"
APPLES
FOR
ORANGES"
(
AFO)

Version
2:
THE
FOUNDATION
of
CAP
&
EARN
OPEN
MARKET,
INTERPOLLUTANT
EMISSIONS
CREDITS
TRADING
Proposed
by
Robert
C.
Dalton.
Environmental
Marketplace
Consultant
And
Vice
President
of
Business
Development
and
Government
Affairs
ESTEC
Enterprises,
Inc.

November
10,
2002
In
South
Carolina
In
New
Jersey
P.
O.
Box
1212
455
Ocean
Blvd.
#
27
Clemson,
SC
29633
Long
Branch,
NJ
07740
Contact
by
e­
mail:
rcd2001@
earthlink.
net
Contact
by
Cell
Phone:

1­
732­
222­
4149
­
i
­

i
Forward
Between
45,000
and
75,000
local
smokestacks
of
manufacturers
in
local
communities
nationwide
can
have
their
ozone
precursor
and
hazardous
air
pollutant
emissions
reduced
by
over
90%
with
a
Cap
&

Earn
emissions
credits
trading
program
that
is
based
upon
this
"
Apples
for
Oranges"
(
AFO)
proposal.

An
open
market,
interpollutant
emissions
credits
trading
program
with
an
emissions
cap
such
as
Apples
for
Oranges
or
Cap
&
Earn
would
use
the
market
value
of
the
multipollutant
emissions
from
coal­
fired
power
plants
to
reduce
emissions
of
ozone
precursors
and
hazardous
air
pollutants
from
local
manufacturing
plants
prior
to
or
in
conjunction
with
reducing
multipollutant
emissions
from
the
older
coal­
fired
power
plants.
The
amount
of
manufacturing
facilities
that
can
have
their
ozone
precursor
emissions
reduced
by
90%
under
an
open
market,
interpollutant
emissions
credits
trading
program
is
staggering.
In
South
Carolina
alone,
the
market
value
for
the
nitrogen
oxide
(
NOx)
emissions
from
these
older
coal­
fired
power
plants
can
reduce
90%
of
the
ozone
precursor
and
hazardous
air
pollutant
emissions
from
over
3000
smokestacks
of
manufacturers
in
local
communities.

The
best
incentive
for
incresing
air
quality
is
to
allow
for
power
companies
to
competitively
increase
market
share
with
an
environmental
agenda.

The
incentive
is
the
electricity
marketplace.
The
current
market
for
electric
power
generation
is
between
$
200
billion
and
$
300
billion
per
year.
One
percent
(
1%)
of
market
share
has
a
value
of
$
2
billion
to
$
3
billion
dollars.
The
value
of
1%
market
share
of
the
electric
power
marketplace
is
almost
greater
than
the
entire
annual
pollution
control
marketplace
for
air
emissions
from
non­
power
plants
sources.
This
large
dollar
value
should
provide
electrical
utilities
enough
incentive
to
aggressively
reduce
their
customers'
emissions
of
ozone
precursors
and
hazardous
air
pollutants,
creating
a
greater
reduction
in
ozone­
forming
emissions
nationwide
and,
most
importantly,
in
local
communities.
The
entire
dollar
value
to
deliver
electricity
in
the
electric
utility
marketplace
is
greater.
The
entire
marketplace
­
ii
­

ii
not
only
includes
power
costs,
but
transmission
and
distribution
costs
also.
The
entire
electric
utility
marketplace
is
much
greater
than
$
500
billion
dollars.

The
Apples
for
Oranges
proposal
is
the
foundation
for
a
Cap
&
Earn
open
market,
interpollutant
emissions
credits
trading
program
with
an
emissions
cap.
Essentially,
Apples
for
Oranges
(
AFO)
is
an
emissions
credits
trading
program
that
calls
for
State
and
Federal
governments
to
allow
trade
between
ozone
precursors
emissions,
volatile
organic
compounds
(
VOC's)
and
nitrogen
oxides
(
NOx).
AFO
is
an
interpollutant
emission
trading
program.
Also,
the
proposal
includes
trading
of
hazardous
air
pollutants
(
HAP's)
and
sulfur
dioxide
emisions.
In
the
proposal,
emissions
trading
focuses
on
local
air
quality
and
the
reduction
of
ozone
precursors
that
are
consider
"
hot
spots"
due
to
emission
of
HAP's.

Cap
&
Earn's
and
AFO's
interpollutant
trading
program
is
unique.
Interpollutant
trading
is
a
profound
change
to
the
Nation's
current
emission
credits
trading
programs.
Cap
&
Earn
and
AFO
would
allow
for
a
true
free
market
of
emission
credits
trading
that
is
based
upon
greed.
The
greed
of
power
companies
that
desires
more
profits
from
increased
market
share.

This
proposal
is
written
for
a
wide
audience.
The
proposal
is
intented
to
educate
the
new
comer
to
emission
credits
trading
and
provide
details
on
key
issues
that
would
effect
the
success
of
emissions
credits
trading
programs
for
experts
and
regulators.

