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Program Basics | Litigation and the CAIR Replacement Rule | 2009 Progress Reports | CAIR States | CAIR NOx Programs | NOx Emission Reductions | CAIR NOx Program Compliance | The CAIR SO2 Program

Program Basics

The Clean Air Interstate Rule (CAIR) was designed to address interstate transport of ozone and fine particulate matter (PM2.5) pollution. To do so, CAIR required certain states to limit annual emissions of nitrogen oxides (NOX) and sulfur dioxide (SO2), which contribute to the formation of ozone and PM2.5. It also required certain states to limit ozone season NOX emissions which contribute to the formation of ozone during the summer ozone season. CAIR developed three separate cap and trade programs that could be used to achieve the required reductions — the CAIR NOX ozone season trading program, the CAIR annual NOX trading program, and the CAIR SO2 trading program. The CAIR NOX ozone season and annual programs began in 2009, while the CAIR SO2 annual program began in 2010. The reduction in ozone and PM2.5 formation resulting from implementation of the CAIR programs provides health benefits as well as improved visibility in national parks and improved stream quality in the eastern U.S.

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Litigation and the 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.

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. EPA has developed a proposed Transport Rule which, if finalized as proposed, would replace CAIR in 2012. The proposed rule was signed in July 2010.

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2009 Progress Reports

Over the next several months, EPA will release a series of reports summarizing the first year of CAIR implementation, including the transition from the ozone season NOX Budget Program (NBP). This first report presents 2009 data on NOX and SO2 emission reductions and compliance results for both the annual and ozone season NOX programs. Future reports will evaluate progress under CAIR in 2009 by analyzing emission reductions, reviewing compliance results and market activity, and comparing changes in emissions to changes in environmental indicators.

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CAIR States

The CAIR NOX ozone season requirements apply to all states from the former NBP except Rhode Island, and to six additional eastern states (Arkansas, Florida, Iowa, Louisiana, Mississippi, and Wisconsin). In addition, while only parts of Alabama, Michigan, and Missouri were in the NBP, the CAIR NOX ozone season requirements apply to these states in their entirety. The CAIR NOX annual and CAIR SO2 requirements, which address PM2.5, apply in all of the CAIR NOX ozone season states except Connecticut, Massachusetts, and Arkansas and also in Texas and Georgia. These areas are shown in Figure 1. In a November 2009 rule, EPA stayed the effectiveness of CAIR for Minnesota, which had previously been identified as significantly contributing to nonattainment of PM2.5 ambient air quality standards in downwind states. For purposes of the 2009 Progress Reports, EPA is excluding Minnesota sources and emissions.

Figure 1: Transition from the NBP to CAIR

Figure 1: Transition from the NBP to CAIR

Note: In a November 2009 rule, EPA stayed the effectiveness of CAIR for Minnesota, which had previously been among the states controlled for fine particles.

Source: EPA, 2010

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CAIR NOX Programs

Affected Units

The CAIR NOX annual program generally applies to large electric generating units (EGUs) – boilers, turbines, and combined cycle units used to generate electricity for sale. The CAIR NOX ozone season program includes EGUs as well as, in some states, large industrial units that produce electricity or steam primarily for internal use and were carried over from the NBP. Examples of these units are boilers and turbines at heavy manufacturing facilities, such as paper mills, petroleum refineries, and iron and steel production facilities. These units also include steam plants at institutional settings, such as large universities or hospitals.

In 2009, there were 3,321 affected EGUs in the CAIR NOX annual program and 3,279 EGUs and industrial facility units in the CAIR NOX ozone season program (see Figure 2). The variation in the number of units covered under the programs is due to the difference in states that are included in each program (see Figure 1). This covers a range of unit types, including units that operate everyday or nearly everyday to provide baseload power to the electric grid as well as units that provide power on peak demand days only and may not operate at all some years.

Figure 2: Affected Units in CAIR NOX Annual and CAIR NOX Ozone Season Programs

Figure 2: Affected Units in CAIR NOx Annual and CAIR NOx Ozone Season Programs

Notes:

“Other” fuel refers to units that burn fuels such as waste, wood, petroleum coke, or tire-derived fuel.

“Unclassified” units have not submitted a fuel type in their monitoring plan and did not report emissions.

Source: EPA, 2010

As part of CAIR implementation, 2008 was a “training year” for NOX monitoring. Units participating in the two CAIR NOX trading programs were required to monitor and report their emissions, but were not required to hold allowances for compliance. The reported emissions and heat input values from 2008 provide a baseline with which to assess future reductions (see Table 1).

