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Acid Rain - Politics Of Acid Rain

emissions sulfur dioxide allowances

The early acid rain debate centered almost exclusively on the eastern portion of the United States and Canada. The controversy was often defined as a problem of property rights. The highly valued production of electricity in coal-fired utilities in the Ohio River Valley caused acid rain to fall on land in the Northeast and Canada. An important part of the acid rain controversy in the 1980s was the adversarial relationship between the U.S. and Canadian federal governments over emission controls of sulfur dioxide and nitrogen oxides. More of these pollutants crossed the border into Canada than the reverse. Canadian officials very quickly came to a consensus over the need for more stringent controls, while this consensus was lacking in the United States.

Throughout the 1980s, the major lawsuits involving acid rain all came from eastern states. States that passed their own acid rain legislation were also from the eastern part of the United States. There has been a clear difference in the intensity of interest between the eastern and western states regarding acid rain.

Legislative History

The U.S. Congress passed the first federal legislation aimed at reducing air pollution in 1967 (Air Quality Act of 1967). In 1970 the Environmental Protection Agency was founded and the Clean Air Act was passed. This law mandated the EPA to identify and set standards for pollutants identified as harmful to human health. The six pollutants identified and labeled "criteria" pollutants were:

  • Sulfur dioxide
  • Nitrogen dioxide
  • Carbon monoxide
  • Particulate matter less than or equal in size to ten micrometers
  • Lead
  • Ozone

Sulfur dioxide and nitrogen dioxide are the biggest contributors in the production of acid deposition.

In 1975 the First International Symposium on Acid Precipitation and the Forest Ecosystem convened in Columbus, Ohio, to define the acid rain problem. The FIGURE 9.4
Effects of acid rain on statues and monuments SOURCE: Acid Rain and Transported Air Pollutants: Implications for Public Policy, U.S. Congress, Office of Technology Assessment, 1984
scientists who took part in the symposium used the meeting to propose a precipitation monitoring network in the United States to cooperate with the European and Scandinavian networks and to set up protocols for collecting and testing precipitation.

In 1977 President Jimmy Carter's Council of Environmental Quality was asked to develop a national acid rain research program. Several scientists drafted a report that eventually became the basis for the National Acid Precipitation Assessment Program (NAPAP). Carter's initiative eventually translated into legislative action with the passage of the Energy Security Act (PL 96–264) in June 1980. Title VII of the Act (the Acid Precipitation Act of 1980) created the NAPAP and authorized federally financed support.

The Clean Air Act was amended in 1977. New legislation was added to address the problem of older fossil-fuel electric power producers that were not covered in the original law. The new program was called the New Source Review, under which these older plants would be required to undergo an EPA assessment if they chose to make changes to their operations. The EPA review would determine whether the planned changes would result in significantly higher emissions rates and, if so, these plants would be required to install pollution control technologies that brought them up to the new standards.

The first international treaty aimed at limiting air pollution was the United Nations Economic Commission for Europe (UNECE) Convention on Long-Range Trans-boundary Air Pollution, which went into effect in 1983. It was ratified by thirty-eight of the fifty-four UNECE member states, which included not only European countries but also Canada and the United States. The treaty targeted sulfur emissions, requiring that the parties reduce emissions 30% from 1980 levels, the so-called 30% club.

In 1990 the Clean Air Act was amended for a second time, and provisions designed specifically for reducing acid deposition were a significant part of the amendments passed.

Acid Rain Program—1990 Clean Air Act Amendments,
Title IV

Title IV of the 1990 Clean Air Act Amendments (PL 101–549) set as its objective achieving a ten-million-ton annual reduction in emissions from 1980 levels by the year 2010. Traditionally, environmental regulation has been achieved by the "command and control" approach, in which the regulator specifies how to reduce pollution, by what amounts, and what technology to use. Title IV, however, gave utilities flexibility in choosing how to achieve these reductions. For example, utilities may reduce emissions by switching to low-sulfur coal, installing pollution control devices called scrubbers, or shutting down plants.


Title IV introduced a new regulatory approach to reduce acid rain—allowing electric utilities to trade allowances to emit sulfur dioxide. Utilities that reduce their emissions below the required levels can sell their extra allowances to other utilities to help them meet their requirements. Because in 1990 electric utilities were the source of 70% of sulfur dioxide emissions and 30% of nitrogen oxide emissions, the Act targeted emissions from electric utilities. Of the desired ten-million-ton reduction in sulfur dioxide, 8.5 million tons is to come from the nation's major source, electric utilities.

The emissions reduction was implemented in two phases. In Phase I, the 263 units at 110 utility plants in twenty-one states with the highest levels of emissions were mandated to reduce their annual emissions by 3.5 million tons beginning January 1995. An additional 182 units joined Phase I voluntarily, bringing the total of Phase I units to 445. Phase II, which began January 1, 2000, affected 2,000 more units in all forty-eight contiguous states and the District of Columbia. Figure 9.5 shows the location of the highest-emitting plants in Phase I and the approximately 2,000 cleaner and smaller units throughout the nation that became involved in Phase II.


