Today, the U.S. Environmental Protection Agency (EPA) released proposed revisions to the federal implementation plans to reduce interstate transport of fine particular matter and ozone that will modify the implementation timeline for key provisions of the rule.
This proposed rule amends the assurance penalty provisions so they start in 2014, instead of 2012, to promote the development of allowance market liquidity as these revisions are finalized. This proposed change smoothes the transition from the preceding Clean Air Interstate Rule (CAIR) programs to the new Cross-State Air Pollution Rule (CSAPR) programs, which officially beings in 2012.
As a result, there will be no restrictions on how many allowances companies may purchase for compliance and no penalty allowances levied in the first two years of the program. Details on state budgets and new unit set asides are below.
If you have any questions regarding the new CSAPR emissions trading markets or wish to transact in these markets, please contact our Emissions Markets Team at: + 1 914.323.0255.
STATE BUDGETS AND NEW UNIT SET ASIDES – Revised allocations
While the below summary indicates significant changes in some state’s budgeted allowance allocations, the total change in allowances allocated across the individual pollutant programs is minimal:
SO2 Group 1: 0.2% increase
SO2 Group 2: 8.2% increase (entirely from revisions to TX)
Annual NOx: 1.3% increase
Seasonal NOx: 2.2% increase
Florida - These revisions would result in a 3% increase to Florida’s 2012 ozone-season NOX budget with corresponding revisions to assurance levels and new unit set-asides.
Louisiana – These revisions would result in a 31.5% increase to Louisiana’s ozone season NOx budget with corresponding revisions to assurance levels and new unit set-asides.
Michigan - This revision would result in an 8.7% increase to Michigan’s annual NOX budget with corresponding revisions to assurance levels and new unit set-asides. This revised assumption would also affect the calculation of Michigan’s potential ozone season NOX budget if that state is included in the CSAPR ozone season NOX program as proposed in the Supplemental Notice of Proposed Rulemaking. EPA will address this issue, along with other public comments submitted on that rule, when the Agency finalizes it later this year.
Mississippi – These revisions would result in a 21% increase to Mississippi’s ozone season NOx budget with corresponding revisions to assurance levels and new unit set-asides.
Nebraska - This revision would result in a 13.6% increase to Nebraska’s annual NOX budget with corresponding revisions to assurance levels and new unit set-asides.
New Jersey - This revision would result in a 37.6% increase to New Jersey’s annual SO2 budget, a 5.8% increase to the annual NOx budget, and a 17.5% increase to the ozone season NOx budget with corresponding revisions to assurance levels and new unit set-asides.
New York – These revisions would result in a 13% increase to New York’s annual SO2 budget, a 20% increase to the annual NOx budget, and a 23% increase to the ozone season NOx budget with corresponding revisions to assurance levels and new unit set-asides.
Texas - These revisions would result in a 29% increase to Texas’ SO2 budget with corresponding revisions to assurance levels and new unit set-asides. This revision would also result in a 2% increase to Texas’ ozone season NOx and a 1% increase to the annual NOx budgets with corresponding revisions to assurance levels and new unit set-asides.
Wisconsin - This revision would result in an increase to Wisconsin’s SO2 budget with corresponding revisions to assurance levels and new unit set-asides.
Other States - Finally, this action would recalculate the new unit set asides for Texas and Arkansas to include two planned facilities, assuring those new facilities of proper new unit allocations.
For a complete view of revised state assurance provisions, please view this LINK