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THE CLEAN AIR INVESTMENT FUND

THE CLEAN AIR INVESTMENT FUND. BACKGROUND & KEY FEATURES. REGULATORY FOUNDATIONS. Implementation plan accompanying July 1997 presidential directive on implementing new NAAQS Chapter 9, Economic Incentive Program Guidance, January 2001. BASIC RATIONALE.

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THE CLEAN AIR INVESTMENT FUND

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  1. THE CLEAN AIR INVESTMENT FUND BACKGROUND & KEY FEATURES

  2. REGULATORY FOUNDATIONS • Implementation plan accompanying July 1997 presidential directive on implementing new NAAQS • Chapter 9, Economic Incentive Program Guidance, January 2001

  3. BASIC RATIONALE • An additional air quality management tool to address high control costs based on “polluter pays” principle • Can assist in shifting emissions reduction burden to lower-cost sectors, especially where trading may not be feasible • May be used to invest in innovative technologies and programs • May also address distributional inequities by helping target reductions

  4. PRIMARY APPROACH:COST RELIEF VALVE • State sets cost threshold for an emissions standard • Regulated sources pay into fund in lieu of incremental reductions that exceed control cost threshold • Fund administrator invests in emissions reduction projects at lower-cost, possibly unregulated, sources

  5. IMPORTANT GUIDANCE ELEMENTS • COST THRESHOLD: • Requires analysis of potential contributing and compensating sources • Provides examples and options for threshold-setting methodology • ASSURANCES • Provides examples and options for covering any potential “gap” in compensating reductions

  6. IMPORTANT GUIDANCE ELEMENTS (cont.) • REQUIRED PROVISIONS • Reductions must meet fundamental integrity elements • Design must include an automatic suspension mechanism • Design must demonstrate environmental benefit • Design should include restrictions on use of AELs

  7. KEY FINDINGS: NEW HAMPSHIRE “TEST” • Provides regulated sources with increased cost certainty • Extremely flexible re: emissions reduction standards, and size, number of targeted sources • Can help state or locality meet an emissions reduction goal at notably lower costs than traditional regulation

  8. SIMILARLY STRUCTURED PROGRAMS • Air Quality Investment Program (California South Coast AQMD) • NOx Emission Reduction Fund (New Hampshire) • The Climate Trust (Oregon)

  9. AN INVITATION • EPA assistance available to any state interested in developing a clean air investment fund • Contact: Brian Cook Department of Government, Clark University (508) 793-7360 bcook@clarku.edu

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