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Cap and Trade Programs

Cap and Trade
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EPA’s cap and trade programs to date have been primarily focused on the electricity generating sector. Power generation is a significant source of pollutants that can impair human health and the environment. These pollutants include sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury. The emissions from power generation contribute to a range of human health and environmental problems and can be transported across long distances. By significantly reducing emissions over large geographic areas, cap and trade programs benefit human health and the environment and also address interstate and long-range transport of emissions.

EPA Programs

The Clean Air Interstate Rule

The Clean Air Interstate Rule (CAIR) will achieve substantial reductions in SO2 and NOx through the use of the proven cap and trade approach that was used in EPA's Acid Rain Program and NOx Budget Trading Program.

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Clean Air Visibility Rule (CAVR)

On October, 5, 2006, EPA finalized an alternative emissions trading program that gives flexibility for states and tribal governments in ways to apply Best Alternative Retrofit Technology (BART). The BART requirements would be satisfied if the trading program meets or exceeds the visibility benefits resulting from BART.

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The Acid Rain Program

The Acid Rain Program was created under Title IV of the 1990 Clean Air Act Amendments to reduce the adverse effects of acid deposition through reductions in annual emissions of S02 and NOx. The Act calls for reductions in SO2, which are largely achieved through a market-based cap and trade program utilizing emission caps to permanently limit SO2 emissions from power plants. NOx reductions under the Acid Rain Program are achieved through a program closer to a more traditional, rate-based regulatory system.

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The NOx Budget Trading Program

The NOx Budget Trading Program is a market-based cap and trade program created to reduce emissions of NOx from power plants and other large combustion sources in the eastern United States. This program was designed to reduce NOx emissions during the ozone season (May 1 to September 30), when ground-level ozone concentrations are highest.

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Additional Cap and Trade Efforts

RGGI - Ten northeastern and mid-Atlantic states will cap and then reduce CO2 emissions from the power sector by 10 percent by 2018.

RECLAIM - Required industries and businesses in the South Coast Air Basin are to cut their emissions by a specific amount each year, resulting in a 70 percent reduction for NOx and a 60 percent reduction for sulfur oxides (SOx) by 2003. An overview of the Regional Clean Air Incentives Market (PDF) (29pp, 508K, About PDF)

Assembly Bill 32 - California’s Climate Change Scoping Plan to mitigate and reduce greenhouse gas emissions in California to 1990 levels by 2020.

Western Climate Initiative - The Western Climate Initiative, launched in February 2007, is a collaboration of seven U.S. governors and four Canadian premiers created to identify, evaluate, and implement collective and cooperative ways to reduce greenhouse gases in the region, focusing on a market-based cap and trade system.

HRVOC Emissions Cap and Trade Program - Adopted in December 2004, the Highly Reactive Volatile Organic Compound (HRVOC) Emissions Cap and Trade (HECT) program establishes a mandatory annual cap for emissions of HRVOCs on sites in the Houston-Galveston-Brazoria ozone nonattainment area with the potential to emit more than 10 tons per year of HRVOC.

Emissions Reductions Market System - The ERMS is a cap and trade regulatory program for stationary sources emitting volatile organic material (VOM) in the ozone nonattainment area located in six counties and three other townships in northeastern Illinois.

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