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Air Trends

Evaluating Ozone Control Programs in the Eastern United States: Focus on the NOx Budget Trading Program, 2004

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Executive Summary

Emission Reductions

  • EPA has developed more than a dozen programs since 1990 to limit ozone formation by reducing emissions of its key precursors: nitrogen oxides (NOx) and volatile organic compounds (VOCs). These programs complement state and local efforts to attain the National Ambient Air Quality Standards for ozone.
  • Emission trends reflect implementation of these control programs, which began in the mid-1990s. In the eastern United States, NOx emissions decreased by 25 percent, and VOC emissions dropped by 21 percent, from 1997 to 2004.
  • Control programs successfully reduced NOx emissions during the warm summer months, generally referred to as the ozone season. The most recent of those programs was the NOx SIP Call, EPA's regulation to reduce the regional transport of NOx and ground-level ozone in the eastern United States.
    • All affected states chose to comply with the NOx SIP Call by participating in the EPA-administered NOx Budget Trading Program (NBP).
    • In response to the NOx SIP Call, emissions of NOx from the power industry (one of the largest NOx sources in the country) dropped significantly after 2002. Other sources did not show this significant drop in emissions.
    • After implementation of the NOx SIP Call in 2004, ozone season power industry NOx emissions were about:
      • 30 percent lower than in 2003, when a limited number of states were subject to NOx SIP Call requirements;
      • 50 percent lower than in 2000, before the NOx SIP Call was implemented; and
      • 70 percent lower than in 1990, before implementation of the Clean Air Act Amendments.
    • These reductions occurred despite a shorter-than-normal control period for states participating in the NBP for the first time in 2004 and despite the use of compliance supplement pool allowances - additional allowances issued to help states phase in compliance during the first two years of the NBP.

Changes in Ozone

  • In most of the eastern United States, reductions in ozone concentrations (adjusted for weather) more than doubled after the NOx SIP Call was implemented, beginning in 2003.
  • Ozone concentrations declined where EPA expected they would. Areas with the greatest decline in ozone concentrations are near, and downwind of, areas with greatest reductions in NOx emissions.
  • Because weather conditions can vary from year to year, ozone levels could be higher in years when weather is conducive to ozone formation - even when current emission control programs are working as expected. To get a truer picture of ozone from year to year, EPA adjusts ozone levels to account for the influence of weather.

Compliance with the NBP

  • Sources choose from a variety of compliance options to meet the emission reduction targets of the NBP, including reducing generation from certain units, modifying or optimizing the combustion process to reduce NOx formation, using add-on controls, or purchasing additional emission allowances from sources reducing below their allocations.
  • In 2004, there was close to 100 percent compliance. Of the more than 2,500 units covered by the NBP in 2004, nearly all held sufficient allowances to cover their emissions. Just two units at one facility were out of compliance and subject to an automatic penalty deduction (three allowances for each excess ton of emissions).
  • Overall trading activity remained robust in 2004, and allowance prices were lower and more stable than in 2003.
  • The level of "banked" (i.e., saved) allowances increased significantly in 2004, as a result of additional sources participating in the NBP and the addition of compliance supplement pool allowances to states' budgets.
  • Sources in the NBP are required to use consistent rigorous monitoring procedures to measure their emissions. In 2004, both electric generating units and industrial boilers passed more than 98 percent of their required quality assurance tests.

New Regulations, Additional Improvements

  • While ozone remains a significant problem in many areas of the United States, EPA anticipates additional improvements, including emission reductions from:
    • Continued implementation of the NOx SIP Call;
    • Mobile source regulations (new passenger vehicles, heavy-duty diesel engines, and other mobile sources);
    • EPA's Clean Air Interstate Rule (CAIR), which will build on the ozone season emission reductions from the NOx SIP Call. In 2015, CAIR, the NOx SIP Call, and other programs in the CAIR region will reduce power industry ozone season NOx emissions by about 50 percent and annual NOx emissions by about 60 percent from 2003 levels. CAIR will ensure that Americans continue to breathe cleaner air by dramatically reducing air pollution that moves across state boundaries in 28 eastern states and Washington, D.C.
    • State Implementation Plans to address ozone nonattainment.

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