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Emission, Compliance, and Market Data

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SO2 Emission Reductions | SO2 Compliance | SO2 Allowance Market | NOx Emission Reductions | NOx Compliance

The Acid Rain Program (ARP), established under Title IV of the 1990 Clean Air Act (CAA) Amendments, requires major emission reductions of SO2 and 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. 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. Since the program began in 1995, the ARP has achieved significant emission reductions. Table 1 shows that between 2004 and 2008, SO2 and NOx emissions fell significantly, while heat input (a surrogate measure of electricity generation) increased slightly. Most of the recent reductions since 2005 are from early reduction incentives of the Clean Air Interstate Rule (CAIR) covering most eastern states.

Over the next several months, EPA will release a series of reports summarizing progress under the ARP. This first report presents 2008 data on emission reductions, compliance results, and SO2 allowance prices. Future reports will evaluate progress under the ARP in 2008 by analyzing emission reductions, reviewing compliance results and market activity, and comparing changes in emissions to changes in acid deposition and surface water chemistry. For more information on the ARP, please visit the program’s website.

At a Glance: ARP Results in 2008

SO2 Emissions: 7.6 million tons

SO2 Compliance: 100%

SO2 Allowances: Banked allowances increased by almost 2 million from 2007 levels

SO2 Allowance Prices: Nominal allowance prices
declined sharply during the year, from a monthly average of $509/ton in January to $179/ton in December

NOx Emissions: 3.0 million tons

NOx Compliance: 100%

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Table 1: SO2, NOx, and Heat Input Trends in Acid Rain Program Units, by Fuel Type

Fuel Type 2004 2005 2006 2007 2008
SO2 NOx HI SO2 NOx HI SO2 NOx HI SO2 NOx HI SO2 NOx HI
Coal 9,840 3,484 20.49 9,837 3,356 20.77 9,244 3,208 20.44 8,768 3,069 20.75 7,517 2,816 20.25
Oil 377 138 1.00 349 129 0.99 135 63 0.58 149 68 0.61 84 46 0.48
Gas 36 134 4.83 35 142 5.34 8 131 5.70 10 141 6.32 7 129 6.21
Other 3 6 0.03 3 6 0.03 7 7 0.05 7 5 0.05 10 5 0.06
Total 10,256 3,762 26.34 10,223 3,633 27.13 9,393 3,409 26.77 8,933 3,283 27.74 7,617 2,996 26.99

Notes:

Source: EPA, 2009

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SO2 Emission Reductions

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, although the program also applies to oil and gas units. 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, and already below the statutory annual cap set for compliance in 2010. Reductions in SO2 emissions from other sources not affected by the ARP (including industrial and commercial boilers and the metals and refining industries) and use of cleaner fuels in residential and commercial burners contributed to a similar overall decline (56 percent) in annual SO2 emissions from all sources since 1980. National SO2 emissions from all sources have fallen from nearly 26 million tons in 1980 to about 11.4 million tons in 2008 (see data available at the National Emissions Inventory (NEI) Air Pollutant Emissions Trends website).

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

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

Source: EPA, 2009

The states with the highest emitting sources in 1990 have generally seen the greatest SO2 reductions under the ARP (see Figure 2). Most of these states are upwind of the areas the ARP was designed to protect, and reductions have resulted in important environmental and health benefits over a large region. In addition, from 2007 to 2008, reductions in SO2 emissions from ARP units in 38 states totaled about 1.3 million tons, or about 15 percent for the year. Five states (Georgia, Indiana, North Carolina, Ohio, and Pennsylvania) accounted for most of the one-year reductions from 2007 to 2008, ranging from 119,271 to 244,651 tons of SO2 in each of these states. From 1990 to 2008, annual SO2 emissions in 38 states and the District of Columbia fell by a total of approximately 8.2 million tons. In contrast, annual SO2 emissions increased by a total of 79,309 tons in 10 states from 1990 to 2008. The seven states with the greatest reductions in annual emissions since 1990 include Ohio, which decreased emissions by over 1.5 million tons, and Illinois, Indiana, Kentucky, Missouri, Tennessee, and West Virginia, each of which reduced total emissions during this time period by more than 500,000 tons.

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

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

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

Source: EPA, 2009

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SO2 Program Compliance

For 2008, EPA allocated 9.5 million SO2 allowances under the ARP (see Table 2). Together with 6.7 million unused allowances 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). 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.

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

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

Source: EPA, 2009

Table 2 explains in more detail the origin of the allowances that were available in 2008, and Table 3 shows how those allowances were used. Approximately 7.6 million allowances were deducted from sources' accounts in 2008 to cover emissions. From 2007 to 2008, the number of banked allowances increased by nearly two million allowances to 8.6 million, a 28 percent increase. In 2008, all ARP facilities complied with the requirement to hold enough allowances to cover SO2 emissions.

