Jump to main content.


2008 Highlights

Central Park
Download the 2008 Highlights Report:

NBP Cover

(pdf, 18.3 MB)

Download Graphics and Source Data

download link image

Overview of the NOx Budget Trading Program | Key Components of the NBP | Key Results | Clean Air Interstate Rule | Appendix A: Ozone Season NOx Emissions (Tons) from NBP Sources, 1990-2008, and 2008 State Trading Budgets

The NOx Budget Trading Program (NBP) was a market-based cap and trade program created to reduce the regional transport of emissions of nitrogen oxides (NOx) from power plants and other large combustion sources that contribute to ozone nonattainment in the eastern United States. NOx is a major precursor to the formation of ground-level ozone, a pervasive air pollution problem in many areas in the East. The NBP was designed to reduce NOx emissions during the warm summer months, referred to as the ozone season, when ground-level ozone concentrations are highest.

The NBP was established through the NOx State Implementation Plan (SIP) Call, promulgated in 1998. All 20 affected states and the District of Columbia (DC) chose to meet mandatory NOx SIP Call reductions primarily through participation in the NBP. From the beginning of program implementation in 2003 to 2008, the NBP dramatically reduced NOx emissions from power plants and industrial sources during the summer months, contributing significantly to improvements in ozone air quality in the eastern United States. In 2009, the NBP was replaced by the Clean Air Interstate Rule (CAIR) NOx ozone season trading program, which required emission reductions from affected sources in an expanded geographic area and went into effect May 1, 2009.

From May to September 2009, the U.S. Environmental Protection Agency (EPA) released three reports detailing progress under the NBP. This final document highlights the key results from the previous reports and discusses the transition from the NBP to the CAIR NOx ozone season program.

For more information on the NBP, please visit the program’s website. Detailed emission results and other facility and allowance data are also publicly available on EPA’s Data and Maps Web site. To view emission and other facility information in an interactive file format using Google Earth or a similar three-dimensional platform, go to the Clean Air Markets Interactive Mapping page.

Top of page

Overview of the NOx Budget Trading Program

Over the past six ozone seasons, the NBP significantly lowered NOx emissions from affected sources, contributing to improvements in regional air quality across the Midwest, Northeast, and Mid-Atlantic. Cap and trade programs such as the NBP and the Acid Rain Program (ARP) set a cap on overall regional emissions and allocate allowances to each affected source. Each allowance authorizes a certain number of emissions—in this case, one ton. This approach provides individual sources with flexibility in how they comply with emission limits. Sources may sell or bank (save) excess allowances if they reduce emissions and have more than they need, or purchase allowances if they are unable to keep emissions below their allocated budget.

As a group, the participating sources cannot exceed the cap and each individual source cannot emit more than the allowances it holds for compliance. The cap level is intended to protect public health and the environment and to sustain that protection into the future, regardless of growth in the affected sector. The cap also lends stability and predictability to the allowance trading market and provides regulatory certainty to affected sources. Cap and trade programs like the NBP and the ARP have proven highly effective in reducing emissions from multiple sources while meeting environmental goals and improving human health.

Top of page

Key Components of the NBP

The NBP was an ozone season (May 1 to September 30) cap and trade program for electric generating units (EGUs) and large industrial combustion sources, primarily boilers and turbines. The program had several important features:

Figure 1: NOx SIP Call Program Implementation

Figure 1: NOx SIP Call Program Implementation

Source: EPA, 2009

Top of page

Top of page

Key Results

Affected Units: There were 2,568 affected units under the NBP in 2008, including some units that may not have operated nor had emissions during the 2008 ozone season:

Figure 2: Number of Units in the NBP by Type in 2008

Figure 2: Number of Units in the NBP by Type in 2008

Notes:

Source: EPA, 2009

Top of page

Ozone Season Emissions: Since the program began in 2003, the NBP has successfully reduced ozone season NOx emissions throughout the region. Figure 3 and Appendix A show that in 2008, NBP ozone season NOx emissions totaled approximately 481,420 tons and were:

Figure 3: Ozone Season NOx Emissions from All NBP Sources

Figure 3: Ozone Season NOx Emissions from All NBP Sources

Notes:

Source: EPA, 2009

Top of page

State-by-State NOx Reductions: Ozone season NOx emissions decreased from levels in the baseline years in all states that participated in the NBP (see Figure 4):

Figure 4: State-level Ozone Season NOx Emissions from NBP to CAIR, 1990-2010

Figure 4: State-level Ozone Season NOx Emissions from NBP to CAIR, 1990-2010

Scale: Largest bar equals 241,000 tons of NOx emissions in Ohio, 1990.

