[BETA] Fortnightly

THE EPA SPEAKS OUT:

The Environmental Protection Agency reviews how the multi-pollutant control concept is to work.

On March 10, 2005, the Environmental Protection Agency (EPA) finalized the Clean Air Interstate Rule (CAIR) to reduce air pollution that moves across state boundaries in 28 Eastern states and the District of Columbia. When fully implemented, CAIR will reduce sulfur dioxide (SO 2) emissions in these states by more than 70 percent and nitrogen oxide (NO X) emissions by more than 60 percent from 2003 levels, resulting in more than $100 billion in health and visibility benefits per year by 2015. ¹ EPA expects these air pollution reductions to be achieved largely through a proven emissions cap-and-trade program.

CAIR-one of the largest EPA initiatives ever undertaken-will go a long way in helping localities meet federal air quality standards. The rule, based on multi-pollutant control concepts that EPA first introduced nearly a decade ago, ² is not without costs, benefits, and other impacts. ³

The Environmental Problem

Currently 132 areas do not meet the new National Ambient Air Quality Standards (NAAQS) for fine particles or ozone, that affect some 160 million people, or 57 percent of the U.S. population (). ⁴ SO 2 emissions contribute to the formation of fine particles and acid rain. NO X emissions contribute to ground-level ozone, the formation of fine particles, and acid rain. These air pollutants are linked to serious health consequences including premature death and heart attacks, as well as illnesses such as chronic bronchitis, asthma, and other respiratory problems. Sulfur and nitrogen deposition contribute to significant environmental problems including damage to sensitive ecosystems and impaired visibility in parks and residential areas.

The Clean Air Act (CAA) requires states to take action to address this environmental problem. However, because air pollution can travel long distances, one state's pollution often affects a downwind state's nonattainment areas. Consequently, an individual state significantly may reduce emissions from within its borders, but may not necessarily meet air quality standards (). To address this "transport" problem, EPA developed a regional approach to the transport of emissions across state borders.

From its extensive consideration of the power industry's emissions and pollution control options over the last 15 years, the agency recognized that the power sector, which emits roughly 69 percent of nationwide SO 2 emissions and 22 percent of nationwide NO X emissions annually, is a source of cost-effective emission reductions (). While the power sector has made meaningful reductions of SO 2, NO X, and direct particulate emissions over the past 25 years, and EPA has already set stricter standards for other major sources of emissions such as cars, trucks, buses, and construction vehicles, EPA has determined that much more is needed to bring many areas into attainment with the NAAQS by CAA deadlines.

Market-Based Approach for CAIR

Since the advent of the acid rain SO 2 cap-and-trade program, the market-based regulatory approach for reducing air emissions has shown remarkable environmental results at costs far below original projections. The cap-and-trade approach establishes an emissions cap and then distributes