Title IV Acid Rain Program

The acid rain program was developed to reduce acid deposition and its impact on public health and the environment. Acid rain occurs when SO2 and NOx are emitted into the atmosphere, combine with water molecules, and return to earth as acidic rain, fog, or snow. Acid rain is harmful to forests, lakes, and buildings. Electric generation plants have been targeted as the leading cause of acid rain.

Approximately 20 million tpy of both SO2 and NOx are produced annually in this country, primarily from coal- and oil-fired electric generating plant. The CAAA established a two-phased goal that required a permanent 50% reduction (10 million tpy) in SO2 and a 2 million tpy reduction of NOx by year 2000. SO2 emissions are regulated using a nationwide tradable "allowance" system. NOx emissions are limited based on unit-specific achievable NOx levels set by the EPA (this level sometimes is the same as the RACT level discussed under Title I).

Specific exemptions from the acid deposition program requirements are provided for cogeneration facilities. If a cogeneration unit supplies less than one-third of its potential output, or less than 25 MW, to an electric utility, then it is exempt from the requirements of the program. A cogeneration unit is also exempt if there was a sales agreement between the unit and a utility in effect at the date of enactment of the CAAA, November 1990.

This aggressive program does not cover industrial facilities, but they may elect to opt-in to the SO2 emissions market allowance under the Act. An industrial source can choose to have an emissions allowance allocation established based on its recent SO2 emissions. If a source is then able to reduce its SO2 emissions, it can sell its excess allowances to utilities. There is also a possibility that the EPA will, in the future, extend the program to industrial boilers that use a substantial portion of their total fuel use in order to produce electricity.

Control Levels and Schedules

SO2 control is in two phases:

• Phase I of the acid rain program (from 1/1995-to-1/2000) requires those producing more than 100 MW (the highest pollution producing 110 power plants) to limit emissions to a level equivalent to 2.5 lbm of SO2 per MMBtu of fuel input.

• Phase II (effective 1/2000) requires plants producing 25 MW or more to achieve an emissions level of 1.2 lbm SO2 per MMBtu. Electric power plants must also install continuous emissions monitoring devices to verify compliance.

The law sets an indefinite long-term cap on SO2 emissions at 8.9 million tpy (a 56% overall reduction) starting in 2000. There is, however, some flexibility. Facilities are allowed to choose the most practical and cost-effective option. They may install scrubbers, switch to low-sulfur fuels, shut down an older plant and replace it with a cleaner plant, or purchase credits for reductions achieved at other plants across the country.

SO2 Allowance System

Rather than impose specific control requirements, the acid rain program establishes a phased-in "allowance system." SO2 emissions from a source are limited to an allowance level. An allowance is defined as the authorization to emit one ton of SO2. Generally, allowances will correspond to the two-phased emissions level requirements. The average fuel consumption rate for the years 1985 to 1987 was used to set the baseline.

Initially, each source is given a certain amount of pollution allowances associated with the baseline SO2 product of its units. The source owners can buy and sell allowances, provided they have enough each year to cover these emissions. The system allows for temporary fluctuations in emissions levels during a given year as long as the total tons of SO2 emitted during the year do not exceed the allowance level for the source. If the allowance is not met, the source is subject to a $2,000 per ton excess emissions fee and is required to offset the excess emissions in the following year.

If a source cannot meet its allowance level, it must acquire allowances from other sources that are able to reduce emissions rates below their allowance level. The allowances are a free market commodity that is regulated by the EPA. They can be used, sold, bought, banked, or traded. The CAAA also provides that the EPA will auction off allowances to small generators that may be unable to obtain allowances on their own. The system allows the nation to reach its goals by providing incentives for overcontrolling where possible, while allowing other sources to comply even if controlling emissions down to the required level is technically or economically unfeasible.

Control technologies for SO2, such as flue gas desul-furization (scrubbers), can be very expensive, often as much as one-quarter of the cost of a new plant. An alternative, however, is the conversion to lower sulfur fuels, including lower sulfur coal, lower sulfur fuel oils, and natural gas. Conversion from coal to lower sulfur oil can reduce emissions by more than one half. Conversion to natural gas reduces SO2 emissions to minuscule levels.

Since 1995, an additional 182 units opted into Phase I requirements as either substitution or compensating units, bringing the total participants to 445 units at 110 electric utility plants. The 445 units successfully met their compliance obligations for 1995. Emissions were reduced 39% below the allowable emissions level required by the CAAA. Nearly all Phase I units implemented the continuous emissions monitoring (CEM) and submitted CEM certification test results by the deadline.

NOx Requirements

In addition to requiring reductions in SO2 emissions, the acid deposition control program also establishes restrictions for emissions of NOX Originally, by 1992, the EPA was required to establish NOX emissions limits for tangentially-fired and dry bottom wall-fired boilers. The EPA was late in establishing these limits, however, and published its final rule in 1994. Phase I-affected facilities with wall- or tangentially-fired boilers had to reduce NOX emissions to 0.5 lbm/MMBtu or 0.45 lbm/ MMBtu, respectively, by January 1, 1996. In 1997, the EPA established emissions limits for the remaining types of utility boilers. All affected sources, including Phase II facilities, had to meet these additional standards by January 1, 2000.

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