Acid Rain and Related Programs:

2008 Highlights
1

Acid Rain and Related Programs: 2008 Highlights

The Acid Rain Program (ARP), established under Title IV of the 1990 Clean 

Air Act (CAA) Amendments, requires major emission reductions of sulfur 

dioxide (SO2) and nitrogen oxide (NOx), the primary precursors of acid 

rain, from the electric power industry. The SO2 program sets a permanent cap on the 

total amount of SO2 that may be emitted by electric generating units (EGUs) in the 

contiguous United States, and includes provisions for trading and banking emission 

allowances. The program is phased in, with the final 2010 SO2 cap set at 8.95 million 

tons, a level of about one-half of the emissions from the power sector in 1980. 

NOx reductions under the ARP are achieved through a program that applies to a 

subset of coal-fired EGUs and is closer to a traditional, rate-based regulatory system. 

Title IV requires NOx emission reductions for certain coal-fired EGUs by limiting 

the NOx emission rate (expressed in lb/mmBtu) to a value based on a unit’s boiler 

type. The goal of the NOx program is to limit NOx emission levels from the affected 

coal-fired boilers so that their emissions are at least 2 million tons less than the 

projected level for the year 2000 without implementation of Title IV. EPA estimated 

this projected number to be 8.1 million tons.

From July to October 2009, the U.S. Environmental Protection Agency (EPA) released 

three reports detailing progress under the ARP. These reports can be accessed at 

<www.epa.gov/airmarkets/progress/arp08.html>. This report highlights the key 

results from the previous reports and discusses the start of the Clean Air Interstate 

Rule (CAIR).

For more information on the ARP please visit: <www.epa.gov/airmarkets/progsregs/

arp/index.html>. Detailed emission results and other facility and allowance data are 

also publicly available on EPA’s Data and Maps Web page at <camddataandmaps.

epa.gov/gdm>. To view emission and other facility information in an interactive file 

format using Google Earth or a similar three-dimensional platform, go to <www.

epa.gov/airmarkets/progress/interactivemapping.html>. Additionally, updated 

quarterly SO2 emission data for ARP coal-fired power plants can be found at <www.

epa.gov/airmarkets/quarterlytracking.html>. For general information on cap and 

trade programs please visit: <www.www.epa.gov/captrade/>.
Key Components of the ARP SO2 Trading 

Program

Phases and Reductions: Title IV of the 1990 Clean Air Act 

Amendments set a goal of reducing annual SO2 emissions 

by 10 million tons from all sources (8.4 million tons from 

power plants) below 1980 levels. To achieve these reductions, the law required a two-phase tightening of the restrictions placed on fossil fuel-fired power plants. Phase I 

began in 1995 and Phase II began in the year 2000. 

Allowance Allocation: The EPA allocates allowances to 

affected utility units based on their historic fuel consumption and a specific emissions rate. Each allowance permits 

a unit to emit 1 ton of SO2 during or after a specified year. 

Annual Reconciliation: For each ton of SO2 emitted in a 

given year, one allowance is retired, that is, it can no longer be used. Allowances may be bought, sold, or banked. 

At the end of each year, sources are granted a 60-day grace 

period to ensure that they have sufficient allowances to 

match their SO2 emissions during the previous year. If they 

need to, they may buy allowances during the grace period. 

Sources may sell allowances that exceed their emissions or 

bank them for use in future years.

Allowance Trading: SO2 allowance trading minimizes 

compliance costs, and since unused allowances can be sold 

to other program participants, the system encourages units 

to reduce emissions beyond required levels. 

Flexible Compliance: Each source can choose the most 

efficient way to reduce its SO2 emissions. Installing new 

control technology, switching to lower-sulfur fuel, or 

optimizing existing controls are all options.

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Acid Rain and Related Programs: 2008 Highlights

Stringent Monitoring: Each source must continuously 

measure and record its emissions of SO2, NOx, and CO2, as 

well as heat input, volumetric flow, and opacity. In most 

cases, a continuous emission monitoring system (CEMS) 

must be used.

