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EPA Announces Results of Annual Sulfur Dioxide Auction

Release Date: 03/29/2005
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Following is an Agency development which may interest you. If you need more information on this subject, call the appropriate contact.

Contact: Dave Ryan, 202-564-7827 / ryan.dave@epa.gov

(03/29/05) EPA today announced the results of the 13th annual acid rain allowance auction held yesterday at the Chicago Board of Trade. The annual auction, which gives private citizens, brokers and power plants an opportunity to buy and sell sulfur dioxide (SO2) allowances, is part of EPA's cap and trade program to reduce acid rain. One of the goals of the Acid Rain Program is to cap SO2 emissions from coal-burning power plants at 8.95 million tons starting in 2010.

An EPA progress report released last September on the cap and trade program shows SO2 emissions from electric power generation in 2003 are down by close to seven million tons from 1980 levels.

A national emissions cap, combined with SO2 allowance trading, has been effective both in terms of cost reduction and human health and environmental benefits since it began in 1995. Current estimates indicate compliance costs about 75 percent below those originally predicted by EPA. Emissions are already more than five million tons below 1990 levels, and acid deposition in the eastern United States has declined by 30 percent or more in certain areas, resulting in improvements in lakes and streams.

The Clean Air Act established an annual national cap on SO2 emissions. Each year, EPA issues allowances to existing sources within that cap. In addition, the Clean Air Act mandates that a limited number of those allowances are withheld and auctioned. The auctions help ensure that new electric generating plants have a source of allowances beyond those allocated initially to existing units. Proceeds from the auctions are returned to sources in proportion to the allowances withheld. In addition to allowances offered by EPA, private parties may offer allowances for sale in the auction.

EPA emphasizes that no matter how many allowances a source purchases, it cannot emit SO2 at a level that would violate the health-based national ambient air quality standard.

Detailed results of this year's acid rain auction and information about how the trading program works are available on EPA's Web site: http://www.epa.gov/airmarkets/auctions . Preliminary data for 2004 reveal emission levels lower than the previous year.
(http://www.epa.gov/airmarkets/cmprpt/index.html)

For further technical information, call Kenon Smith of EPA's Clean Air Markets Division at 202-343-9164.