The
concept
behind
"
Apples
for
Oranges"
and
Cap
&
Earn
has
been
said
to
have
merit
by
one
the
leading
experts
in
emissions
credits
trading,
and
currently,
the
USEPA
is
studying
their
own
version
of
"
Apples
for
Oranges"
emission
credits
trading
for
trading
diesel
particulate
emissions
reduction
(
emission
credits)
for
NOx
emissions.
It
appears
that
the
"
Apples
for
Orange"
concept
is
ready
to
unleash
free
enterprise
to
improve
our
nation
air
quality.

The
author
of
this
"
Apples
for
Oranges"
proposal
has
spent
over
10
relentless
years
studying
and
observing
deregulation
of
electricity,
emission
credits
trading
and
environmental
laws
and
regulations.
­
iii
­

iii
Table
of
Contents
Chapter
Page
1
Definitions
..................................................................................... ........................................
1
2.
Background............................................................................... .............................................
2
3.
In­
Step
with
the
Concerns
of
the
the
Local
Community............................... ....................  
5
4
AFO
Helps
to
Stop
the
Spread
of
Ozone
Precursors
  ..
              ..
9
A.
Smokestack
Height........                .............................. 
11
B.
Dilution
Methods
with
Fans
and
Blowers.......................................
...........     .
12
C.
"
Skipping
to
the
Next
County"........................................................
............... ....... 
13
D.
Expansion
by
Duplicating
Facilities
                    .
15
5.
The
Best
Incentive
to
Reduce
Emisisons
and
Increase
Air
Qualilty.............................  .. ...
17
6.
An
Estimated
45,000
to
75,000
Smokestacks
Can
be
Cleaned
(
based
upon
USPIRG
Data).... 
21
1.
Real
Life
Scenarios:
Interpollutant
vs.
Intrapollutant
Emission
Credits
Trading
 .......  ....
26
A
THE
CITY
AND
DIESEL
PARTICULATE
An
Urban
Approach
to
Better
Air
Quality
                  ......
28
B
THE
POWER
OF
A
LARGE
CONSUMER
­
A
CUSTOMER
APPROACH
        .
29
A
Tire
Manufacturer
in
South
Carolina
C.
CREATING
JOBS
IN
AN
ECONOMICALLY
DEPRESSED
REGION
........................    
30
Camden,
NJ
Needs
Industry.
D.
PREVENTING
A
LOSS
OF
JOBS
­
A
COMMUNITY
EFFORT
...................................    
32
Boat
Manufacturers
and
Other
Manufacturing
Facilities,
Atlantic
County,
NJ
E.
THE
POWER
OF
A
LARGE
CUSTOMER
­
AN
ELECTRICITY
PROVIDER
APPROACH
... .
34
An
Automobile
Manufacturer
in
South
Carolina
F.
COMPANY
EXPANSION
­
EXERCISING
OPTIONS
..............................................  
35
Commercial
Bakery
in
Bergen
County,
NJ
G.
POWER
OF
THE
LARGE
CUSTOMER
AND
ITS
SUPPLIERS
................................... 
37
A
COOPERATIVE
APPROACH
TO
CLEAN
AIR
An
Automobile
Manufacturer
and
Regional
Parts
Suppliers
in
South
Carolina
8.
Establishing
Reasonable
Guidelines
for
Interpollutant
Emissions
Credits
Trading
........  .. 
39
A.
Guidelines
for
Trading
Between
Pollutant
Species:
Air
Toxins
(
HAP),
NOx,
VOC,
and
(
SOx) 
40
B.
Guidelines
for
Emissions
Reductions
from
Utilities
and
Industry
........................................  
43
C.
Addressing
the
"
Hot
Spots"
Issue.
.............................................................................................. 
44
D.
Geographic
Scale
for
Trading      ..................................................................................
45
E.
Federal
and
State
Oversight
of
Air
Quality
Management
................................................................
46
F.
Ensuring
Credible
Record
Keeping
and
Monitoring
........    ..................................................
46
G.
Fractional
Energy
Trading
...........................................................      .............................
46
9.
Summary
of
Key
Points............................................................................................  .........
48
10.
Appendices
                                 
53
.
Appendix
A:
USPIRG
Data
and
Calculations
................................................................ ...
53
Appendix
B:
Proposal
to
Rep.
Lindsay
Graham,
R­
SC
...........................................................
56
Appendix
C:
E­
mail
from
Dr.
Bruce
Yandel
........................................................................
57
1
1
Chapter
1
Definitions
Ozone
Precursors
 
Ozone
Precursor
are
chemicals
that
react
with
the
sun's
ultraviolet
energy
at
a
certain
temperature
and
atmospheric
conditions
to
cause
pollution
related
to
the
formation
of
ozone.
Common
ozone
precursors
are
volatile
organic
compounds
(
VOC's)
and
nitrogen
oxides
(
NOx).
These
chemicals
are
emitted
from
automobiles,
stands
of
pine
trees,
sewage
treatment
facilities,
industry
and
coal­
fired
and
gas­
fired
power
plants.
When
ozone
reaches
a
certain
levels
in
the
local
atmosphere,
ozone
can
trigger
breathing
difficulties
in
people
who
are
sensitive
to
ozone.