Automatic Penalties and Enforcement: Any source that 

fails to hold enough allowances to match its SO2 emissions 

for the previous year must pay to EPA by July 1 an automatic penalty of $2,000 (inflation-adjusted to $3,337 for 2008) 

per ton of emissions in excess of allowances held. The 

source must also immediately surrender to EPA an amount 

(referred to as an “offset”) of allowances, issued for the year 

the payment is due, equalling the tons of excess emissions. 

Moreover, each ton of excess emissions and each day of the 

year in which they occur constitute a violation of the Clean 

Air Act, subject to a discretionary monetary penalty.

Key Results of the SO2 Trading Program

Affected Units: The SO2 requirements under the ARP apply to EGUs, fossil fuel-fired combustors that serve a generator that provides electricity for sale. The vast majority 

of ARP SO2 emissions result from coal-fired EGUs (close to 

99 percent), although the program also applies to oil and 

gas units. There were 3,572 EGUs subject to the ARP’s SO2

requirements in 2008. These units were at 1,346 facilities 

and 419 of those facilities had coal-fired generating units.

SO2 Emission Reductions: As Figure 1 shows, ARP units 

have reduced annual SO2 emissions by 56 percent compared with 1980 levels and 52 percent compared with 1990 

levels. Sources emitted 7.6 million tons of SO2 in 2008, well 

below the current annual emission cap of 9.5 million tons, 

Figure 1: SO2 Emissions from Acid Rain Program Sources, 1980-2008

Source: EPA, 2009

Phase II (2000 on) Sources All Affected Sources

9.4 9.3 8.7

5.3 5.4 5.5 5.3 4.9

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

9.4

7.6

8.7 8.3

7.1 7.0

10.0 9.6 9.5 9.5 9.5 9.5 9.5 9.5 9.5

Phase I (1995-1999) Sources Allowances Allocated

1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

2

4

6

8

10

12

14

16

18

20

SO2 Emissions (million tons)

7.0 8.9
3

and already below the statutory annual cap of 8.95 million 

tons set for compliance in 2010. Figure 2 shows state-bystate SO2 emission reductions. The states with the highest 

emitting sources in 1990 have generally seen the greatest 

SO2 reductions under the ARP.

Compliance: In 2008, all ARP units complied with the requirement to hold enough allowances to cover SO2 emissions.

Allowances: In 2008, EPA allocated 9.5 million SO2 allowances under the ARP. Together with 6.7 million unused alAcid Rain and Related Programs: 2008 Highlights

Scale: Largest bar equals 2.2 million tons of SO2 emissions in Ohio, 1990.

Source: EPA, 2009

Figure 2: State-by-State SO2 Emission Levels for Acid Rain Program Sources, 1990-2008

1990 Emissions

1995 Emissions

2000 Emissions

2005 Emissions

2008 Emissions
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Acid Rain and Related Programs: 2008 Highlights

lowances carried over (or banked) from prior years, there 

were 16.2 million allowances available for use in 2008. 

ARP sources emitted approximately 7.6 million tons of SO2

in 2008, less than the allowances allocated for the year, and 

far less than the total allowances available (see Figure 3). 

Thus after the 2008 allowance reconciliation, the number 

of banked allowances increased to 8.6 million. In 2010, the 

total number of Title IV allowances allocated annually will 

drop to 8.95 million and remain statutorily fixed at that annual level.

Allowance Market: Figure 4 shows the annual volume of 

SO2 allowances transferred under the ARP (excluding allocations, retirements, and other transfers by EPA) since 

Figure 4: SO2 Allowances Transferred under the ARP

Source: EPA, 2009

5

10

15

20

25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Trades Between Distinct Entities (significant transfers)

Allowances (millions)

