers a source to be “fossil fuel-fi red” if more than 50 percent of annual heat input results from combusting fossil fuels.
The majority of the approximately 320 new sources expected to be affected under CAIR are simple-cycle combustion turbines outside the NO X SIP Call region that came online prior to 1991. Most of the others are IPP units or cogeneration units that were exempt from the ARP. Table 9 on page 40 delineates the expanding coverage of electricity generators from the ARP to CAIR and CAMR. 

## How the New Trading Programs Work States had the choice of participating in the federal cap and trade programs to reduce SO 2 and NO X emissions and all have elected to do so. The result is a larger seasonal NO X program beginning in 2009, a new annual NO X program beginning in 2009, and a new SO 2 program in the CAIR region with a tighter, regional cap in 2010. All three new CAIR programs require additional reductions in 2015 (See timeline in Figure 26 on page 41). States can either submit state plans for EPA approval or come under a federal plan that also serves as a backstop to enter the program. The state plans can use EPA’s model trading rules, with 

### Legend

Both PM and Ozone Nonattainment PM Only Nonattainment Ozone Only Nonattainment Area Count

13

7 3

106 Nonattainment Areas Projected to Attain 

### Figure 25: Pr **ojected Nonattainment Areas in 2020 After Reductions From CAIR, CAVR, and Clean Air Act Programs** 

Note: Figure 25 depicts 129 areas that, as of April 2006, were in nonattainment of the PM 2.5 or ozone NAAQS (or both). As indicated in the legend, 106 of those areas are projected to attain the applicable NAAQS by 2020 as a result of existing programs, such as T itle IV of the Clean Air Act, the NO X SIP Call, some existing state rules, and the addition of CAIR and CAVR. Note that the 23 areas that are forecast to remain in nonattainment may need to adopt additional local or regional controls to attain the NAAQS by the dates set pursuan t to the CAA. These additional local or regional measures are not forecast in Figure 25, and therefore the fi gure overstates the extent of expected nonattainment in 2020.
**Source:** EPA, 200640 Acid Rain and Related Programs: 2006 Progress Report state-specifi c approaches to allocating NO X allowances, allowing sources to opt-in, and including industrial sources that are subject to the NO X SIP Call trading program. The federal backstop program was published in May 2006 and went into effect in June 2006. Therefore, the regulated community has faced CAIR requirements that have been in effect since June 2006.

Under Title IV of the CAA, the ARP will continue to operate even after the new regional CAIR SO 2 trading program begins in 2010. (Title IV NO X requirements also remain unchanged under CAIR.) Sources will use Title IV SO 2 allowances to demonstrate compliance with annual CAIR requirements as well as with annual Title IV requirements. As a result, banked Title IV allowances can be used for CAIR compliance, and sources in all states subject to CAIR for SO 2 will be subject to two SO 2 trading programs that share the same currency.
Under CAIR, however, one allowance does not always cover one ton of emissions. Instead, for purposes of CAIR, SO 2 allowances of vintage 2009 and earlier will each cover one ton of emissions; vintage 2010 - 2014 allowances will authorize 0.50 tons of emissions; and vintage 2015 or later allowances will authorize 0.35 tons of emissions. These ratios achieve the more stringent reductions required under CAIR, maintain the value of ARP allowances, and make ARP compliance a foregone conclusion with CAIR compliance.
The NBP will cease to operate with the start of the seasonal NO X trading program under CAIR in 2009. Sources in most CAIR states will be subject to two separate CAIR NO X trading programs: an annual NO X program for PM 2.5 control and a seasonal NO X program for ozone control. However, these two programs will not share currency, as CAIR annual and ozone season NO X allowances are not interchangeable.
EPA will provide NO X emission allowances to each state according to the state budget for each program. States covered by both programs will allocate both annual and seasonal allowances to sources (or other entities). ARP NBP CAIR CAMR PM 2.5 Ozone
Annual SO 2 Annual NO X Summer NO X Annual NO X and SO 2 Summer NO X Annual Mercury