Note: Projected emissions in 2010 represent estimated reductions due to the implementation of CAIR.

Source: EPA, 2009

Top of page

High Electric Demand Days: Even with seasonal NOx reductions, periods of hot weather and related high electricity demand often elevate peak NOx emissions on a given day:

Figure 5: Comparison of Ozone Season Daily NOx Emissions for All NBP Units, 2003-2008

Figure 5: Comparison of Ozone Season Daily NOx Emissions for All NBP Units, 2003-2008

Note: The relatively high May 2004 daily emissions represent the delayed May 31st compliance date that year for non-OTC states.

Source: EPA, 2009

Top of page

Compliance: Through a wide range of pollution control strategies, sources achieved nearly 100 percent compliance in 2008:

Allowances: Prices and activity were down in 2008 but there is still a substantial bank and an active market:

Continuous Emission Monitoring Systems: Although many NBP units with low levels of emissions did not have to use CEMS, the vast majority—over 99 percent—of the NOx emissions under the NBP were measured by CEMS (see Figures 6 and 7):

Figure 6: Monitoring Methodology for the NBP by Number of Units in 2008

Figure 6: Monitoring Methodology for the NBP by Number of Units in 2008

Source: EPA, 2009

Top of page

Figure 7: Monitoring Methodology for the NBP by Ozone Season NOx Emissions in 2008

Figure 7: Monitoring Methodology for the NBP by Ozone Season NOx Emissions in 2008

Notes:

Source: EPA, 2009

Top of page

Controls: Sources could select from a variety of compliance options to meet NBP emission reduction targets, including installing control technologies, optimizing existing controls, switching fuels, retiring units, and reducing output:

Ozone: Ground-level ozone has decreased since implementation of the NBP in 2003 (see Figure 8):

Figure 8: Seasonal Average 8-Hour Ozone Concentrations in the NBP Region, 1997-2008

Figure 8: Seasonal Average 8-Hour Ozone Concentrations in the NBP Region, 1997-2008

Note: Data presented in this figure are averages of 8-hour daily maximum ozone concentrations during the ozone season for AQS and CASTNET sites within the NBP region.

Source: EPA, 2009

Top of page

Nonattainment Areas: Based on 2006-2008 air monitoring data, ozone air quality improved in almost all of the 104 areas in the eastern United States designated to be in nonattainment for the 1997 8-hour NAAQS:

Figure 9: Changes in Ozone Nonattainment Areas in the East, 2001-2003 (Original Designations) versus 2006-2008

Figure 9: Changes in Ozone Nonattainment Areas in the East, Original Designations of 2001-2003 versus 2006-2008

Note: States in the NBP region are shown inside the black boundary line.

Source: EPA, 2009

Top of page

Human Health Benefits: Studies continue to show a significant link between exposure to air pollution, particularly PM2.5 and ozone, adverse health effects including respiratory and cardiovascular effects, and premature death:

Ecosystem Protection: Changes in ozone and nitrate concentrations due to the NBP have contributed to improvements in ecosystems in the East:

Top of page

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 is also intended to improve visibility in Class 1 areas, including national parks, monuments, and wilderness areas. To do this, 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. Similar to the NOx SIP Call, CAIR gave affected states NOx emission budgets and the flexibility in their state implementation plans (SIPs) to reduce emissions using a strategy that best suits their circumstances, including EPA-administered, regional cap and trade programs as one option.

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 for the NOx programs began in 2008; monitoring and reporting for SO2 began in 2009.

Figure 10: Transition from the NBP to CAIR

Figure 10: Transition from the NBP to CAIR

Notes:

Source: EPA, 2009

Top of page

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 Court.

Current CAIR Implementation in NBP States

All NBP states, except Rhode Island, are included in the CAIR NOx ozone season program (see Figure 10). Furthermore, the CAIR NOx ozone season program includes six additional eastern states (Florida, Iowa, Louisiana, Mississippi, Arkansas, and Wisconsin) and full state coverage in Alabama, Missouri and Michigan. The 2009 CAIR NOx ozone season cap is 580,000 tons.