Interpollutant
Trading
­
Interpollutant
trading
occurs
when
one
type
of
pollutant
credit
is
traded
for
a
different
type
of
pollutant
emission.
Nitrogen
oxide
(
NOx)
emissions
credits
are
traded
for
volatile
organic
compound
(
VOC)
emissions.
Sulfur
dioxides
(
SOx)
emissions
credits
are
traded
for
carbon
dioxide
(
CO2)
emissions.

Intrapollutant
Trading
­
Intrapollutant
trading
occurs
when
a
specific
type
of
pollutant
credit
is
traded
for
the
same
pollutant
emission.
Nitrogen
oxides
(
NOx)
emissions
credits
are
traded
for
nitrogen
oxide
emissions
(
NOx)
only.
VOC
emissions
credits
are
traded
for
VOC
emissions,
only.

Open
Market
with
Interpollutant
Trading
(
Apples
for
Oranges)
­
Pollution
reduction
is
accomplished
by
interpollutant
trading.
Emission
credits
for
one
type
of
pollutant
can
be
traded
for
another
type
of
pollutant
emission.
The
trading
can
occur
between
different
industries.
A
VOC
credit
from
a
manufacturer
can
be
traded
for
a
NOx
emission
from
an
electrical
utility.
This
is
an
example
of
interpollutant
emission
credits
trading.

Open
Market
­
Emission
credits
for
a
specific
pollutant
can
be
traded
between
different
industries.
Example:
NOx
credits
are
traded
for
NOx
emissions,
between
an
electrical
utility
and
a
manufacturer.
A
NOx
emission
credit
cannot
be
traded
for
any
other
emission
type
such
as
a
VOC,
SOx
or
etc.
This
is
an
example
of
intrapollutant
emissions
credits
trading.

Multipollutant
Approach
­
(
For
Electrical
Utilities
Only).
The
main
emissions
types
from
electrical
utilities,
(
mercury,
nitrogen
oxides,
sulfur
dioxides
and
carbon
dioxide)
would
have
one
reduction
target
and
program
for
a
specified
pollutant.
NOx
emissions
credits
are
traded
for
NOx
emissions.
SOx
emissions
credits
are
traded
for
SOx
emissions.
The
Multipollutant
Approach
is
limited
to
coal­
fired
power
plants
at
this
time.
This
is
an
example
of
intrapollutant
emissions
credits
trading
program.

VOC
­
Volatile
Organic
Compound.
A
regulated
group
of
organic
species
that
are
emitted
from
industrial
and
commercial
processes.
Volatile
organic
compounds
can
contain
chlorine
atoms.
A
VOC
is
more
strictly
regulated
if
the
compound
is
considered
a
hazardous
air
pollutants
(
HAP).
2
2
Chapter
2
:
Background
3
3
Chapter
2
BACKGROUND
Apples
for
Oranges
(
AFO),
an
open
market,
interpollutant
emissions
credits
trading
program
with
an
emissions
cap,
is
an
incentive
method
for
cleaning
the
environment
without
substantially
effecting
economic
growth
of
our
nation,
focusing
on
the
local
environment
and
economic
growth
of
a
community.
The
program
was
originally
introduced
last
year
in
Washington,
DC.
Apples
for
Oranges'
open
market,
interpollutant
emissions
trading
provides
healthy,
clean
air
for
a
community
whether
the
community
is
an
urban
area
in
the
Northeast
or
West
or
a
manufacturing
area
located
in
the
Southeast,
Midwest
or
Northwest.
Open
market,

interpollutant
emissions
credits
trading
provides
an
enormous
amount
of
flexibility
for
communities
and
businesses
to
produce
a
healthy
environment.
Aggressive
incentives
for
power
companies
are
used
to
increase
air
quality
by
decreasing
the
emissions
of
other
companies.
The
biggest
incentive
for
the
power
company
having
business
from
a
customer.
Other
incentives
can
contain
obligations
such
as
decreasing
carbon
dioxide
emissions
through
increased
efficiency
and
renewable
energy
requirements
as
well
as
target
reductions
for
mercury,
sulfur
dioxide
and
nitrogen
oxide
emissions.
These
additional
incentives
would
be
generally
used
to
try
to
create
a
concensus
between
the
environmental
community,
individuals,
industry
and
power
companies.

