Acid rain program

Scope

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 NO_x allowances, as well as seasonal NO_x allowances. At the end of each year or ozone season, the source must hold an allowance amount equal to its emissions for that period.

Regulatory citations

• 40 CFR 72 — Permits Regulations
• 40 CFR 73 — Sulfur Dioxide Allowance System
• 40 CFR 74 — Sulfur Dioxide Opt-Ins
• 40 CFR 75 — Continuous Emission Monitoring
• 40 CFR 76 — Acid Rain Nitrogen Oxides Emission Reduction Program
• 40 CFR 77 — Excess Emissions
• 40 CFR 78 — Appeal Procedures

Key definitions

• Acid rain: Any form of precipitation with acidic components, such as sulfuric or nitric acid that fall to the ground in wet or dry forms.
• New unit: A unit that commences commercial operation on or after November 15, 1990, including any such unit that serves a generator with a capacity of 25 megawatts or less or that is a simple combustion turbine.

Summary of requirements

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 NO_x program represents most of the same principles of the SO₂ trading program. But it differs in that it does NOT cap NO_x emissions like the SO₂ program does. It also uses an allowance trading system.

Affected sources must do the following:

• Install systems that nonstop monitor emissions of SO₂, NO_x, and other associated pollutants to track progress and ensure compliance.
  • Most of the time, a continuous emission monitoring (CEM) system must be used.
• Report hourly emissions data to EPA on a quarterly basis.
  • Usually, power plant operators track this information and report it.
  • This data is recorded in the Emissions Tracking System.

Most units affected by the Acid Rain Program comply with the emission reduction requirements by:

• Using or blending low-sulfur coal,
• Installing SO₂ and NO_x controls such as scrubbers and low-NO_x burners, or
• Purchasing allowances from the market or using banked allowances.