The Acid Rain Program (ARP), the Cross-State Air Pollution Rule (CSAPR), the CSAPR Update, and the Revised CSAPR Update are implemented through trading programs1 designed to reduce emissions of sulfur dioxide (SO₂) and nitrogen oxides (NOₓ) from power plants. Established under Title IV of the 1990 Clean Air Act Amendments, the ARP was a landmark nationwide emissions trading program, with a goal of reducing the emissions that cause acid rain. The success of the program in achieving significant emission reductions in a cost-effective manner led to the application of the market-based emissions trading tool for other regional environmental problems, namely interstate air pollution transport, or pollution from upwind emission sources that impacts air quality in downwind areas. The interstate transport of pollution makes it difficult for downwind states to meet health-based air quality standards for regional pollutants, particularly fine particulates (PM₂.₅) and ozone. EPA first employed trading to address regional pollution in the NOₓ Budget Trading Program (NBP), which helped northeastern states address the interstate transport of NOₓ emissions causing ozone pollution in northeastern states. Next, the NBP was effectively replaced by the ozone season NOₓ program under the Clean Air Interstate Rule (CAIR), which required further summertime NOₓ emission reductions from the power sector, and also required annual reductions of NOₓ and SO₂ emissions to address PM₂.₅ transport. In response to a court decision on CAIR, CSAPR replaced CAIR beginning in 2015 and continued to reduce annual SO₂ and NOₓ emissions, as well as ozone season NOₓ emissions, to facilitate attainment of the 1997 annual PM₂.₅, and 2006 24-hour PM₂.₅, and the 1997 8-hour ozone National Ambient Air Quality Standards (NAAQS). Implementation of the CSAPR Update began in 2017. The CSAPR Update further reduces ozone season NOₓ emissions to help states attain and maintain a newer ozone NAAQS established in 2008. Implementation of the Revised CSAPR Update began in 2021 and resolves 21 states’ outstanding interstate transport obligations for the 2008 ozone NAAQS. Most recently, in February 2022, the EPA proposed additional reductions in ozone-forming emissions of NOₓ to facilitate attainment and maintenance of the more stringent 2015 ozone NAAQS.
The Mercury and Air Toxics Standards (MATS) set limits on emissions of hazardous air pollutants from power plants. EPA published the final standards in February 2012, and the compliance requirements generally went into effect in April 2015, with extensions for some plants until April 2016 and a small number until April 2017. As such, 2021 is the fifth full year for which most sources covered by MATS have reported emissions data to the EPA.
- These emissions trading programs are also known as “allowance trading programs” or “cap-and-trade” programs.