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Clean Air Rules: A New Roadmap for the Power Sector

How new market-based regulations fit with today’s programs.

Fortnightly Magazine - June 2007

particles in downwind states, CAIR requires 25 Eastern states and D.C. to reduce and cap annual SO 2 and NO X emissions. In addition, CAIR requires 25 Eastern states and D.C. to reduce and cap ozone season (May through September) NO X emissions to address their contribution to unhealthy levels of 8-hour ozone. As shown in Figure 2, most states covered under CAIR are required to address contributions to both PM2.5 and ozone nonattainment, and therefore reduce annual SO 2 and NO X emissions as well as seasonal NO X emissions.

Generally, the CAIR model rules include fossil fuel-fired boilers and combustion turbines serving a generator with a nameplate capacity greater than 25 MW and producing electricity for sale. The CAIR programs generally are aimed at the same types of sources as the Acid Rain Program and NO X SIP Call—namely electricity generating units that sell power. However, the universe of CAIR sources is somewhat more inclusive in two ways. First, CAIR affects some sources that either permanently ( e.g., simple-cycle turbines, certain cogeneration units) or temporarily ( e.g., independent power producers, or IPPs, with power-purchase agreements in effect) were exempt from the Acid Rain Program. These units were designed and operated to be in the business of producing electricity for sale and were part of the universe of sources that EPA demonstrated could reduce emissions in a highly cost-effective manner for purposes of CAIR. Second, CAIR affects some power-generating sources that were not regulated under the NO X SIP Call because CAIR uses a definition whereby sources are considered to be “fossil-fuel-fired” and that is consistent with the one used in the Acid Rain Program ( i.e., if you combust any fossil fuel, you are considered “fossil-fuel-fired”), while the NO X SIP Call definition considers a source to be “fossil-fuel fired” if more than 50 percent of annual heat input results from combusting fossil fuels.

The majority of the approximately 320 new sources expected to be affected under CAIR are simple-cycle combustion turbines outside the NO X SIP Call region that came online prior to 1991. Most of the others are IPP units or cogeneration units that were exempt from the Acid Rain Program.

Table 1 delineates the expanding coverage of electricity generators from the Acid Rain Program to CAIR and CAMR as EPA has learned more about less traditional electricity generators and their capabilities for highly cost-effective controls. This table is intended as an overview of programs. Individuals with specific questions about applicability should contact their state air office. The National Association of Clean Air Agencies (formerly STAPPA and ALAPCO) maintains a state-by-state list of contacts at http://www.4cleanair.org.

How the New Trading Programs Work

If states choose to participate in the federal cap-and-trade programs to reduce SO 2 and NO X emissions, the result will be a larger seasonal NO X program beginning in 2009, a new annual NO X program beginning in 2009, and a new SO 2 program in the CAIR region with a tighter, regional cap in 2010. All three new CAIR programs