Chapter 12

Improving Air Quality: Controlling Stationary Sources

2004 Thomson Learning/South-Western

Controlling Stationary Sources

Stationary sources contribute to the emissions levels of all the criteria pollutants; this group includes:
Electric power plants Chemical plants Steel mills Residential furnaces

Regulated by technology-based standards

Controlling Stationary Sources

Figure 12.1 National Emissions Estimates for Stationary Sources by Major Category, 1999

Controlling Stationary Sources

Age-Specific Control Differences: New Versus Existing Sources
Defining technology-based emissions limits New source performance standards (NSPS) technology-based emissions limits established for new stationary sources Dual-control approach
New or modified stationary source a source for which construction or modification follows the publication of regulations Existing stationary source a source already present when regulations are published
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Controlling Stationary Sources

Bubble policy allows a plant to measure its emissions as an average of all emission points emanating from that plant Emissions banking allows a source to accumulate emission reduction credits if it reduces emissions more than required by law and to deposit these through a banking program

Controlling Stationary Sources

Location-Specific Control Differences: PSD Versus Nonattainment Areas
Defining Emissions Limits in PSD Areas Best available control technology (BACT) a new source has to meet a standard that aligns with the maximum degree of pollution reduction available
Emissions trading in PSD areas Netting developed for PSD areas to allow emissions trading among points within a source for the same type of pollutant, such that any emissions increase due to a modification is matched by a reduction from another point within that some source
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Controlling Stationary Sources

Emissions Trading in Nonattainment Areas Offset plan developed for nonattainment areas to allow emissions trading between new or modified sources and existing facilities such that releases from the new or modified source are more than countered by reductions achieved by existing sources
To facilitate the plan, an emissions bank of accumulated emission reduction credits was set up where facilities could deposit and access offsets as needed

Controlling Stationary Sources

Sorting It Out Emissions limits for PSD areas are more stringent than in Nonattainment Areas Limits for New Sources are more stringent than those for Existing Sources within both types of areas

Controlling Acidic Deposition

Regional pollution problem source of the contamination is often hundreds of miles from where the detrimental effects are felt

Controlling Acidic Deposition

The Problem of Acidic Deposition
Acidic deposition arises when sulfuric and nitric acids mix with other airborne particles and fall to the earth as dry or wet deposits

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Controlling Acidic Deposition

The Policy Response: Title IV of the 1990 Amendments
SO2 Emissions Allowance Program Tradeable SO2 emission allowances permits issued to stationary sources, each allowing the release of one ton of SO2 which can be either held or sold through a transfer program

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Economic Analysis of Stationary Source Controls

Relative Cost of Using Command-andControl Instruments
The lack of flexibility in a standards-based approach adds significantly to societys costs and offers no incentive to low-cost abaters to clean up beyond the statutory level In most instances society should realize important cost savings from a shift to more flexible policy instruments with no reduction in air quality benefits

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Economic Analysis of Stationary Source Controls

Uniform Technology-Based NSPS
Two potential problems with the new source performance standards (NSPS) Implemented uniformly Technology-based standards

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Economic Analysis of Stationary Source Controls

Figure 12.2 Cost-Ineffectiveness of the Uniform New Source Performance Standard

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Economic Analysis of Stationary Source Controls

Figure 12.3 Analysis of the NSPS in the 1977 Clean Air Act Amendments According to Perl and Dunbar (1982)

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Economic Analysis of Stationary Source Controls

The Dual-Control Approach and the New Source Bias
Dual-control approach gives states more direct supervision over those firms on which their economies have come to depend Can generate market distortions

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Economic Analysis of Stationary Source Controls

Economics of Market-Based Trading Programs
Analysis of Emissions Trading Ultimately, all sources will control pollution to the point where the marginal abatement cost of doing so is equal across firms a cost effective solution

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Economic Analysis of Stationary Source Controls

Figure 12.4 Analyzing the Dual-Control Approach and the New Source Bias: Marginal Abatement Cost Levels for New Versus Existing Sources

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Economic Analysis of Stationary Source Controls

Analysis of the 1990 SO2 allowance trading plan Firms with excess allowances become suppliers in the market Firms unable to match their emissions level to their number of held allowances become demanders On net, buyers and sellers will trade for allowances, and emissions levels should reach the level where MACs are equal across firms

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Economic Analysis of Stationary Source Controls

Figure 12.5 Cost-Effectiveness of the SO2 Allowance Trading Plan

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Economic Analysis of Stationary Source Controls

Figure 12.6 Comparison of Intrautility and Interutility SO2 Allowance Trades through 2001

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