Open
market,
interpollutant
emissions
trading
with
an
emissions
cap
produces
a
shift
in
the
present
way
power
companies,
industrial
and
commercial
sectors,
environmentalists
and
the
community
are
grouped
in
the
eyes
of
society.
This
shift
is
illustrated
below:

Current
View
Emission
Producers
Community
ELECTRIC
UTILITIES
RESIDENTIAL
CUSTOMERS
MANUFACTURERS
ENVIRONMENTALISTS
COMMERCIAL
BUSINESSES
4
4
Interpollutant
Emissions
Trading
Electricity
Producers
Electricity
Consumers
ELECTRIC
UTILITIES
RESIDENTIAL
CUSTOMERS
ENVIRONMENTALISTS
MANUFACTURERS
COMMERCIAL
BUSINESSES
The
change
in
grouping
from
emissions
producers
and
community
to
electricity
producers
and
electricity
consumers
allows
for
the
environmental
marketplace
to
be
polarized
with
an
economic
weight
never
before
seen
in
any
other
environmental
regulatory
program.
This
change
is
beneficial
for
both
the
local
community,
manufacturers
and
the
power
industry
The
proposed
target
reductions
by
open
market,
interpollutant
emissions
credits
trading
with
an
emissions
cap,
are
greater
than
any
other
proposed
emissions
trading
program
or
regulatory
method
in
our
Nation.
The
long
term
national
goal
of
Apples
for
Oranges
interpollutant
emissions
credits
trading
is
to
reduce
two­
thirds
(
2/
3)
of
all
present
day
air
pollution
by
almost
ninety
percent
(
90%)
in
the
next
ten
years
and
almost
ninety
percent
(
90%)
of
air
pollution
for
new
sources.
This
two­
thirds
(
2/
3)
of
all
air
pollution
emissions
are
from
power
generators,
industrial
manufacturers
and
commercial
businesses.
The
Apples
for
Oranges
open
market,
emissions
credits
trading
program
with
an
emissions
cap,
which
is
called
Cap
&
Earn,

provides
the
best
incentive
ever
for
the
power
industry
to
reduce
pollution
nationwide,
while
focusing
on
air
quality
in
local
communities
by
reducing
emissions
from
local
manufacturers
and
transportation
sources.
5
5
Chapter
3
IN­
STEP
WITH
CONCERNS
OF
THE
LOCAL
COMMUNITY
6
6
ENVIRONMENTAL
QUESTIONS
FOR
LOCAL
COMMUNITIES
There
are
two
fundamental
questions
that
communites
have
to
the
right
to
ask
themselves
with
regard
to
their
leaders
choosing
a
Federal
or
State
environmental
protection
program
either
through
administrative
regulation
or
Federal
or
State
laws
made
by
their
legislative
branch.
The
first
question
to
ask
families
is:

1.
"
If
they
have
a
choice
between
having
the
ozone
precursors
or
hazardous
air
pollutants
from
a
manufacturing
facility
next
to
their
homes
reduced
or
emissions
from
the
a
power
plant
over
100
miles
away
reduced,
which
would
they
want?"

The
other
fundamental
question
answered
is:

2.
"
Should
Federal
and
State
regulations
and
laws
provide
opportunity
for
communities
to
choose
between
reducing
in
air
pollution
from
local
sources
and
reducing
air
pollution
from
source
hundreds
of
miles
away?"
7
7
The
answers
to
these
two
questions
are
obvious,
and
would
be:

1.
Families
would
want
the
local
industry
cleaned.
2.
Laws
and
regulations
should
allow
for
a
choice
between
local
and
distant
reductions
in
emissions
to
be
made
by
local
communities.

An
open
market
,
interpollutant
emission
credits
trading
program
with
a
cap,
such
as
Cap
&

Earn
and
Apples
for
Oranges,
provides
opportunity
for
local
action.
On
the
Federal
level,
there
is
a
strong
difference.
Federal
environmental
action
tends
to
focus
on
distanst
action
for
emissions
reductions
in
local
communities.

On
the
National
level,
the
US
Senate
and
USEPA
have
a
multipollutant
approach
for
power
plants
and
ozone
precursor
emissions
reduction.
Both
the
Bush
Administration
and
the
US
Senate
proposed
a
multipollutant
reduction
strategy
with
intrapollutant
species
trading,
not
interpollutant
species
trading.
In
2001,
the
U.
S.
Senate
introduced
the
Clean
Power
Act
which
addresses
reductions
in
sulfur
dioxide
(
SO2),
nitrogen
oxides
(
NOx),
mercury
and
carbon
dioxide
(
CO2)

emissions
by
2007,
whereas
the
Bush
Administration's
Clear
Skies
Initiative
proposed
a
timetable
for
its
multipollutant
emissions
reduction
limits
to
be
met
by
2010
or
later.
Neither
of
these
Federal
initiatives
for
emissions
reduction
regulations
focuses
on
strategies
specifically
designed
to
improve
local
air
quality.
Both
the
US
Senate's
and
USEPA's
approach
rely
on
intrapollutant
emissions
trading
which
are
designed
primarily
for
emissions
reductions
from
coal
fired
power
plants
far
away
from
local
communities.
A
balanced
approach
is
needed.
This
balanced
approach
should
address
transient
emissions
from
distanst
coal­
fired
power
plants
and
the
emisssions
in
the
local
community.