Basic Applicability >25 MW >25 MW coal-fi red utility boilers that burned coal between 1990 – 95 >25 MW (but OTC states may be >15 MW) and certain non-EGUs greater than 250 mmBtu/hr >25 MW >25 MW andcertain nonEGUs greater than 250 mmBtu/hr* >25 MW, coal-fi red

Exceptions Certain IPPs,cogens, qualifying facilities, and simple cycle turbines Same as SO 2 plus some boiler types Certain cogens, plus units that burn less than 50% fossil fuel Certain cogens (different than NBP) Certain cogens (different than NBP) Certain cogens (same as CAIR)

Geographic coverage 48 contiguous states + DC 48 contiguous states + DC 20 states + DC 25 states + DC 25 states + DC 50 states + DC + 2 tribes 

### Table 9: Overview of Fossil Fuel-Fired Electricity Generators Covered under E **PA’s Cap and Trade Programs** 

* States in the NBP can expand their CAIR NO X ozone season program applicability to include non-EGUs in the NBP.

**Source:** EPA, 200741 Acid Rain and Related Programs: 2006 Progress Report The CAIR seasonal NO X program allows the use of banked allowances from the NO X SIP Call, just as the CAIR SO 2 program allows the use of banked allowances from the ARP. The annual NO X trading program includes a limited compliance supplement pool of allowances to be awarded for early reductions in 2007 and 2008, or to address issues of reliability of electricity supply in 2009.
The structure of the CAIR programs and, in particular, the provisions allowing use of banked allowances from ARP and NBP, exemplify EPA’s effort to ensure an orderly transition to CAIR’s trading programs and strongly encourage early reductions. There is a substantial incentive for sources to begin complying with CAIR immediately, and emissions already have dropped as a result. 

## CAIR Allowance Market and State Activity Although there will be two distinct markets, EPA expects that the prices in both the annual and seasonal markets will be established by the cost of controls for annual compliance. There has been trading activity in the 2009 seasonal NO X market and limited annual NO X CAIR market trading. Observers expect that active trading will not occur until CAIR SIPs have been approved and NO X allowance accounts are populated later this year.

For both the SO 2 and NO X markets, it will take time for buyers and sellers to continue to assess the fundamentals of the changes introduced by CAIR, but this is secondary to the achievement of

Phase I : CAIR NO x Programs (ozone

- season and annual) (09)

Phase I : CAIR SO 2 Program (10)

States develop SPs (18 months) SIPs due (Sep 06) Early Emission Reduction Period

(annual CAIR NO x program) (07 and 08)

Phase II : CAIR NO x and SO 2 Programs Begin (15) Early reductions for CAIR NO x ozone-season program and CAIR SO 2 program begin immediately because NO x SIP Call and Title IV allowances can be banked into CAIR.

Note: Dotted lines indicate a range of time. 05 06 07 08 09 10 12 13 14 11 15

CAMR signed 18 17 16 

### CAIR

CAMR and CAVR CAIR signed

SPs Due (Nov 06) Phase I : CAMR Hg Program (10) Phase II : CAMR Hg Program (18) Regional Haze (RH) SIPs Due (Dec 08) CAVR BART Controls Required (5 years after RH SIPs approved) CAVR signed FIP (June 06) 

### Figure 26: Timeline for Implementation of CAIR/CAMR/CAVR (2005-2018)

Note: During the CAIR annual NO X program early emission reduction period, owners may earn additional allowances available through a compliance supplement pool established under EPA’s CAIR rulemaking.

**Source:** EPA, 200742 Acid Rain and Related Programs: 2006 Progress Report the environmental accountability and results of the program. CAIR required covered states to submit SIPs to EPA by September 2006. The agency also promulgated a federal implementation plan (FIP) that implements the model trading rules for every CAIR state and offered to leave it in place for states not wishing to submit a SIP. EPA expects all 29 affected jurisdictions to participate in the EPA-run trading programs.

States have some fl exibility in participating in the trading programs, including determining NO X allowance allocations independently. Nearly all states submitting SIPs thus far have established their own allocation methodologies, often including special set-asides for new sources and for various state priorities, like renewable energy or add-on emission controls. In some cases, states roll any unclaimed set-aside allowances back into the main allowance pool; others hold them over for possible distribution in the future.
States may also choose to allow participation by nonEGUs from the NBP and can allow other units to opt-in using methodologies in the CAIR model rules. Of the 19 states plus the District of Columbia that are subject to both the NO X SIP Call and CAIR (note that Rhode Island was included in the former, but not the latter), all but five have indicated they will include the NBP’s nonEGUs in the CAIR NO X ozone season program. Most states thus far have chosen not to include the model rule provisions that allow sources to opt-in.
Whether sources in a state are subject to a SIP or a FIP, there will be initiation of the allocation of NO X allowances under CAIR by the end of this year (SO 2 allowances already have been allocated under Title IV). Installed by

2006 Installed by 2006 Installed by 2006

0 50,000 100,000 150,000 200,000 250,000 300,000

Scrubbers + SCRs SCRs Scrubbers**Gigawatts** Projected 201 0

Projected 201 0

Projected 201 0 Projected 2020

Projected 2020

Committed 2007-201 0 Committed 2007-201 0 Committed 2007-201 0 Projected 2020

69 units 180 units

111 units

247 units 209 units

83 units

37 units

179 units 121 units

16 units 27 units 133 units 

### Figure 27: Current and Projected SO **2** 

### Scrubber and NO **X** 

### SCR Controls on **Coal-fi red EGUs** 

Note: Existing, committed, and projected controls are due to existing programs as well as CAIR, CAMR, and CAVR.

**Source:** EPA, for IPM, 200743 Acid Rain and Related Programs: 2006 Progress Report Figure 27 shows advanced SO 2 and NO X controls already in place in the CAIR region, as well as those controls that facilities have already committed to install or that are projected under CAIR with additional consideration of CAMR and CAVR requirements.


## CAMR CAMR requires all 50 states, the District of Columbia, and two tribes to regulate mercury emissions from coal-fi red EGUs. CAMR establishes “standards of performance” limiting mercury emissions from new and existing coal-fi red power plants and, like CAIR, creates a model cap and trade program with two phases of reductions. The fi rst phase cap is 38 tons, taking advantage of “co-benefi t” reductions—mercury reductions achieved by reducing SO 2 and NO X emissions under CAIR—to fulfi ll EPA’s requirement to act on mercury emissions. The second phase, beginning in 2018, goes further to reduce emissions to 15 tons upon full implementation. CAMR sets an emission reduction requirement in the form of an annual budget for each state and two tribes in accordance with the two caps.

New coal-fi red power plants will have to meet new source performance standards in addition to being subject to the caps. EPA established annual budgets for each state, and states must ensure that current and future mercury emissions from coal-fi red EGUs do not exceed the annual state budget. Like CAIR, CAMR does not exempt the units that may be exempt under the ARP. The summary of applicability across programs in Table 9 on page 40 includes general CAMR applicability for comparison.

Furthermore, under CAMR, affected coal-fi red electric utility units will be required to continuously monitor mercury mass emissions for the fi rst time, regardless of whether or not they will be participating in the trading program. Monitoring technologies will be subject to rigorous certifi cation and quality assurance/quality control requirements under 40 CFR Part 75. Affected sources are required to install and certify continuous emissions or sorbent trap monitoring systems by January 1, 2009.
This new requirement is one of the primary areas of focus for EPA’s CAMR implementation efforts. Recent work by both EPA and industry has advanced mercury monitoring systems, reference testing methods, and calibration standards to a point that measuring capabilities that had limited feasibility a few years ago now are fully or nearly ready and even commercially available. Over the past year, the performance and reliability of mercury monitoring systems have substantially improved as a result of fi eld demonstrations and testing by EPA and industry. EPA continues to work closely with the regulated community, monitoring equipment and software vendors, academia, and other organizations to ensure timely implementation of a technically sound, effective CAMR mercury monitoring program. 

