EPA Rule Limits Cap-and-Trade Markets
JULY 16, 2010
The U.S. Environmental Protection Agency (EPA) proposed new regulations last week that would impose tougher limits on power plant emissions of smog- and acid rain-forming sulfur dioxide (SO2) and nitrogen oxides (NOx). The revamped rules would rely less on emissions trading across state lines, striking a blow to the cap-and-trade system currently in place.
The proposed “Transport Rule” would require 31 states and the District of Columbia to reduce “transported” emissions, which can travel long distances over state lines. The new rule seeks to replace and improve the 2005 Clean Air Interstate Rule (CAIR)—the U.S. Court of Appeals for the D.C. Circuit ordered EPA to revise CAIR in July 2008, citing conflicts with existing Clean Air Act regulations.
EPA anticipates power plants can meet new reduction requirements by operating currently installed scrubbers, investing in more control equipment or using low-sulfur coal. The annual cost of compliance would reach $2.8 billion in 2014, according to EPA estimates. Emissions trading would be allowed within an individual state but limited between multiple states.
Tags: cap and trade, Chicago Climate Exhange, Clean Air Act, Cooperative Finance Corporation, EPA