Cap
&
Earn
and
Apples
for
Oranges
(
AFO)
seeks
either
a
balance
between
local
and
distant
emissions
reductions
or
an
initial
amount
of
emissions
reductions
that
focus
on
local
8
8
action.
Using
an
interpollutant
emissions
trading
system,
hazardous
air
pollutants
(
HAP)
can
be
removed
from
communities
more
readily
than
with
current
and
proposed
trading
systems.
Theses
hazardous
air
pollutants
commonly
can
be
volatile
organic
compounds
that
are
ozone
precursors.

The
Cap
&
Earn
and
"
Apples
for
Oranges"
emissions
credits
trading
program
uses
the
market
value
of
the
large
amount
of
ozone
precursor
emissions
from
coal­
fired
and
gas­
fired
power
plants
such
as
NOx
as
a
driving
force
for
reducing
ozone
precursor
emissions
from
sources
in
local
communities
which
emit
hazardous
air
pollutants
and
volatile
organic
compounds.

Neither
the
Bush
Administration's
Clear
Skies
Initiative
nor
the
U.
S.
Senate's
Clean
Power
Act
addresses
the
issue
of
local
air
quality
in
terms
of
hazardous
air
pollutants
and
ozone
precursors.
This
is
wrong.
The
Federal
programs
do
little
to
promote
improved
local
air
quality,

but
instead
promotes
measures
by
industry
that
are
designed
to
shift
precursor
ozone
emissions
about
the
local
communities.
These
methods
will
be
discussed
in
the
next
Section.

Air
quality
is
local,
so
local
control
of
precursor
ozone
air
emissions
should
take
precident
over
distant
air
emissions.
Local
control
should
be
integrated
with
national
air
quality
initiatives
for
local
economic
growth.
A
Cap
&
Earn
emissions
credits
trading
program
provides
local
control
of
air
quality
and
allows
for
economic
growth.
­
9
­

9
Chapter
4
CAP
&
EARN
HELPS
TO
STOP
THE
SPREADING
OF
OZONE
PRECURSORS
­
10
­

10
Chapter
4
The
Cap
and
Earn
emissions
credits
trading
program
is
designed
to
help
stop
the
spread
ozone
precursors
by
legal
methods
that
are
commonly
employed
by
environmental
engineers
and
environmental
lawyers
to
improve
of
local
air
quality,
but
these
methods
spread
ozone
precursors
about
a
State.
These
common
spreading
methods
are
known
as
1)
smokestack
height,
2)
dilution
with
fans/
blowers,
c)
skipping
to
the
next
county
and
d)
expansion
by
duplicating
facilities.
While
these
methods
that
spread
ozone
precursors
about
the
community
can
be
effective
in
reducing
ozone
precursors
locally,
nothing
stops
these
ozone
precursor
that
are
emitted
into
the
local
atmosphere
from
being
carry
by
wind
currents
to
adjacent
communities
with
poor
air
quality.

Federal
regulations
and
programs
that
are
designed
to
reduce
air
emissions
of
ozone
precursors
and
hazardous
air
pollutants
do
very
little
stop
these
spreading
method.
In
fact,
the
Federal
regulations
and
programs
promote
the
spread
of
air
emissions
of
ozone
precursors.

Programs
such
as
Cap
&
Earn
or
other
"
Apples
for
Oranges"
emissions
trading
programs
are
designed
to
reduce
emission
regardless
of
the
location
of
a
manufacturing
facility
and
produce
real
reductions
of
ozone
precursor
and
hazardous
air
pollutant
emissions
in
local
communities.

The
following
examples
of
"
spreading
methods"
are
provided
to
give
insight
and
understanding
to
the
reader,
so
the
advantages
of
Cap
&
Earn
and
"
Apples
for
Oranges"
will
become
evident.
­
11
­

11
METHOD
1.
SMOKESTACK
HEIGHT
Environmental
engineering
methods
can
reduce
the
local
impact
on
air
quality
by
a
manufacturing
facilities,
without
reducing
emissions
of
ozone
precursors.
One
method,
which
is
know
as
adjusting
smokestack
height,
reduces
the
very
local
impact
on
a
manufacturing
facility's
community.
Environmental
Engineers
calculate
air
models
which
determine
the
amount
of
local
ozone
precursors
or
harzardous
air
pollutants
a
facility
produces
locally
by
a
smokestack's
height.
Typically,
the
smokestack's
height
is
increased
so
the
ozone
precursors
and
hazardous
air
pollutants
are
carried
away
by
the
air
currents
(
wind)
to
other
locations
such
as
a
nearby
county
or
another
State.
As
shown
above,
short
smokestacks
produces
very
local
amounts
of
ozone
precursors
and
hazardous
air
pollutants,
whereas
the
tall
smokestack
allows
for
the
ozone
precursors
and
hazardous
air
pollutants
to
be
carried
away
to
another
community.
This
is
a
common,
but
ineffective
practice
to
reduce
air
emissions
of
ozone
precursors
and
hazardous
air
pollutants.
­
12
­