## The Mercury Trading Program and State Activity The trading program under CAMR will work similarly to existing programs and the SO 2 and NO X programs under CAIR, with two notable differences between the CAMR and CAIR trading programs. First, there are no opt-in provisions included in CAMR; second, allowances under CAMR are measured in ounces rather than tons.
Even with some states choosing to control mercury emissions directly, EPA expects a robust trading program. In July 2006, EPA conducted limited modeling meant to be illustrative of a reduced market based on the states and tribes EPA projected would participate in the national trading program at the time. This more limited market represents states that allocated close to 69 percent of the initial budget of mercury allowances and comprises more than 700 units. These units represent more than 200 GW of capacity—nearly equivalent to the number of coal-fi red units in the successful NBP across a larger number of states. As with the NBP, EPA expects a viable market will result.44 Acid Rain and Related Programs: 2006 Progress Report Based on this modeling, prices for mercury allowances are expected to be the same as or lower than prices in a full national market. This is because several states that would have required relatively large amounts of mercury allowances to comply with CAMR, such as Illinois, will not be participating. Overall, states opting to participate in the trading program generally are characterized by larger percentages of coal-fi red generation. Moreover, 21 states submitted state plans to EPA by the November 2006 CAMR deadline, and additional state plans have been received since. The remaining states are actively working on plans. Of all affected jurisdictions, 35 states and two tribes are planning on participating in the CAMR trading program. Twelve states have indicated they will not participate in the trading program, and at least one state is still undecided. Three states (Idaho, Vermont, and Rhode Island) and the District of Columbia do not have any coal-fi red EGUs and thus have zero budgets.
States not participating in the trading program must ensure they meet their state budget with other methods. Alternatives often involve control requirements based on percent reduction provisions determined through an analysis of control options that states have evaluated as feasible. Some states have chosen to do this in phases like EPA has, though the start of the second phase is accelerated in some cases. Unlike a capped program, percent reduction programs do not necessarily guarantee emissions will remain below a state’s budget, often because of the uncertainty of new source growth over time. Therefore, states are often coupling these programs with caps to ensure the state’s budget will be maintained.
Where mercury trading programs are enacted, EPA expects emission controls to exceed requirements in 2010. This is because sources are likely to optimize the controls installed for CAIR to reduce as much mercury as possible in anticipation of increasing prices for mercury allowances under the lower second phase cap.
In December 2006, EPA proposed a CAMR federal plan to be fi nalized in states that either fail to submit a CAMR state plan or whose state plan is somehow defi cient. EPA is evaluating comments and plans to fi nalize the CAMR federal plan by the end of 2007 and have it go into effect in the fi rst half of 2008. The plan puts into place a cap and trade program in any state in which the federal plan is fi nalized and contains provisions to create trading programs for states or regions that could emerge in the future.


## CAVR CAVR supplements the emission reductions of CAIR by requiring emission controls known as best available retrofi t technology (BART) for industrial facilities emitting air pollutants that reduce visibility by contributing to regional haze in national parks and wilderness areas. For the electric power industry, CAVR applies outside of the states covered by CAIR. For all other industries, it is a nationwide program. The pollutants include PM 2.5 and its precursors, such as SO 2 , NO X , volatile organic compounds, and ammonia. The BART requirements apply to facilities built45 Acid Rain and Related Programs: 2006 Progress Report **Source:** EPA, 2007 

### Figure 28: Projected Coal-fi **red EGU Retrofi ts with CAIR/CAMR/CAVR by 2020** *

between 1962 and 1977 that have the potential to emit more than 250 tons a year of visibility-impairing pollution. The requirements cover 26 categories, including utility and industrial boilers and large industrial plants such as pulp mills, refi neries, and smelters.
Many of these facilities have not been subject to federal pollution control requirements for these pollutants. Under the 1999 regional haze rule, states are required to set periodic goals for improving visibility in the 156 “Class I” natural areas, including national parks. CAVR includes guidelines for states to use in determining which facilities must install controls and the type of controls the facilities must use. States must develop their implementation plans by December 2007, identify the facilities that will have to reduce emissions under BART, set emission limits for those facilities, and require installation of BART in 2014.46 Acid Rain and Related Programs: 2006 Progress Report 

### Simplified Monthly Transfer Volume and Price, 2000-2007

$200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Jun-2007Dec2006 Jun-20 06 Dec-2005Jun200 5 Dec- 2004 Jun-2004 Dec-2003 Jun-2003 Dec-2002 Jun-2002 Dec-200 1 Jun