Table 1: Comparison of NOX Emissions, Heat Input, and NOX Emission Rates for all CAIR Sources

CAIR NOX Ozone Season Program

Fuel Ozone Season NOx Mass Emissions
(thousand tons)
Ozone Season Heat Input
(billion mmBtu)
Ozone Season NOx Emission Rate
(lb/mmBtu)
2008 2009 2008 2009 2008 2009
Coal 625 442 6.14 5.22 0.20 0.17
Gas 34 33 1.40 1.53 0.05 0.04
Oil 28 19 0.28 0.21 0.20 0.18
Other 2 2 0.03 0.02 0.14 0.14
Total 689 495 7.85 6.97 0.18 0.14

CAIR NOX Annual Program

Fuel Annual NOx Mass Emissions
(thousand tons)
Annual Heat Input
(billion mmBtu)
Annual NOx Emission Rate
(lb/mmBtu)
2008 2009 2008 2009 2008 2009
Coal 2,154 1,184 16.32 13.94 0.26 0.17
Gas 95 91 4.08 4.37 0.05 0.04
Oil 47 33 0.45 0.36 0.21 0.18
Other 7 4 0.08 0.07 0.16 0.11
Total 2,302 1,312 20.93 18.74 0.22 0.14

Notes:

Tons are rounded to the nearest 1,000 and the heat input values are rounded to the nearest 10 million mmBtus. Totals in final row may not equal the sum of individual rows due to rounding.

The average emission rate is based on dividing total reported emissions for each fuel category by the total heat input reported for that category, and then rounding the emission rate to the nearest 0.01 lb/mmBtu. The average emission rate expressed for the total uses the heat input-weighted average for the fuel categories.

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

“Other” fuel refers to units that burn fuels such as waste, wood, petroleum coke, or tire-derived fuel.

Source: EPA, 2010

NOX Emission Reductions

Ozone Season NOX Reductions

As Figure 3 shows, nearly all the emissions in the NBP region went on to be covered by the CAIR NOX ozone season program. Figure 4 shows that in the first year of CAIR ozone season compliance, former NBP units (i.e., legacy units) continued to reduce their NOX emissions.

Figure 3: Ozone Season NOX Emissions from NBP Sources

Figure 3: Ozone Season NOx Emissions from NBP Sources

Notes: “Dropout” units are those units that were included in the NBP but did not participate in the 2009 CAIR NOX ozone season program.

The 2009 total includes only former NBP units now covered by CAIR.

Source: EPA, 2010

Figure 4: Ozone Season Emissions from CAIR NOX Ozone Season Sources

Figure 4:  Ozone Season Emissions from CAIR NOx Ozone Season Sources

Source: EPA, 2010

Between 2008, the CAIR training year, and 2009, the first year of operation of the CAIR NOX trading programs, ozone season NOX emissions fell in every state participating in the CAIR NOX ozone season program (see Figure 5). Units in the seasonal program reduced their overall NOX emissions from 689,000 tons to 495,000 tons. An 11 percent drop in heat input and a 22 percent improvement in NOX rate accounted for this reduction in total summer NOX emissions.

Figure 5: Ozone Season Emissions by States Participating in the CAIR NOX Ozone Season Program

Figure 5:  Ozone Season Emissions by States Participating in the CAIR NOx Ozone Season Program

Source: EPA, 2010

In the 2009 ozone season, the total emissions from participating sources were about 130,000 tons (21 percent) below the regional emission cap of 624,698 tons. Nineteen states and the District of Columbia had emissions below their allowance budgets, collectively by about 155,000 tons. Another six states (Arkansas, Iowa, Louisiana, Michigan, Mississippi, and Pennsylvania) exceeded their 2009 budgets by a total of about 22,000 tons, indicating that, on an aggregate basis, sources within those states covered a portion of their emissions with allowances banked from earlier years, transferred from an out-of-state account, or purchased from the market.

Annual NOX Reductions

As Figure 6 shows, the introduction of the CAIR NOX annual program reduced year-round emissions in 2009 as program participants operated NOX control devices on EGUs outside the summer months. From 2008 to 2009, NOX emissions from units in the CAIR NOX annual program region fell from 2.3 million tons to 1.3 million tons, reflecting a 43 percent reduction in annual NOX mass emissions and a 36 percent improvement in the annual NOX emissions rate. These improvements occurred while power demand (as measured by heat input) from those sources only dropped 10 percent.

Figure 6: Monthly Emissions and Heat Input from CAIR NOX Annual Program Sources 2008 – 2009

Figure 6: Monthly Emissions and Heat Input from CAIR NOx Annual Program Sources 2008 – 2009

Source: EPA, 2010

In 2009, the total emissions from sources in the annual NOX region were about 350,000 tons (also 21 percent) below the regional budget of 1,655,362 tons. All states participating in the program reduced emissions from 2008 levels. Eighteen states and the District of Columbia had emissions below their allowance budgets, collectively by about 191,000 tons. Another six states (Delaware, Iowa, Louisiana, Michigan, Mississippi, and Pennsylvania) exceeded their 2009 budgets by a total of about 37,000 tons. Annual emissions by state can be seen in Figure 7.