12
Open
market,
interpollutant
emissions
credits
trading
programs
with
a
emission
s
cap
would
remove
the
ozone
precursors
and
hazardous
air
pollutants
from
the
environment
permanently.
For
example,
emissions
credits
could
be
generated
by
a
power
company
from
installing
pollution
control
equipment
at
a
manufacturing
facility
that
has
emissions
of
ozone
precursors.
The
control
equipment
would
reduce
the
emissions
of
volatile
organic
compounds
(
VOC)
from
the
manufacturing
facility,
producing
emission
credits.
These
emissions
credits
would
be
purchased
by
the
power
company,
and
the
VOC
emissions
credits
would
be
used
to
offset
power
company's
nitrogen
oxide
(
NOx)
emissions
from
a
power
plant
over
100
miles
away.
The
emission
credits
would
be
used
for
a
limited
amount
of
time,
only
METHOD
2.
DILUTION
WITH
FANS/
BLOWERS
Other
environmental
engineering
methods
also
reduce
local
impact
of
a
facilities
emissions
of
ozone
precursors
and
hazardous
air
pollutants
on
air
quality
by
a
manufacturing
facility,
without
reducing
any
of
these
emissions.
Fans
and
Blowers
are
attached
to
smokestacks.
These
fans
and
blowers
mix
a
large
amount
of
clean
air
with
ozone
precursors
and
hazardous
air
pollutants
then
project
the
mixture
high
above
the
manufacturing
facility.
Above
the
manufacturing
facility,
these
diluted
emissions
are
carried
away
by
the
air
currents
(
wind)
to
different
locations
such
as
a
nearby
­
13
­

13
town
or
another
State.
This
is
a
common,
but
ineffective
practice
for
removing
ozone
precursors
and
hazardous
air
pollutant
emissions
from
the
local
environment
also.

The
Cap
&
Earn
and
AFO
interpollutant
emissions
credits
trading
programs
could
remove
the
ozone
precursors
and
hazardous
air
pollutants
from
the
environment
permanently.
The
ozone
precursors
or
hazardous
air
pollutant
emissions
from
a
manufacturing
facility
would
be
destroyed
by
pollution
control
equipment,
and
emissions
credits
would
be
created.
Subsequently
these
emission
credits
would
be
purchased
by
a
power
company.
Then
for
a
limited
period
of
time,

these
emissions
credits
could
be
used
to
offset
a
power
company's
sulfur
dioxide
(
SOx)
emissions
from
a
power
plant
over
a
hundred
miles
away.
This
is
the
principle
behind
Apples
for
Oranges
and
Cap
&
Earn,
open
market,
interpollutant
emissions
credits
trading
programs.

METHOD
3.
SKIPPING
TO
THE
NEXT
COUNTY
Commonly,
industry
will
build
a
new
manufacturing
facility
or
move
an
existing
facility
across
county
lines
to
save
money
by
not
being
required
to
reduce
their
ozone
precursors
or
hazardous
air
pollutant
emissions,
and
in
fact
the
new
manufacturing
facility
can
increase
their
emissions
of
ozone
precursors
or
hazardous
air
pollutants
by
this
method.
This
is
known
as
­
14
­

14
"
skipping
to
the
next
county".
Companies
can
cross
the
county
line
either
by
100
feet
or
a
mile
where
a
facility
releases
more
ozone
precursors
into
the
environment
more
because
the
chosen
county
would
have
less
strigent
air
quality
regulations.
And,
the
ozone
precursors
and
hazardous
air
pollutants
from
this
facility
can
drift
into
other
counties
with
worse
air
quality
adversely
effecting
local
air
quality
miles
away.

Manufacturing
facilities
need
to
expand
to
accommodate
growth.
If
the
costs
of
compliance
to
one
county's
air
quality
regualtions
are
less
than
another
county's
regulatory
cost,

then
a
manufacturing
facility
tends
to
build
a
facility
in
the
county
which
is
not
a
nonattainment
area
with
lower
cost
to
meet
environmental
regualations.
(
See
above.)
Regardless
of
the
argument
about
an
increased
tax
base
of
County
B,
a
reduction
in
ozone
precursors
and
hazardous
air
pollutants
does
not
occur
when
companies
decides
to
"
skip
to
the
next
county"
due
to
Federal
air
quality
regulations.

Cap
&
Earn,
an
open
market,
interpollutant
emissions
credits
trading
with
an
emissions
cap
would
reduce
ozone
precursors
and
hazardous
air
pollutants
regardless
of
a
county's
air
quality
status,
attainment
or
nonattainment
region.
Simply
put,
the
power
company
which
is
bidding
on
the
new
facility's
electricity
would
bid
on
the
emissions
credits
from
the
facility.
These
emission
credits
would
be
created
by
the
power
company
installing
pollution
control
equipment
on
the
facility.
VOC
credits
generated
would
subsequently
be
used
by
the
power
company
to
offset
some
of
their
emissions,
NOx
or
SOx.,
in
other
areas
of
the
region.
­
15
­

15
METHOD
4.
EXPANSION
BY
DUPLICATING
FACILITIES
Another
common
method
to
save
money
by
not
reducing
emissions
of
ozone
precursors
and
hazardous
air
pollutants
is
duplicating
facilities.
For
an
extended
period
of
time,
this
method
avoids
future
economic
growth
problems
associated
with
Federal
and
State
environmental
regulations
and
is
legal.
This
strategy,
"
Expansion
by
Duplicating
Facilities",
is
quite
effective
for
growing
industries
to
be
able
to
meet
their
market
demands
without
having
to
limit
production
of
their
products.