-2001 Dec-2000 Jun-2000



### Date**Nominal Price ($/ton)**

0.00 0.50 1.00 1.50 2.00**Transfer Volume (millions)**

Price Volume 

### Figure 29: SO **2** 

### Allowance Trading Volume and Prices from June 2000 to June 2007

**Source:** EPA, 2007 For CAIR-affected EGUs, participation in the CAIR programs meets federal source-specifi c BART requirements because CAIR was determined to be better than BART controls under CAVR in the CAIR region. Specifi cally, controls for EGUs subject to CAIR will result in more visibility improvement in natural areas than BART would have provided. States could, however, require additional reductions. 

## Analyzing the Impacts of Rule Implementation
**Projected Controls** Although aspects of CAIR and CAMR are in litigation, implementation moves ahead. Having promulgated these environmental programs, EPA has gone on to work with states, which are now working aggressively to put implementing rules in place. The regulated community is going forward with installing equipment for CAIR, entering into contracts for construction of mercury controls, and putting monitoring systems in place.
Sources have begun responding to the new requirements with investments and application of retrofi t technology. EPA estimates that in 2010, EGUs accounting for 60 percent of total capacity will have scrubbers, increasing to 73 percent by 2020. Modeling shows that the percentage of advanced controls will go up (with the amount of capacity with advanced controls projected to increase even faster) and the number of units without advanced controls will go down, especially for larger units (see Figure 28 on page 45).
As observed with previous programs, the regulated community responds with a sense of purpose and alacrity to cap and trade programs. EPA, using existing CAA authority, is moving to address interstate transport47 Acid Rain and Related Programs: 2006 Progress Report 

### Figure 30: Actual and Forecasted SO **2** 

### Allowance Prices

**Source:** EPA, 2007 

### $533 $505

$267 $370

$270 EPA Projected Allowance Price, 2006 Dollars

2010-2014

Vintage 2006 Vintage 2010 Vintage Up to 2010

Vintage 

### June 2007 Spot Market Price Range $705

of SO 2 and NO X emissions and lower mercury emissions with CAIR, CAMR, and CAVR. EPA expects these programs to deliver signifi cant human health and environmental improvements in a cost-effective manner by harnessing market forces to achieve substantial required emission reductions.



### CAIR and the SO **2** 

### Trading Market In 2006 trading, prices began the year at nearly $1,500 per ton. As EPA discussed in the 2005 Acid Rain Program Progress Report , market observers characterized this high price as a result of uncertainty over the implementation of CAIR. However, by mid-2006, prices were lower and had stabilized, generally trading through the second half of 2006 in a band between $400 and $600 per ton. Prices have generally remained at this level through the end of June 2007. EPA also observed that, during the period of peak allowance prices in late-2005 and early-2006, transfer volumes were generally lower in the market, which indicates that many market participants were not trading during this period of high volatility. EPA expects that trade volumes will again increase as the market continues to stabilize in 2007. Figure 29 shows the variation in SO 2 allowance price and transfer volume from June 2000 though June 2007.
Current prices continue to compare favorably with EPA’s updated estimate of future SO 2 allowance prices under CAIR. As shown in Figure 30, EPA projected that pre-2010 vintage allowances would be worth $533 per allowance in 2010, and that 2010-2014 vintage allowances would be worth $267 per allowance due to the 2:1 retirement ratio that applies to those vintage allowances in the CAIR region.48 Acid Rain and Related Programs: 2006 Progress Report Category Label ANC Levels* Expected Ecological Effects

Acute Concern < 0 micro equivalent per Liter (μeq/L) Complete loss of fi sh populations is expected. Planktonic communities have extremely low diversity and are dominated by acidophilic forms. The numbers of individuals in plankton species that are present are greatly reduced.

Elevated Concern 0 - 50 μeq/L Fish species richness is greatly reduced (more than half of expected species are missing). On average, brook trout populations experience sub-lethal effects, including loss of health and reproduction (fi tness). During episodes of high acid deposition, brook trout populations may experience lethal effects. Diversity and distribution of zooplankton communities declines.

