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Lessons Learned - The NOx Budget Trading Program
Exerpt taken from The NOx Budget Trading Program: A Collaborative, Innovative Approach to Solving a Regional Air Pollution Problem (PDF) (13 pp. 1.4 M, About PDF) The Electricity Journal, Vol 20/9 pp. 65-76, Nov. 2007.
Following the last four years of EPA and state experience implementing the NOx Budget Trading Program, important lessons have emerged.
- The Program works: substantial emission reductions have occurred throughout the states and across the region, quickly leading to dramatic improvements in air quality.10
- EPA demonstrated its authority under Title I of the Clean Air Act Amendments to implement regional cap-and-trade programs that mitigate transport of interstate pollution and provide large emission reductions.
- Cap-and-trade is effective in controlling emissions from sources beyond the power sector.
- A simple program is better than a complex one.
- Accurate baseline emission inventory information is critical to effective program design.
- EPA is best at establishing overall objectives, defining key elements, and administering a program, while states are capable of adopting programs to fit local circumstances and addressing distributional impacts of programs.
- There does not appear to be evidence of local concentrations of emissions (or hot spots) as a result of regional cap-and-trade programs.
- EPA found that the pace of implementation matters and it is valuable to consider phasing in emission reduction requirements.
- EPA made the regulated community clearly responsible for emission reductions, but allowing considerable freedom on how to comply led industry to devise highly cost-effective control strategies that reduced emissions over time.
- Although the NBP provides considerable compliance flexibility, the level of compliance is extremely high with a limited number of government staff involved in program administration.
- EPA finds that Congressional direction makes it easier to set up and implement cap-andtrade programs.
The NOx Budget Trading Program showed that regional cap-and-trade programs are adaptable to more than one pollutant, time period, and geographic scale, and can achieve compliance results similar to the Acid Rain Program. The OTC NOx budget program was also an important example of cooperation between states, regional planning organizations, and EPA. The NBP further demonstrates how EPA and states can work together to identify and implement solutions to address pollutant transport across state boundaries that impacts public health and the environment. The program demonstrates that industries in addition to the power sector can effectively participate and that keeping rules simple and clear delivers value. This market-based approach has led to highly cost effective improvements in air quality in the eastern United States, with dramatic improvements in attainment of the ozone NAAQS.