By
Federal
Laws
and
Regulations,
a
facility
that
is
located
in
an
ozone
non­
attainment
area
is
limited
to
100
tons
of
emissions
of
volatile
organic
compounds
(
VOCs).
The
owner
of
a
manufacturing
company
has
options
either
to
increase
the
production
of
a
current
facility
to
a
level
that
produces
over
100
tons
of
emissions
of
ozone
precursors
and
install
pollution
control
equipment
or
the
owner
can
open
a
new
facility,
increase
production
and
can
legally
produce
up
­
16
­

16
to
200
tons
of
emissions.
Each
facility
would
produce
100
tons
of
emissions
ozone
precursors
each.

The
reader
of
this
section
should
not
view
these
identified
legal
methods
that
allow
for
economic
growth
and
increase
air
polluiton
as
an
attack
on
industry.
The
purpose
of
this
section
is
to
provide
an
objective
review
of
current
practices
by
industry
for
growth
&

profit
and
their
effect
on
air
quality
in
our
society.
One
should
keep
in
mind
that
these
current
methods
can
help
to
decrease
local
pollution
which
leads
to
ozone
formation.

However,
these
same
practices
probably
are
not
the
answer
to
solve
today's
and
tomorrow's
poor
air
quality
that
produces
unhealthy
levels
of
ozone
in
many
regions
of
our
Country.
Today,
more
cost
effective
strategies
are
needed
to
increase
air
quality.
These
strategies
have
to
take
in
to
account
that
air
pollution
is
effected
not
only
from
local
sources
but
from
sources
miles
away
from
ones
community.

A
Cap
&
Earn
emission
credits
trading
with
an
open
market
interpollutant
emission
credits
trading
program
such
as
"
Apples
for
Oranges"
could
prevent
an
increase
in
emissions,
allow
for
industry
to
grow
and
improve
air
quality
regardless
of
wherever
industry
moves.
­
17
­

17
Chapter
5
THE
BEST
INCENTIVE
TO
REDUCE
EMISSIONS
AND
INCREASE
AIR
QUALITY
­
18
­

18
THE
BEST
INCENTIVE
FOR
CLEANING
THE
ENVIRONMENT
The
best
incentive
for
incresing
air
quality
is
to
allow
for
power
companies
to
competitively
increase
market
share
with
an
environmental
agenda.
The
environmental
agenda
would
rely
on
an
open
marketplace
with
free
enterprise.
Power
companies
would
make
their
own
choices
which
they
believe
would
do
the
most
to
increase
their
market
share
and
to
meet
the
given
emissions
reductions
targets
for
a
desired
timetable.
For
example,
two
timetables
could
be
allowed
for
reducing
emissions
of
ozone
precursors
and
hazardous
air
pollutants
by
the
Federal
Government.
One
timetable
allows
for
Cap
&
Earn
or
an
other
types
of
open
market,

intrapollutant
trading
(
or
current
regulations
and
the
proposed
multipollutant
strategy)
and
would
have
certain
obligations.
These
obligations
could
be
the
target
emissions
reductions
and
the
timetable
of
the
Senate's
Clean
Power
Act.
The
second
timetable
could
be
the
Bush
­
19
­

19
Administration's
emission
reduction
and
time
table
under
the
Clear
Skies
Initiative.
The
second
timetable
would
allow
for
Cap
&
Earn
or
"
Apples
for
Oranges"
open
market,
interpollutant
emissions
credits
trading
with
an
emissions
cap,
and
would
have
certain
obligations
to
reduce
the
level
of
the
emissions
cap
of
the
course
of
time,
also.
The
second
timetable
would
require
power
companies
to
reduce
more
air
emissions
by
the
timetable
proposed
by
the
Administration
than
compared
to
the
emissions
reductions
by
the
Senate's
timetable.
The
second
timetable
would
allow
for
power
companies
to
aggressively
reduce
emissions
of
ozone
precursors
and
hazardous
air
pollutants
from
industrial
and
commercial
customers,
while
having
to
exceed
the
emissions
reduction
for
coal­
fired
power
plants
under
the
Senate
plan.
Each
power
company
would
have
to
make
its
choice
by
2004.

