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2003 Acid Rain Allowance Auction
Remarks by Sam Napolitano
March 25, 2003
On behalf of U.S. Environmental Protection Agency, I am pleased to hear the announced results of the 11th annual auction of sulfur dioxide (SO2) allowances under the Acid Rain Trading Program, Title IV of the Clean Air Act, conducted for EPA by the Chicago Board of Trade.
We have been working with the Chicago Board of Trade, as well as with the power-generating utilities, brokers and traders, for more than ten years on the Acid Rain Trading Program. Together, we have demonstrated that an emissions cap and trade approach can improve human health and the environment at a lower cost and with greater efficiency than traditional control approaches.
SO2 emissions from electric power generation continue to decline in the United States, down by more than 7.0 million tons since 1980. Preliminary results for 2002 reveal emission levels dropped more than 400,000 tons from the previous year.
The collective success we have seen in the Acid Rain Program has inspired the development of additional cap and trade programs to pursue other emission reductions. In addition to the Acid Rain Program, states have asked EPA to administer a cap and trade program to reduce summertime ozone levels from nitrogen oxide (NOx) emissions in the Northeast since 1999. Numerous additional states in the Midwest and Southeast will also use this model to address a broader area of ozone transport and the resultant summer smog problems beginning in 2004.
On February 27, 2003, the Clear Skies Act was introduced in both houses of Congress. The centerpiece of the bill is a cap and trade system to reduce further air pollution from power plants.
Under the Clear Skies Act, we would see power plant emissions mandatorily cut by about 10 percent for major air pollutants from today's levels. The Act calls for lowering the existing SO2 cap under the Acid Rain Program by two-thirds, expanding and capping NOx reductions nationwide and year-round, and also reducing and capping mercury emissions.
As the President noted in his announcement, "...a market-based cap and trade approach... rewards innovation, reduces costs, and guarantees results..."
Thank you for your participation and support. I look forward to hearing the remarks of the others here today.