Table 2: Origin of 2008 Allowable SO2 Emission Levels

Type of Allowance Allocation Number of Allowances Explanation of Allowance Allocation Type
Initial Allocation 9,191,897 Initial allocation is the number of allowances granted to EGUs based on the product of their historical utilization and emission rates specified in the Clean Air Act.
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 106,497 Opt-in allowances are provided to units entering the program voluntarily. There were 20 opt-in units in 2008.
Total 2008 Allocation 9,548,394  
Total Banked Allowances 6,678,688 Banked allowances are those allowances accrued in a facility’s account from previous years, which can be used for compliance in 2008 or any future year.
Total 2008 Allowable Emissions 16,227,082  

Notes: Total banked allowances are adjusted from the 2007 Progress Report to account for additional allowance deductions made after the 2007 reconciliation was completed.

Source: EPA, 2009

Table 3: SO2 Allowance Reconciliation Summary, 2008

Total Allowances Held (1995 – 2008 vintages) 16,227,082
Affected Facility Accounts 12,210,477
Other (General and Non-Affected Facility Accounts) 4,016,605
Allowances Deducted* 7,602,693
Penalty Allowance Deductions ( 2009 Vintage) 0
Banked Allowances 8,624,389
Affected Facility Accounts 4,607,784
Other (General and Non-Affected Facility Accounts) 4,016,605

* Includes 3,315 allowances deducted from opt-in sources for reduced utilization. Additionally, allowances deducted for emissions are about 14,000 tons less than the total emissions used elsewhere in this report, which reflect data reported as of July 1, 2009. This is a result of rounding differences, any changes in reported emission data after reconciliation, and resolution of petitions, including emissions for one facility (WH Zimmer in OH) that has not been reconciled due to a monitoring petition. When this facility is reconciled the number of allowances deducted will go up and the amount of banked allowances will decrease.

Source: EPA, 2009

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2008 SO2 Allowance Market

In 2008, the SO2 allowance market experienced a 65% price decline; the monthly average price fell from $509 per ton in January to $179 per ton by December (see Figure 4). That decline has continued in 2009, falling to $71/ton by May. ARP reports released in the coming months will analyze allowance market activity in more detail.

Figure 4: Average Monthly SO2 Allowance Price, August 1994 – May 2009

Figure 4: Average Monthly SO2 Allowance Price, August 1994 - May 2009

Source: CantorCO2e Market Price Index, 2009

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NOx Emission Reductions

Title IV requires NOx emission reductions for certain coal-fired EGUs by limiting the NOx emission rate (expressed in lb/mmBtu). Congress applied these rate-based emission limits based on a unit's boiler type (see Table 4). 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.

Table 4: NOx-Affected Title IV Units by Boiler Type and NOx Emission Limit

Coal-Fired Boiler Type Title IV Standard NOx Emission Limits (lb/mmBtu) Number of Units
Phase I Group 1 Tangentially Fired 0.45 133
Phase I Group 1 Dry Bottom, Wall-fired 0.50 107
Phase II Group 1 Tangentially Fired 0.40 300
Phase II Group 1 Dry Bottom, Wall-fired 0.46 294
Cell Burners 0.68 37
Cyclones > 155 MW 0.86 54
Wet Bottom > 65 MW 0.84 20
Vertically Fired 0.80 24
Total All Units   969

Source: EPA, 2009

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, or more than double the Title IV NOx emission reduction objective. While the ARP was responsible for a large portion of these annual NOx reductions, other programs — such as the Ozone Transport Commission (OTC), the NOx Budget Program under EPA's NOx State Implementation Plan (SIP) Call, and other regional and state NOx emission control programs — also contributed significantly to the NOx reductions achieved by sources in 2008.

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

Figure 5: NOx Emission Trends for All Acid Rain Program Units, 1990\u20142008

Source: EPA, 2009

From 1995 to 2008, annual NOx emissions from ARP units dropped by about 3.1 million tons, a net decrease of 51 percent. Forty-two states and the District of Columbia reduced NOx emissions during this period versus six states that accounted for only about 15,600 tons of increased NOx emissions during the same period (see Figure 6).

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NOx Compliance

The ARP NOx Program does not impose a cap on NOx emissions and does not rely on allowance trading. The program allows affected sources to comply either by meeting a unit-specific emission rate or by including two or more units in an emission rate averaging plan. These options provide affected sources with the flexibility to meet the NOx emission reduction requirements in the most cost-effective manner. In 2008, all 969 units that were subject to the ARP NOx Program achieved compliance.

Figure 6: State-by-State NOx Emission Levels for Acid Rain Program Sources, 1990 – 2008

Figure 6: State-by-State NOx Emission Levels for Acid Rain Program Sources, 1990\u20142008

Scale: Largest bar equals 500,000 tons of NOx emissions in Ohio, 1990.

Note: Area shaded in gray represents the NOx Budget Program geographic region.

Source: EPA, 2009

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