NOx Budget Trading Program- Basic Information
The NOx Budget Trading Program (NBP) was a market-based cap and trade program created to reduce the regional transport of NOx emissions from power plants and other large combustion sources that contribute to ozone nonattainment in the eastern United States. The program was a central component of the NOx SIP Call, promulgated in 1998. All 20 states covered by the NOx SIP Call were in the NBP.
In 2009, CAIR's NOx ozone season program began, effectively replacing the NBP in the East and achieving further summertime NOx reductions from the power sector.
Cap and trade programs set a cap on overall regional emissions and allocate each affected source allowances authorizing a certain number of tons of emissions. 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. 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. Cap and trade programs have proven highly effective in reducing emissions from multiple sources, while achieving emission reductions, meeting environmental goals, and improving human health.