NBP states affected by CAIR transitioned to the CAIR NOx ozone season program on May 1, 2009. In addition, most NBP states (except Rhode Island, Massachusetts, and Connecticut) are also subject to emission reductions under the CAIR annual NOx programs to help states attain the NAAQS for PM2.5. States meet their NOx SIP Call obligations using the CAIR NOx ozone season trading program and, as a result, CAIR allows states to include all of their NBP sources in the CAIR NOx ozone season program (even if they would not otherwise be affected by CAIR). Most states used this flexibility, and those that did not are pursuing other strategies to meet their 2009 NOx SIP Call reduction requirements from their NBP sources. Rhode Island has decided not to join the CAIR trading program but must continue to meet its NOx SIP Call reduction requirements.

The 2009 CAIR NOx ozone season emission cap for EGUs is at least as stringent as the NBP, and in some states is tighter. The trading budget for any NBP state that includes its industrial units under CAIR will remain the same for those units as it was in the NBP. CAIR also allows sources to bank and use pre-2009 NBP allowances for CAIR NOx ozone season program compliance on a 1:1 basis, thereby giving sources in those states the incentive to begin reducing their emissions sooner. Flow control no longer applies in 2009 and beyond, so transferred NBP allowances may be used under CAIR on a straight 1:1 basis with no restrictions or time limits.

Furthermore, sources outside of the NBP region can buy and use pre-2009 NBP allowances in the CAIR NOx ozone season trading program. Finally, in order to be in compliance, NBP sources that did not have enough allowances in their accounts at the end of the reconciliation period to cover their 2008 ozone season emissions surrendered 2009 CAIR allowances at a 3:1 ratio.

Top of page

Appendix A: Ozone Season NOx Emissions (Tons) from NBP Sources, 1990-2008, and 2008 State Trading Budgets

State 1990 2000 2003 2004 2005 2006 2007 2008 2008 Budget
AL 89,758 84,560 50,895 40,564 33,632 27,812 28,744 30,221 25,497
CT 11,203 4,697 2,070 2,191 3,022 2,514 2,152 1,721 4,477
DC 576 134 72 35 279 115 76 133 233
DE 13,180 5,256 5,414 5,068 6,538 4,763 5,454 4,285 5,227
IL 124,006 119,460 48,917 40,976 37,843 36,343 35,630 34,126 35,557
IN 218,333 145,722 100,772 68,375 57,249 55,510 56,374 57,838 55,729
KY 153,179 101,601 63,057 40,394 36,730 37,461 40,210 39,386 36,109
MA 40,367 14,324 9,265 7,481 8,269 5,464 3,666 3,230 12,861
MD 54,375 28,954 19,257 19,944 20,989 18,480 16,521 10,667 15,466
MI 120,132 80,425 45,614 39,848 42,157 40,353 34,354 34,358 31,247
MO 64,272 34,058 29,407 16,190 18,809 15,917 12,961 12,777 13,459
NC 92,059 73,082 51,943 39,821 32,888 30,387 28,390 27,105 34,703
NJ 44,359 14,630 11,003 10,807 11,277 8,692 7,773 7,139 13,022
NY 84,485 43,583 34,815 34,157 36,633 26,339 24,728 20,934 41,385
OH 240,768 159,578 133,043 67,304 54,335 52,817 57,862 54,644 49,842
PA 199,137 87,329 51,530 52,140 51,125 52,806 57,615 56,747 50,843
RI 1,099 288 209 177 253 181 187 161 936
SC 56,153 39,674 34,624 25,377 18,193 18,376 18,418 17,552 19,678
TN 115,348 69,641 55,376 31,399 25,718 23,930 23,261 21,711 31,480
VA 51,866 40,043 32,766 25,448 22,309 20,491 22,957 19,596 21,195
WV 149,176 109,198 69,171 41,333 30,401 28,852 28,967 27,089 29,507
All NBP States 1,923,831 1,256,237 849,220 609,029 548,649 507,603 506,300 481,420 528,453

Notes:

Source: EPA, 2009

Top of page


Local Navigation


Jump to main content.