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The Acid Rain Program (ARP), under Clean Air Act Title IV - Acid Deposition Control, requires major emission reductions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from the power sector.
The Program affects fossil fuel-fired power plants. Under ARP, the Environmental Protection Agency (EPA) sets a cap on total emissions. EPA allocates allowances based on a rate of SO2 emissions and a baseline fuel consumption. An allowance permits a utility or industrial source to emit one ton of emissions during a certain compliance period. Allowances are entirely marketable commodities. SO2 allowances are allocated to affected units serving generators over 25 megawatts. There are annual SO2 and NOx allowances, as well as seasonal NOx allowances. At the end of each year or ozone season, the source must hold an allowance amount equal to its emissions for that period.
Aside from the federal program, EPA accepts state acid rain programs as well. They can be stricter, but they must at least meet outlined federal requirements. Check with your state for emissions limits and any applicable acid rain program.
Sources may choose different ways to reduce emissions. They can sell or save excess allowances if they decrease emissions and have more than needed or buy allowances if they cannot keep emissions under their allocated level. Allowances can be bought straight from a company, individual, or group who holds them, or through a broker. Under ARP, SO2 can be purchased at the annual EPA Acid Rain Program SO2 Allowance Auction. Auction allowances are sold to the highest bidder until there are no more allowances left. Successful bidders are notified and listed on EPA’s website. The allowances are traded and sold nationwide just like stocks.
The NOx program represents most of the same principles of the SO2 trading program. But it differs in that it does NOT cap NOx emissions like the SO2 program does. It also uses an allowance trading system.
Affected sources must do the following:
Most units affected by the Acid Rain Program comply with the emission reduction requirements by: