Lulu Yu Eva Wu
Summary of this policy
The NOx Budget Trading Program is a market-based cap and trade program which created to reduce emissions of oxides of nitrogen (NOx). The main NOx polluters are heat-engine plant in the eastern United States. NOx has been linked to a variety of health effects, the severity of which depends on concentration, length of exposure, and breathing rate. The NOx Budget Trading Program was designed to reduce NOx emissions during the w ozone season (May 1- September 30) when ground-level ozone emission are most serious.
The goal of this programme is to get 392 facilities to reduce annual NOx emissions by a total of nearly 510,000 tonnes from 2007 levels.
Coverage of the policy
(Contains two parts, one is the Geographical Scope and the other is Species Coverage)
The OTC consists of representatives from the Northeast and Mid-Atlantic states, the States that will now be involved include Alabama, Connecticut, Delaware, Illinois, Indiana, Kentucky, Massachusetts, Maryland, Michigan, North Carolina, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, West Virginia and the District of Columbia.
The main objective of implementation of this project was the large pollutant in States who make significantly contribute to the pollution. The EPA requires them to control NOx emissions in response to the Section 126 Final Action rulemaking. Some fossil fuel boilers or combustion turbines who serve an electric generating are also included in this trading programme. The standard was output of greater than 25 MW or that have a maximum rated heat input capacity of greater than 250 mm Btu/h.
How it works
First of all, during the “ozone season” NBP set a regional “budget” (or cap) on emissions from power plants and other combustion sources during the “ozone season”. Sources were required to reduce emissions significantly below baseline levels in each participating state to meet the budget. States allocated allowances to sources (each allowance equaled one ton of emissions) and sources could use emissions trading to achieve the most cost-efficient reductions possible. If emissions were below budget levels, sources could “bank” unused allowances and use or trade the banked allowances to cover emissions in a subsequent ozone season.
Secondly, the OTC created flow control system to control the overuse of allocated NOx allowances. Flow control was triggered when the total number of allowances overused for all sources exceeded 10 percent of the total overall (regional) budget for the next year. Then EPA calculated the flow control ratio, they will dividing 10 percent of the total regional NOx trading budget by the number of banked allowances The resulting flow control ratio established the percentage of banked allowances that could be deducted from a source’s account on a 1:1 ratio of one allowance per one ton of emissions. The remaining banked allowances, if used, were deducted at a 2:1 ratio of two allowances per one ton of emissions.
Implementation
Montioring system was widely used during the implementation of this project. This project begin monitoring on May 1, 2002. If sources do not have enough allowances to cover their emissions based on their initial allocation, they may buy allowance from other sources who didn’t used up the allowance. This cap and trade system works really flexibility and sources have two months time to ensure they hold adequate extra allowance which was until November 30 each year. Usually the way sources ensure they hold adequate emissions allowances through two ways. One was the standardized monitoring and the other was reporting procedures. Usually budget sources must monitor and report their actual emissions to the EPA to ensure demonstrate compliance. Under the trading system, sources with large NOx emissions must monitor their emissions using continuous emissions monitoring systems. Sources with lower NOxemissions may use simpler estimation methods.
The sources had two option to evaluate the allowance. One was to allocate allowances based on each source’s share of statewide ozone season heat input. The other was based ozone season outputto reward sources that generated more energy with less fuel input.
Cost-effectiveness
About 290,000 NOx allowances will be allocated in total region-wide to sources every year. Sources that retire will continue to receive allocations until the next allocation update. EPA also making additional allowances available to participating sources through a compliance supplement pool during the initial two years of the programme, the. These allowances will be distributed among sources which made early reductions during the 2001 and 2002 ozone seasons. Sources may use these allowances for compliance purposes as they would other allowances for the 2003 and 2004 compliance periods. However, the EPA will retire all remaining pool allowances from the allowance tracking system after the 2004 ozone season compliance determination process is completed. New sources entering into the programme will be allocated allowances from a portion of the State budget that is set aside for new sources
A new source is eligible to receive allowances from the new source set-aside until it has sufficient operating data to receive an updated allocation as an existing source. Each new electric generating unit will be allocated allowances based on the product of either a NOxx emissions rate of 0.17lbs/mm Btu or the unit’s permitted limited, whichever is less, times their actual utilisation for the control period. Sources that are not currently subject to the programme but undergo major modifications and are subsequently required to participate in the programme are initially treated as new sources and therefore are eligible to receive allowances from the new sources set-aside. After compliance has been determined, any allowances remaining in the new source set-aside will be redistributed to existing sources.
Result
There’s a significant outcome in NOx. In 2006, under the NOx Budget Program, the budget sources emitted 491,483 tons, which means a reduction of NOx by more than 38,000 tons, or 7 % from the emission in 2005 and 74 % from 1990 emissions. In addition, like improvements in NOx, there’s also changes in ozone. Ozone concentrations in urban and rural areas had decreased during 2004-2006 in comparison to that during the period 2000-2002. The average reduction in ozone concentrations in states participating NOx Budget Program was estimated as 5%.
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.
Rescource
http://www.epa.gov/airmarkets/progress/docs/otcreport.pdf
http://www.epa.gov/airtransport/pdfs/SNPRAllocations.pdf
http://daq.state.nc.us/monitor/eminv/noxbudget/nox_budget_program_overview.pdf
http://ekh.unep.org/files/GP-10.pdf