Title IV allows companies to buy, sell, trade, and bank sulfur dioxide pollution rights. Utility units are allocated allowances based on their historic fuel consumption and a specific emissions rate. Each allowance permits a unit to emit one ton of sulfur dioxide during or after a specific year. For each ton of sulfur dioxide discharged in a given year, one allowance is retired and can no longer be used. Companies that pollute less than the set standards will have allowances left over (banked allowances). They can then sell the difference to companies that pollute more than they are allowed, bringing them into compliance with overall standards. Companies that can clean up their pollution less expensively by changing fuel or persuading their customers to conserve energy would recover some of their costs by selling their pollution rights to other companies. The EPA holds an allowance auction each year. The sale offers allowances at a fixed price. This use of market-based incentives by Title IV is regarded by many as a major new method for controlling pollution.

Utilities also took advantage of their flexibility under Title IV to choose less costly ways to reduce emissions, such as switching from high- to low-sulfur coal, and are achieving sizable reductions in their sulfur dioxide emissions. More than half of Phase I plants opted to switch to low-sulfur coal, and 16% chose to install scrubbers. Air scrubbers are treatment devices placed on the exhaust or smoke stack and used to reduce the particulate matter and other contaminants in plant emissions. Only 3% of plants initially planned to purchase allowances. Not surprisingly, the market for low-sulfur coal is growing as a result of Title IV, and the market for high-sulfur coal is decreasing.

From 1995 to 1998, however, there was considerable buying and selling of allowances among utilities. Because the utilities that participated in Phase I reduced their sulfur emissions more than the minimum required, they did not use as many allowances as they were allocated for the first four years of the program. Those unused allowances could be used to offset sulfur dioxide emissions in future years. According to figures published by the EPA in the Acid Rain Program, 2003 Progress Report (September 2004), a total of 9.5 million allowances were granted nationally for the year. To this was added the large stockpile of banked allowances carried over from prior years, making the total allowance stockpile available for 2003 19.93 million tons.

In 2003 utility sources emitted 10.6 million tons of sulfur dioxide, about a million tons more than the allowances granted in 2003 but far fewer than were in the pool of allowances available since that pool includes all the stockpiled allowances from prior years. Over time the bank of allowances is expected to be depleted further as plants use stockpiled allowances to comply with the more stringent emissions requirement of Phase II.


Title IV of the Clean Air Act Amendments (PL 101–549) maintained the traditional environmental "command and control by regulation" approach for nitrogen oxides. Under this approach, the EPA specifies how the pollution will be reduced, by what amounts, and what technology to use. The nitrogen oxides FIGURE 9.5
Geographic distribution of utility plants under Phases 1 and 2 of the Acid Rain Program's emissions reduction effort
SOURCE: Air Pollution: Allowance Trading Offers an Opportunity to Reduce Emissions at Less Cost, U.S. General Accounting Office, December 1994
program establishes standard emissions limitations (the amount that can be discharged) for the affected units.

To encourage industry to reduce nitrogen oxides emissions before the required January 2000 date, the EPA adopted regulations in April 1995 that provided an incentive. The EPA allowed Phase II, Group I nitrogen oxides affected units, which would not have been subject to nitrogen oxide emission limits until January 2000, to use an "early election" compliance option. Under this provision, these Phase II, Group I units can demonstrate compliance with the higher Phase I limits for their boiler type from 1997 through 2007 and postpone having to meet the more stringent Phase II limits until 2008. There is one catch, however. If the utility fails to meet the annual Phase I limit for the boiler in any year, the unit is subject to the more stringent Phase II limit for Group I boilers beginning in 2000, or the year following the exceedance, whichever is later.

Clear Skies Act

On February 27, 2003, new legislation was introduced to the U.S. House of Representatives (HR 999) and the U.S. Senate (S 485), entitled the Clear Skies Act of 2003. This legislation would amend the Clean Air Act and create a mandatory program that would reduce power plant emissions of sulfur dioxide, nitrogen oxides, and mercury by setting national caps on each pollutant. The stated pollution caps are as follows:

  • Cut emissions of sulfur dioxide by 73%, reducing the emissions experienced in 2000 (eleven million tons) to a cap of three million tons in 2018.
  • Reduce nitrogen oxide emissions by 67%, reducing the 2000 emissions of five million tons to a cap of 1.7 million tons in 2018.
  • Cut mercury emissions by 69%, reducing the forty-eight tons emitted in 1999 to a cap of fifteen tons in 2018.

Environmental groups such as the Sierra Club, however, argued that the Clear Skies Act was essentially written by the energy industry, was riddled with loopholes for big polluters, and would actually weaken existing pollution rules. The Clear Skies Act of 2003 stalled in Congress. It was reintroduced in January 2005, and, as of that spring, appeared to have died in the Senate Environment and Public Works Committee.

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