Moderate Concern 50 - 100 μeq/L Fish species richness begins to decline (sensitive species are lost from lakes). Brook trout populations are sensitive and variable, with possible sub-lethal effects. Diversity and distribution of zooplankton communities begin to decline as species that are sensitive to acid deposition are affected.
Low Concern > 100 μeq/L Fish species richness may be unaffected. Reproducing brook trout populations are expected where habitat is suitable. Zooplankton communities are unaffected and exhibit expected diversity and distribution. 

### Table 10: Aquatic Ecosystem Status Categories for the Adirondacks

* It is important to note that the wide range of ANC values within these categories makes it likely that substantial improvements in ANC may

occur without changing the categorization of a given lake.

**Source:** EPA, 2007

June 2007 spot market prices show that the prices for the earlier vintages are trading for $505 to $705 per ton, and that the later vintages (2010-2014) are trading for $270 to $370 per ton (see Figure 30 on page 47). These market prices compare favorably with, though slightly above, EPA’s estimate for the CAIR markets. 

### Predicting the Response of Acidifi **ed Lakes and Streams Under CAIR**  In addition to the improvements in lake and stream acidity resulting from implementation of the ARP, CAIR will further reduce SO 2 and NO X emissions, thereby reducing acid deposition and contributing to improvements in lake and stream conditions. EPA utilized a surface water chemistry model called the Model of Acidifi cation of Groundwater in Catchments (MAGIC) to estimate the response of acidifi ed lakes and streams to these reductions in acid deposition. MAGIC incorporates a small number of processes that are important in infl uencing the long-term response of surface waters to acidic deposition.
The Adirondack region of New York was selected as the location for this evaluation. Aquatic ecosystem status categories have been defi ned to track recovery for this area and are presented in Table 10. This analysis uses projected acid deposition scenarios for 2010, 2015, and 2020 that depict acid deposition in the absence (baseline) and presence of CAIR for each year. Using the difference between the baseline and CAIR deposition data, MAGIC projects the response of indicators of stream and lake acidity (such as ANC) to reductions in acid deposition resulting from CAIR implementation.49 Acid Rain and Related Programs: 2006 Progress Report 0 25 50 75

Acute Concern Elevated Concern Moderate Concern Low Concern
2050 Lake Status**% of Lakes** -50 0 0 25 50

50 100 150 200 250 75 100

2050 Lake ANC (ueq/L)**Cumulative % of Lakes**

-50 

### 2020 **2050**

11 32 36 20 11 30 32 27

0 25 50 75

Acute Concern Elevated Concern Moderate Concern Low Concern
2020 Lake Status Base Scenario CAIR Scenario Base Scenario CAIR Scenario

11 32 32 32 36 20 7 30 0 0 25 50

50 100 150 200 250 75 100

2020 Lake ANC (ueq/L)**Cumulative % of Lakes % of Lakes**  

### Figure 31: Simulated Responses in 2020 and 2050 of Adirondack Lakes to Changes **in Acid Deposition (Baseline Conditions versus CAIR Scenarios)**

Note: Baseline results are shown in red while CAIR results are shown in green - values rounded. The wide range of ANC values wi thin these categories makes it likely that substantial improvements in ANC may occur without changing the categorization of a given lake.