Trades Between Related Entities

30

1994

0.9 1.9

4.4

7.9

9.5

6.2

12.7 12.6

11.6

8.1 7.5

10.0 9.5 9.1

5.9

9.2

16.7

8.2

15.2

13.5

18.7

25.0

22.5

21.4

16.5

15.3

19.9

22.4

16.9

13.9

Figure 3: SO2 Emissions and the Allowance Bank, 1995-2008

8.7

11.7

13.4

15.0

16.6

21.6

19.9

18.8 18.2

17.1

16.4 15.7 15.8 16.2

5.3 5.4 5.5 5.3 4.9

11.2 10.6 10.2 10.6 10.3 10.2

9.4 8.9

7.6

5

10

15

20

25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Allowances Allocated Unused Allowances from Previous Years Actual Emissions from Affected Sources

SO2 (million tons)

Source: EPA, 2009
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Acid Rain and Related Programs: 2008 Highlights

official recording of transfers began in 1994. About 5.9 million allowances (42 percent) were transferred in economically significant transactions (i.e., between economically 

unrelated parties). Transfers between economically unrelated parties are considered a better indicator of an active, 

functioning market than are transactions among the various facility and general accounts associated with a given 

company.

Key Results of the NOx Program

NOx Emission Reductions: Figure 5 shows that NOx emissions from all ARP sources were 3.0 million tons in 2008. 

This level is 5.1 million tons less than the projected level in 

2000 without the ARP (8.1 million tons), or more than double the Title IV NOx emission reduction objective. Although 

the ARP was responsible for a large portion of these annual 

NOx reductions, programs such as the NOx Budget Trading 

Program and other regional and state NOx emission control 

programs also contributed significantly.

Compliance: In 2008, 969 coal-fired generation units at 

383 facilities were subject to the ARP NOx Program. All 

units achieved compliance in 2008.

Environmental Results

SO2 Air Quality: Data collected from monitoring networks 

show that the decline in SO2 emissions from the power industry has improved air quality. The national composite 

average of SO2 annual mean ambient concentrations decreased 71 percent between 1980 and 2008.

Figure 5: NOx Emission Trends for All Acid Rain Program Units, 1990-2008

5.5 5.4 5.4 5.5 5.3

4.8

4.5

4.1 4.0

3.8

3.4 3.3 3.1 3.0

2.7

6.7

6.1 5.9 6.0 6.0

5.5

5.1

4.7 4.5 4.2

3.8 3.6

3.4 3.3

3.0

1

2

3

4

5

6

7

8

1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

NOx Emissions (million tons)

NOx Program Affected Sources Title IV Sources Not Affected for NOx

Source: EPA, 2009
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Acid Rain and Related Programs: 2008 Highlights

Acid Deposition Improvements: Monitoring data show 

significant improvements in the primary acid deposition 

indicators:

• Wet Sulfate Deposition: Between the 1989 to 1991 

and 2006 to 2008 observation periods, decreases 

in wet deposition of sulfate averaged more than 30 

percent for the eastern United States (see Figure 6).

•	 Nitrogen Deposition: Inorganic nitrogen in wet deposition decreased in the Mid-Atlantic and Northeast, 

but to a lesser extent than sulfur (see Figure 7). Wet 

nitrogen deposition is influenced by sources outside 

the ARP.

Figure 6: Annual Mean Wet Sulfate Deposition

1989-1991

2006-2008

Source: NADP, 2009

Figure 7: Annual Mean Wet Inorganic Nitrogen Deposition

1989-1991

2006-2008

Source: NADP, 2009
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Acid Rain and Related Programs: 2008 Highlights

Surface Water Quality Improvements: Acid rain, resulting 

from SO2 and NOx emissions, negatively affects the health 

of lakes and streams and creates chemical conditions that 

may adversely impact fish and other aquatic animals. 

