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Status of Clean Air Interstate Rule Implementation and Rules to Replace CAIR

Status of Clean Air Interstate Rule Implementation and Rules to Replace CAIR. EPRI CEM User Group Conference St. Louis May 13, 2009 Beth Murray U.S. EPA Clean Air Markets Division. Presentation Outline. Overview of the rule Litigation summary Implementation timeline and status

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Status of Clean Air Interstate Rule Implementation and Rules to Replace CAIR

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  1. Status ofClean Air Interstate Rule Implementationand Rules to Replace CAIR EPRI CEM User Group Conference St. Louis May 13, 2009 Beth Murray U.S. EPA Clean Air Markets Division

  2. Presentation Outline • Overview of the rule • Litigation summary • Implementation timeline and status • Program reminders • Emission reductions • Replacement rule outreach

  3. CAIR Overview CAIR is in full operation and will remain in effect until a replacement is put in place • Finalized in 2005 and went into effect in 2006 • Affects 28 states + DC • Annual SO2 and NOx Phase Irequirements in place • Annual SO2 cap • Annual NOx cap • Summertime NOx Phase Irequirements in place • Ozone season NOx cap • Expect CAIR Phase II limits to be replaced by new rulemaking

  4. States controlled for fine particles (annual SO2 and NOx) States controlled for ozone (ozone season NOx) States controlled for both fine particles (annual SO2 and NOx) and ozone (ozone season NOx) States not covered by CAIR CAIR Region

  5. CAIR Challenged inUS Court of Appeals for the DC Circuit • July 11, 2008 – Court issues decision to vacate CAIR • Fall 2008 – Parties to the litigation submit requests for rehearing and other information including expected effects of a vacatur • December 23, 2008 – Court amends decision and remands CAIR without vacatur • Requires EPA to promulgate replacement rules to CAIR, consistent with the Court's July 11, 2008 ruling • Leaves CAIR in effect until replacement rules are promulgated

  6. CAIR Implementation Timeline CAIR NOx Programs Annual: 01/01/09 Ozone: 05/01/09 CAIR SO2 Program 01/01/10 SO2 Monitoring and Reporting Required (‘09) NOx Monitoring and Reporting Required (‘08) 08 09 10 11 CAIR Replacement NPR

  7. CAIR Implementation Status • Some states still cleaning up rules and SIPs • State flexibilities include: • NOx allocation methodology – annual and ozone season • Compliance Supplement Pool – annual NOx • Opt-ins • Non-EGUs from the NOx Budget Program

  8. State Flexibilities under CAIR • NOx allocation methodologies • About 1/3 use model rule approach • Remaining 2/3 chose their own approach • Compliance Supplement Pool • One time distribution • Issued as 2009 annual NOx allowances • 2 states chose not to distribute it • EPA administers it in 5 states • Expediting CSP allocation when possible

  9. State Flexibilities – continued • Opt-ins • 13 states allow opt-ins • 16 states chose not to include opt-ins • Expanding CAIR ozone applicability to non-EGUs • NBP sources only • 14 out of the 20 NBP states chose to do this

  10. Current State Plan Status SO2 ü SO2 ü ü ü ü ü ü NOx Map represents information as of 3/23/09.

  11. Source Response to CAIR • Sources have CAIR Designated Representatives • Facility accounts are established and allocations recorded • Sources are monitoring and reporting emissions • Some sources will earn CSP allowances for their NOx reduction efforts • Allowances for 2009 and 2010 have been recorded in most states • Post-2010 allowances have been recorded in many states • General concern regarding post-2010 trades • “Buyer beware” language posted on EPA web site

  12. CAIR NOx Programs – Reminders • NOx annual and ozone season programs are two separate and distinct trading programs • NBP ended with the 2008 ozone season • Banked NBP allowances were transferred into the CAIR NOx ozone season program • Allowance transfer deadlines for 2009 compliance • November 30, 2009 for ozone season • March 1, 2010 for annual

  13. CAIR SO2 Program – Reminders • CAIR SO2 allowance holding requirement begins in 2010 • Allowance transfer deadline for 2010 is March 1, 2011 • SO2 compliance uses existing Acid Rain allowances at higher than 1:1 ratios • 2010 – 2014 allowances are deducted at a 2 to 1 ratio

  14. Progress under Emissions Cap and Trade

  15. Annual SO2 Emission Levels forAcid Rain Program Sources, 1990-2008 2008 data are preliminary

  16. Annual NOx Emission Levels for Acid Rain Program Sources, 1995-2008 2008 data are preliminary

  17. Ozone Season NOX Emission Levels for NOX Budget Trading Program Sources, 1990-2008 2008 data are preliminary

  18. Outreach on Rules to Replace CAIR • Over the last two months, EPA staff have held extensive “listening sessions” with major stakeholders on the rules to replace CAIR National Association of Clean Air Agencies (NACAA) Lake Michigan Air Directors Consortium (LADCO) Ozone Transport Commission (OTC) Central States Air Resource Agencies (CENSARA) Southeastern States Air Resource Managers (SESARM) State of Texas Non-Governmental Organizations (environmental and health) Council of Industrial Boiler Owners (CIBO), American Forest Products Association, Automobile Alliance, American Chemistry Council and related industries Electric power industry and related industries and organizations

  19. Clean Air Markets www.epa.gov/airmarkets • Visit the Clean Air Markets web site to view: • Emissions data • Allowance transfers • Program rules and guidelines • Studies and reports

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