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Regional Clean Air Incentives Market (RECLAIM)
EPA Announces Results of Annual Sulfur Dioxide Auction
Contact: Dave Ryan, 202-564-7827 / ryan.dave@epa.gov
EPA today announced the results of the 13th annual acid rain allowance auction held yesterday at the Chicago Board of Trade. The annual auction, which gives private citizens, brokers and power plants an opportunity to buy and sell sulfur dioxide (SO2) allowances, is part of EPA's cap and trade program to reduce acid rain. One of the goals of the Acid Rain Program is to cap SO2 emissions from coal-burning power plants at 8.95 million tons starting in 2010.
An EPA progress report released last September on the cap and trade program shows SO2 emissions from electric power generation in 2003 are down by close to seven million tons from 1980 levels.
A national emissions cap, combined with SO2 allowance trading, has been effective both in terms of cost reduction and human health and environmental benefits since it began in 1995. Current estimates
indicate compliance costs about 75 percent below those originally predicted by EPA. Emissions are already more than five million tons below 1990 levels, and acid deposition in the eastern United States has declined by 30 percent or more in certain areas, resulting in improvements in lakes and streams.
The Clean Air Act established an annual national cap on SO2 emissions. Each year, EPA issues allowances to existing sources within that cap. In addition, the Clean Air Act mandates that a limited number of those allowances are withheld and auctioned. The auctions help ensure that new electric generating plants have a source of allowances beyond those allocated initially to existing units. Proceeds from the auctions are returned to sources in proportion to the allowances withheld. In
addition to allowances offered by EPA, private parties may offer allowances for sale in the auction.
EPA emphasizes that no matter how many allowances a source purchases, it cannot emit SO2 at a level that would violate the health-based national ambient air quality standard.
Detailed results of this year's acid rain auction and information about how the trading program works are available on EPA's Web site: http://www.epa.gov/airmarkets/auctions . Preliminary data for 2004
reveal emission levels lower than the previous year. http://www.epa.gov/airmarkets/cmprpt/index.html
For further technical information, call Kenon Smith of EPA's Clean Air Markets Division at 202-343-9164.
Results of 2004 S02 Allowance Auction
Private citizens, brokers and power plants bought and sold 250,011 tons of sulfur dioxide (SO2) at the 12th annual acid rain allowance auction on March 22 at the Chicago Board of Trade. An EPA progress report on the Acid Rain Program released in November 2003 details the emissions reductions resulting from the program http://www.epa.gov/airmarkets/cmprpt/index.html.
Each "allowance" is the equivalent of one ton of acid rain-causing SO2, which is emitted from power plants. EPA's Acid Rain Program uses a market-driven cap-and-trade system to cut SO2 emissions from power plants. SO2 emissions from electric power generation continue to decline, down by more than 7 million tons since 1980, improving human and environmental health, earlier, and at less cost, than would have occurred with more conventional approaches.
The auction, conducted by the Chicago Board of Trade, includes two "vintages" of allowances. Vintage describes the earliest year an allowance may be applied against SO2 emissions. In addition to year 2004 allowances, the Clean Air Act mandated that EPA auction additional allowances seven years in advance to help provide stability in planning for capital investment. These advance allowances will be usable in 2011.
Summary Results of the 2004 SO2 Allowance Auction: http://www.epa.gov/airmarkets/auctions.
EPA has been working with the Chicago Board of Trade, as well as the power industry and brokers and traders, since the program's inception. The result is a viable SO2 allowance market and a demonstration that a mandatory emissions cap along with emissions trading can improve the environment at a lower cost than traditional control approaches. Detailed results of this year's acid rain auction and information about how the trading program works are available on EPA's Web site: http://www.epa.gov/airmarkets/auctions
A national emissions cap, combined with SO2 allowance trading, has been effective both in terms of cost reduction and human health and environmental benefits since the program began in 1995. Current estimates indicate compliance costs 75 percent below those originally predicted by EPA. Acid deposition in the eastern United States has declined by approximately 30 percent, and many lakes and streams are showing signs of recovery.
The Clean Air Act established an annual national cap on SO2 emissions. Power plants hold annual allowances that they can use to cover SO2 emissions up to the cap level. In addition, the Clean Air Act mandates that a limited number of those allowances are withheld and auctioned. The auctions help ensure that new electric generating plants have a source of allowances beyond those allocated initially to existing units.
Using Capitalism to Reduce Emissions Will Unleash American Ingenuity
EPA's Power Profiler
Is a powerful new online resource to help consumers understand the environmental impacts of their electricity use. Many individuals and businesses want to know what's in the electricity they consume. What emissions are produced when they turn on an appliance, and what fuels are burned? Accurate information on environmental impacts of electricity use can be hard to find. With a few clicks of a mouse, EPA's new Power Profiler will provide the answers, for any electricity consumer in the U.S.
Besides providing emission rates and resource mix for each region of the US power grid, Power Profiler will calculate how many pounds of air pollutants and greenhouse gases an individual consumer's electricity consumption is responsible for. Power Profiler can also translate emissions impacts into commonly understood concepts such as trees planted or numbers of cars on the road.
Power Profiler is designed both for businesses and individuals who want to know about their own "environmental footprint" and what they can do to reduce the environmental impact of their electricity consumption. Power Profiler provides several options for calculating the annual emissions associated with a consumer's electricity use.
All that is needed to calculate an emissions profile for an individual consumer is their zip code and the identity of the distribution utility that delivers their electricity (selected from a pull-down menu). The user-friendly application guides the user through a few simple questions and gives them several options for reporting results.
Power Profiler divides the U.S. into 27 distinct regions of the power grid, each with different emissions and fuel mix characteristics. When the user provides consumption data (through any of several options), Power Profiler will calculate their annual pounds of emissions for sulfur dioxide, nitrogen oxides, and carbon dioxide.
This edition of Power Profiler is based on 1998 data from EPA's eGRID database. EPA welcomes feedback on the content and functionality of Power Profiler via comments to: dew.wendy@epa.gov.
Power Profiler can be accessed on the following website:
www.epa.gov/cleanenergy/powerprofiler
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Meeting The Kyoto Protocol Commitments: Summary-Domestic Emissions Trading Schemes, January 2001
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