Surface water chemistry provides direct indicators of the 

potential effects of acidic deposition on the overall health 

of aquatic ecosystems. Surface water monitoring networks, 

like EPA’s Long-Term Monitoring (LTM) program, provide 

information on how water bodies are responding to 

changes in emissions. Since the implementation of the ARP, 

scientists have found signs of recovery in many, but not 

all, of the lakes and streams studied in the eastern United 

States:

• Sulfate Concentrations: Measurements of sulfate in 

surface waters provide important information on the 

level of acidification of a water body. Decreasing sulfate 

concentrations in surface water signify a trend toward 

recovery from acidification. Figure 8 shows that sulfate 

concentrations are declining at almost all sites in the 

Northeast (New England, Adirondacks/Catskills and 

Pennsylvania [Northern Appalachians]). However, 

in the Southern Blue Ridge (Central Appalachians), 

sulfate concentrations in many streams are increasing. 

Figure 8: Trends in Lake and Stream Water Chemistry at LTM 

Sites, 1990-2007, Sulfate Ion Concentration (μeq/L/yr)

Increasing significant trend

Increasing non-significant trend

Decreasing non-significant trend

Decreasing significant trend

1990-2007

Sulfate Ion Concentration

Source: EPA, 2009

Figure 9: Trends in Lake and Stream Water Chemistry at LTM 

Sites, 1990-2007, ANC Levels (μeq/L/yr)

Source: EPA, 2009

1990-2007

Increasing significant trend

Increasing non-significant trend

Decreasing non-significant trend

Decreasing significant trend

Acid Neutralizing Capacity 

 (ANC)

• Acid Neutralization Capacity (ANC): ANC is 

a measure of the sensitivity of a water body to 

acidification. Movement toward recovery of an acidified 

aquatic ecosystem is indicated by an increase in ANC. 

Figure 9 shows that ANC is on average increasing in 

three of the four regions, which in part can be attributed 

to declining sulfate deposition. The site trends also 

indicate variation within each region. Only two sites 

indicate a significant downward trend in ANC.
8

Acid Rain and Related Programs: 2008 Highlights

1 Chestnut, L. G., and Mills, D. M. 2005. A fresh look at the benefits and costs of the US Acid Rain Program, Journal of 

Environmental Management, 77(3): 252-266.

Human Health Benefits

Benefits from the ARP include the prevention of human 

health-related impacts, such as premature death, asthma 

exacerbation, and hospital admissions for respiratory 

and cardiovascular ailments. Emissions of SO2 and NOx

are precursors to formation of fine particulate matter 

(PM2.5), while NOx also contributes to the formation of 

ground-level ozone. These air pollutants are detrimental to 

human health. By reducing power sector emissions of SO2

and NOx, ambient air quality is improved thus improving 

human health. 

EPA recently updated the estimated U.S. PM2.5 and ozone 

health-related benefits due to ARP implementation for the 

prospective year 2010 that were originally published in a 

2005 journal article.1 The results of the revised assessment 

show that estimated PM2.5 health benefits due to ARP 

implementation in 2010 are valued at $170–$410 billion 

(2008 dollars). The benefits are primarily from reduced 

premature mortality of 20,000 to 50,000 incidences per 

year in 2010. Using updated methods to assess groundlevel ozone benefits from ARP implementation in 2010 

results in total health benefits ranging from $4.1–$17 

billion (2008 dollars). The benefits are primarily from 

reduced premature mortality of 430 to 2,000 incidences 

per year in 2010. These updated benefits do not include 

human welfare benefits due to better ecological conditions, 

such as improved visibility and reduced acidification of 

lakes and streams. 

Clean Air Interstate Rule

CAIR was issued on March 10, 2005, in order to build on 

the emission reductions under the NBP and the ARP. The 

rule was designed to permanently lower emissions of SO2 

and NOx in the eastern United States. CAIR, as promulgated, was designed to help states address ozone nonattainment and attain the NAAQS for PM2.5 by reducing transported precursors, SO2 and NOx. CAIR was also expected 

to improve visibility in Class 1 areas, including national 

parks, monuments, and wilderness areas. To achieve these 

emission reductions, it created three separate compliance 

programs: an annual NOx program, an ozone season NOx

program, and an annual SO2 program.

Each of the three programs uses a two-phased approach, 

with declining emission caps in each phase. The first phase 

began in 2009 for the NOx annual and NOx ozone season 

programs, and will start in 2010 for the SO2 annual program. The rule also establishes a second phase for all three 

programs beginning in 2015. 

All 28 states and the District of Columbia chose to be part 

of the EPA-administered regional CAIR trading programs. 

Monitoring and reporting according to EPA’s stringent regulations began in 2008 for the NOx programs and in 2009 

for the SO2 program. 

Litigation and CAIR Replacement Rule

On July 11, 2008, the U.S. Court of Appeals for the D.C. Circuit issued a ruling vacating CAIR in its entirety. EPA and 

other parties requested a rehearing, and on December 23, 

2008, the Court revised its decision and remanded CAIR to 

EPA without vacatur. This ruling leaves CAIR and the CAIR 

Federal Implementation Plans (FIPs)—including the CAIR 

trading programs—in place until EPA issues new rules to 

replace CAIR.

While the court did not impose a deadline by which EPA 

must issue the replacement rules, EPA estimates that development and finalization of replacement rules could take 

about two years. EPA is committed to issuing rules to replace CAIR that will help states address the interstate air 

emissions transport problem in a timely way and that fully 

comply with the requirements of the Clean Air Act and the 

opinions of the D.C. Circuit. 

Current CAIR Implementation

The CAIR NOx ozone season and CAIR NOx annual program 

requirements to hold allowances equivalent to ozone season and annual emissions started in 2009.

The CAIR SO2 program requirements for continuous 

monitoring and reporting started January 1, 2009. Acid 

Rain sources that are already complying with Part 75 

monitoring and reporting provisions essentially do not 

have to do anything additional to comply with CAIR SO2

monitoring requirements. Sources not subject to the Acid 

Rain Program but subject to CAIR began complying with 

Part 75 monitoring and reporting this year. The requirement to hold allowances in the CAIR SO2 program begins 

January 1, 2010.
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Acid Rain and Related Programs: 2008 Highlights

Online Information, Data, and Resources

The availability and transparency of data, from emission 

measurement to allowance trading to deposition monitoring, is a cornerstone of effective cap and trade programs. 

CAMD, in the Office of Air and Radiation’s Office 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 emission trading programs, see <www.epa.gov/

airmarkets>. For information about the ARP, see <www.

epa.gov/airmarkets/progsregs/arp/index.html>.

Figure 10: U.S. Sulfur Dioxide Emissions from ARP Sources and Ambient Sulfate Concentration, 1990

Note: This example depicts 1990 SO2 emissions from ARP sources along with 1990 sulfate concentration data as measured by the 

CASTNET monitoring program.

Source: EPA, 2009
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Acid Rain and Related Programs: 2008 Highlights

To increase data transparency, EPA has created 

supplementary maps that allow the user to display air 

market program data geospatially on an interactive 

3D platform. Figures 10 and 11 are examples of these 

interactive maps. The maps come in the form of a KMZ 

file (a compressed KML file) that is downloaded directly 

to the user’s computer. Data can be explored in new and 

meaningful ways by turning different layers on and off, 

overlaying data points and satellite imagery, and using 

navigation tools to change the view of the Earth’s surface. 

KMZ/KML files are supported by programs such as Google 

Earth, ESRI Arc Explorer, and NASA WorldWind View. These 

interactive mapping applications provide a unique way to 

identify environmental trends and track the progress of 

various EPA programs, such as the ARP. 

For more information or to utilize the program, visit the Web 

site at <epa.gov/airmarkets/progress/interactivemapping.

html>.

Figure 11: U.S. Sulfur Dioxide Emissions from ARP Sources and Ambient Sulfate Concentration, 2008

Note: This example depicts 2008 SO2 emissions from ARP sources along with 2007 sulfate concentration data as measured by the 

CASTNET monitoring program.

Source: EPA, 2009
United States

Enivironmental Protection Agency

Office of Air and Radiation

Office of Atmospheric Programs

Clean Air Markets Division

1200 Pennsylvania Ave., NW

Washington, DC 20460

EPA-430-R-09-031

December 2009

www.epa.gov/airmarkets

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