By Shane Robinson
February 18, 2002

Last year's efforts by Congress to pass a bill aimed at a market-based emissions trading approach to reducing air pollutants have continued into the current legislative session. At least five such bills have been introduced _ all deal with reductions of sulfur dioxide (SO2), nitrous oxides (NOx), and mercury from power plants.

All the bills would place a nationwide cap on the amount of each of these three pollutants that could be emitted from the electric utility sector. Permits to emit the pollution would then be distributed to utilities. As under the current SO2 permit trading program, utilities could then choose to reduce emissions, thereby generating excess permits that could be sold or traded to utilities who need more permits. The decision to buy or sell permits would be made by each individual pollution source, based on the most economical choice for that source.

This kind of "cap and trade" approach to pollution control has a broad base of support because the SO2 permit trading program has proved to be both cost-effective and effective in reducing pollution. Supporters of permit trading systems include environmental and public health advocates, utility and industry groups, as well as the American Public Power Association that represents municipal-owned electric utilities.

While the President has not yet released his proposal for a multi-pollutant bill, Jeff Holmstead, Assistant Administrator of EPA's Office of Air and Radiation, has indicated that emissions reductions which the Administration will call for would result in dramatic benefits to human health and the environment.

Emission reductions of the scale currently being discussed within the Administration would likely reduce the number of counties that would otherwise face new regulation under the new “8-hour ozone and particulate matter (PM2.5) standards that will be implemented over the next few years.

For example, even with the expected air quality improvements over the next twenty years from existing regulatory programs, EPA estimates that by the year 2020, as many as 117 counties in the Eastern U.S. would not attain the new PM2.5 standards and 42 counties in the East would not attain the 8-hour ozone standard. However, under a well-designed multi-pollutant bill, as few as 32 counties would be in PM2.5 non-attainment areas, with 27 counties in 8-hour ozone non-attainment areas.

These figures, based on EPA's best projections, show that multi-pollutant legislation may well be a key component of the nation's air program. In fact, EPA has suggested that a new permit trading system would be so effective that a number of current regulatory programs that affect power generation might no longer be needed and could be phased out. As examples, Administrator Holmstead cites the NOx SIP Call, Best Available Retrofit Technology (BART) requirements, mercury Maximum Achievable Control Technology (MACT) standards, and New Source Review (NSR) technology-based requirements for power plants.

Holmstead cautions, however, that a national emissions level cap on this one industrial sector is not a panacea for all state and local air quality concerns and that other emission reductions will be needed for some areas of the country. This is especially true for ozone, since automobiles are responsible for up to half of the NOx emissions in many cities that result in ozone formation.

Despite the broad base of support for a three-pollutant bill and the promise it holds for substantial improvements in public and environmental health, some groups want to include a fourth pollutant _ carbon dioxide (CO2). One such bill _ "The Clean Power Act" (S.556) _ introduced by Senator James Jeffords (VT), Chair of the Senate Environment and Public Works Committee, has received the most attention because it includes a mandated cap on CO2 emissions.

Because of this cap, the President has promised a veto of the bill as currently written, arguing that it would force a dramatic shift from coal to natural gas and thereby endanger national energy security and substantially raise energy prices.

This week, Senator Jeffords postponed markup of his bill as the result of discussions with Senator Joe Lieberman (CT) and notably Senators Bob Smith (NH) and George Voinovich (OH) who have voiced strong opposition to a CO2 cap. Committee staff are said to be working cooperatively on a proposal to refine the bill _ addressing NOx, SO2, mercury, and CO2 _ to be considered by the Committee before the Easter recess in late March.