Figure 7: Annual Emissions by States Participating in the CAIR NOX Annual Program

Figure 7:  Annual Emissions by States Participating in the CAIR NOx Annual Program

Source: EPA, 2010

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CAIR NOX Program Compliance

Compliance Results

As of June 3, 2010, the reported 2009 ozone season NOX emissions by CAIR sources totaled 495,198 tons and annual emissions totaled 1,311,986 tons. Because of variation in rounding conventions, changes due to resubmissions by sources, and allowance compliance issues at certain units, these numbers are higher than the sums of emissions used for reconciliation purposes shown in Tables 2 (ozone season reconciliation) and 3 (annual reconciliation). Therefore, the allowance totals deducted for actual emissions in Tables 2 and 3 differ from the number of emissions shown elsewhere in this report.

CAIR NOx Ozone Season
Reported emissions (tons): 495,198
Rounding and report resubmission adjustments (tons): -199
Emissions not covered by allowances (tons): -12
Total allowances deducted for emissions: 494,987
CAIR NOx Annual Program
Reported emissions (tons): 1,311,986
Rounding and report resubmission adjustments (tons): -1,666
Emissions not covered by allowances (tons): -21
Total allowances deducted for emissions: 1,310,299

Tables 2 and 3 show how NOX allowances were used in 2009. Only one facility did not hold enough allowances to cover its emissions for both the ozone season and annual program. That facility automatically surrendered a 3 for 1 penalty deduction from next year’s allowances for each program.

Table 2: CAIR Ozone Season Allowance Reconciliation Summary, 2009

Total Allowances Held (2003 through 2009 Vintages) 887,786
   Affected Facility Accounts 752,378
   Other (State Holding, General, and Non-Affected Facility Accounts) 135,408
Allowances Deducted 494,987
Banked Allowances 392,799
   Affected Facility Accounts 257,391
   Other (State Holding, General, and Non-Affected Facility Accounts) 135,408
Penalty Allowance Deductions (2010 Vintage) 12

Note: this table does not include some information for sources with ongoing monitoring petitions or applicability issues. When these facilities are reconciled the numbers will change.

Source: EPA, 2010

Table 3: CAIR NOX Annual Allowance Reconciliation Summary, 2009

Total Allowances Held (2009 Vintages) 1,653,274
    Affected Facility Accounts 1,576,393
   Other (State Holding, General, and Non-Affected Facility Accounts) 76,881
Allowances Deducted 1,310,299
Banked Allowances 342,975
    Affected Facility Accounts 266,094
    Other (State Holding, General, and Non-Affected Facility Accounts) 76,881
Penalty Allowance Deductions (2010 Vintage) 21

Note: This table does not include some information for sources with ongoing monitoring petitions or applicability issues. When these facilities are reconciled the numbers will change.

Source: EPA, 2010

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The CAIR SO2 Program

The CAIR SO2 trading program is intended to reduce ambient SO2 levels in downwind states by capping emissions in participating eastern states. The program applies to the same EGUs as the CAIR NOX annual program. Of the 3,321 units in the CAIR SO2 program (see Figure 8), 2,595 (78 percent) were also covered by the Acid Rain Program (ARP) in 2009. The other units are largely fossil generation units that entered SO2 control under the broader applicability requirements of CAIR. All the CAIR SO2 program facilities participated in a monitoring and reporting training year in 2009. In 2010, the first year of operation of the CAIR SO2 trading program, facilities were obligated to hold SO2 allowances. Except for a small number of facilities with pending applicability questions, all participating units reported data in 2009. Their total SO2 emissions were 5.0 million tons.

Figure 8: Affected Electric Generating Units in the CAIR SO2 Program

Figure 8:  Affected Electric Generating Units in the CAIR SO2 Program

“Other” fuel refers to units that burn fuels such as waste, wood, petroleum coke, or tire-derived fuel.

“Unclassified” units have not submitted a fuel type in their monitoring plan and did not report emissions.

Source: EPA, 2010

Figure 9 shows that most of the SO2 emissions under the ARP are also subject to CAIR, and that the CAIR SO2 program continues and complements the ARP’s history of SO2 emission reductions.

Figure 9: SO2 Emissions from ARP and CAIR Annual SO2 Program Sources 2004 – 2009

Figure 9: SO2 Emissions from ARP  and CAIR Annual SO2 Program Sources 2004 – 2009

Note: “Non-CAIR Units in ARP” refers to sources covered by the ARP outside of the CAIR region.

Source: EPA, 2010

 


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