**Source:** EPA, 2007

The improvements in ANC predicted for lakes in the Adirondacks are depicted in the cumulative distribution plots in Figure 31. The cumulative distribution plots provide information about the change in ANC for all lakes and show that ANC under CAIR is consistently higher than without CAIR. For example in 2020, 59 percent of lakes under CAIR and 56 percent of lakes without CAIR have ANC greater than 50. The bar graphs in Figure 31 show the change in ecosystem status categories for lakes in the Adirondacks between the baseline and CAIR conditions. On average, MAGIC projects that ANC will increase by 7.5 μeq/L in 2020 and 12 μeq/L in 2050 with CAIR. This analysis clearly indicates that improvements in aquatic ecosystem status for the lakes in the Adirondacks should occur as a result of reductions in acid deposition attributable to CAIR emission reductions.51 Acid Rain and Related Programs: 2006 Progress Report The availability and transparency of data, from emission measurement to allowance trading to deposition monitoring, is a cornerstone of effective cap and trade programs. The Clean Air Markets Division (CAMD), in the Offi ce of Air and Radiation’s Offi ce of Atmospheric Programs, develops and manages programs for collecting these data and assessing the effectiveness of cap and trade programs, including the ARP.
The CAMD Web site provides a public resource for general information on how market-based programs work and what they have accomplished, along with the processes, information, and tools necessary to participate in any of these market-based programs.
For information about EPA’s air emissions trading programs, see: <http://www.epa.gov/airmarkets>.
For information about the ARP, see: <http://www.epa.gov/airmarkets/progsregs/arp/ index.html>. 

# Online Information, Data, and Resources53 Acid Rain and Related Programs: 2006 Progress Report 1. See <www.epa.gov/ttn/chief/trends> (Total emissions are preliminary projections, based on 2002 National Emissions Inventory).

2. Chestnut, L. G., Mills, D. M. (2005, November). A fresh look at the benefi ts and costs of the U.S. Acid Rain Program. Journal of Environmental Management , Vol. 77, Issue 3, 252-256.

3. For the statutory provisions on allowance allocations, see Section 403 of the CAA, as amended in 1990. See <www.epa.gov/air/caa/caa403.txt>.
4. See <www.epa.gov/ttn/chief/trends>.

5. Detailed emissions and allowance data for ARP sources are available on the Data and Maps portion of EPA’s Clean Air Markets

Web site, see <http://camddataandmaps.epa.gov/gdm/>.

6. Allowance transfers are posted and updated daily on <www.epa.gov/airmarkets>.

7. See <http://aura.gsfc.nasa.gov/instruments/omi/index.html> for further information. The SO 2 data team includes researchers

from a number of locations, including the Goddard Earth Sciences and Technology Center at the University of Maryland Baltimore County; the Joint Center for Earth Systems Technology at the University of Maryland Baltimore County; the National Aeronautics and Space Administration, Goddard Space Flight Center; and the Royal Netherlands Meteorological Institute (KNMI).

8. Kim, S.W., et al. “Satellite-observed U.S. power plant NO X emission reductions and their impact on air quality.” Geophysical

Research Letters , Vol. 33, No. 22, L22812, doi: 10.1029/2006GL027749, 29 November 2006.

9. Borrell, P., Burrows, J., Platt, U., & Zehner, C. (2001). Determining tropospheric concentrations of trace gases from space. ESA

Bulletin , 107, 72-81.

10. It should be noted that there has not been a violation of the SO 2 standard at any U.S. monitoring site since 2000.

11. See the EPA Offi ce of Transportation and Air Quality Web site < www.epa.gov/otaq> for information on recent rules to reduce NO X emissions from mobile sources. Additional NO X reductions are occurring as a result of the NBP. See EPA’s September 2007 report, NO X Budget Trading Program: 2006 Program Compliance and Environmental Results , at <www.epa. gov/airmarkets/progress/nbp06.html>, which discusses these NO X reduction efforts.

12. National Research Council (2004). Air Quality Management in the United States . National Academies Press, Washington, DC.

13. Clean Air Act Advisory Committee, Air Quality Management Work Group (2005). “Recommendations to the Clean Air Act Advisory Committee: Phase 1 and Next Steps.”

14. The data used to compute trends for the Southern Appalachians include a signifi cant update (over fi ve years of new data), resulting in a substantial change in the magnitude and direction of the trends shown in the 2005 Acid Rain Progress Report

. The trends shown here should be regarded as more accurate estimates of long-term patterns for this region.

15. CAIR (see <www.epa.gov/cair/index.html>), CAMR (see <www.epa.gov/air/mercuryrule>), CAVR (see <www.epa.gov/oar/ visibility/index.html>). 

# Endnotes

## United States Environmental Protection Agency Offi ce of Air and Radiation Clean Air Markets Division 1200 Pennsylvania Ave, NW (6204) Washington, DC 20460

EPA-430-R-07-011