The
incentive
is
the
electricity
marketplace.
The
current
market
for
electric
power
is
between
$
200
billion
and
$
300
billion
per
year.
One
percent
(
1%)
of
market
share
has
a
value
of
$
2
billion
to
$
3
billion
dollars.
The
value
of
1%
market
share
of
the
electric
power
marketplace
is
almost
greater
than
the
entire
annual
pollution
control
marketplace
for
air
emissions
from
nonpower
plants
source.
This
large
dollar
value
should
provide
electrical
utilities
enough
incentive
to
aggressively
reduce
their
customers'
emissions
of
ozone
precursors
and
hazardous
air
pollutants,

creating
a
greater
reduction
in
ozone­
forming
emissions
nationwide
and,
most
importantly,
in
local
communities.
The
entire
dollar
value
to
deliver
electricity
in
the
electric
utility
marketplace
is
greater.
The
entire
marketplace
includes
not
only
power
cost,
but
transmission
and
distribution
costs
also.
The
entire
electric
utility
marketplace
is
much
greater
than
$
300
billion
dollars.
­
20
­

20
An
aggressive
reduction
of
emissions
follows
several
premises:


the
electricity
seller
wants
to
retain
present
customers,


the
electricity
seller
wants
to
grow
the
business,
therefore
the
seller
needs
new
customers,
and

a
deregulated
electricity
market
allows
for
manufacturers,
commercial
businesses
and
the
average
customer
to
demand
more
from
the
electricity
provider.

Cap
&
Earn
gives
power
companies
greater
ability
to
improve
the
local
and
national
air
quality
by
reducing
their
customers'
air
ozone
precursors
and
hazardous
air
pollutants
whereas
intrapollutant
emissions
credits
trading
does
not.
The
greater
ability
to
improve
the
local
and
national
air
quality
by
AFO
programs
would
be
driven
by
the
natural
desire
of
power
companies
to
expand
business
and
greater
reduction
targets
for
the
multiple
pollutants
which
would
be
achieved
under
a
longer
time
table.

An
estimated
amount
of
industrial
and
commercial
smokestacks
which
could
be
cleaned
by
market
forces
is
rather
larger
under
an
open
market,
interpollutant
emissions
trading
program
with
an
emission
cap.
The
estimate
is
discussed
later
in
this
document.
The
estimated
amount
is
based
upon
USPIRG's
data.
­
21
­

21
CHAPTER
6
AN
ESTIMATED
45,000
TO
75,
000
SMOKESTACKS
CAN
BE
CLEANED
­
22
­

22
Based
on
calculations
using
USPIRG
data,
the
Nox
emissions
from
the
average
older
coalfired
power
plants
creates
a
market
value
for
emissions
credits
that
can
purchase
over
300
units
of
pollution
control
equipment
for
manufacturers
to
offset
NOX
emissions
from
the
power
plant
for
a
limited
time.

Three
years
ago
US
Public
Interest
Research
Group
(
USPIRG)
published
a
list
of
the
"
Dirtiest
100
Power
Plants"
in
the
United
States
(
see
Appendix
A).
The
purpose
of
the
USPIRG
data
was
to
release
to
the
public
a
comparison
between
the
amount
of
nitrogen
oxide
(
NOx)

emissions
that
older
coal­
fired
power
plants
emit
and
the
amount
of
nitrogen
oxide
(
NOx)

emissions
these
same
plants
would
emit
under
current
regulations.
Today,
these
older
coal­
fired
power
plants
have
been
subject
to
much
legal
attention
by
the
courts,
former
and
current
USEPA
Administrations
and
the
US
Congress.

An
open
market,
interpollutant
emissions
credits
trading
program
such
as
Apples
for
Oranges
or
Cap
&
Earn
would
use
the
market
value
of
the
multipollutant
emissions
from
power
plants
to
reduce
emissions
of
ozone
precursors
and
hazardous
air
pollutants
from
local
manufacturing
plants
prior
to
or
in
conjunction
with
reducing
multipollutant
emissions
from
the
­
23
­

23
older
coal­
fired
power
plants.
The
amount
of
manufacturing
facilities
that
can
have
their
ozone
pre­
cursor
emissions
reduced
by
90%
under
an
open
market,
interpollutant
emissions
credits
trading
program
is
staggering.
The
market
value
for
the
nitrogen
oxide
(
NOx)
emissions
from
these
older
coal­
fired
power
plants
can
reduce
90%
of
the
ozone
precursor
and
hazardous
air
pollutant
emissions
from
between
45,000
and
75,000
local
smokestacks
of
manufacturers
in
local
communities.

USPIRG
data
showed
that
the
number
tons
of
nitrogen
oxides
(
NOx)
emitted
from
older
coal­
fired
power
plants
which
have
not
complied
with
current
regulations
for
nitrogen
oxide
emissions
(
NOx)
to
be
in
excess
of
2,705,092.
That
immense
tonnage
creates
a
significant
market
value
for
emission
credits.
Current
range
for
values
of
nitrogen
oxide
(
NOx)
emissions
credits
put
the
value
of
a
ton
of
nitrogen
oxides
(
NOx)
at
between
$
3750.00
and
$
6,200.00
during
the
years
2003­
2007.
The
value
of
the
power
plants'
excess
tons
of
NOx
emissions
which
is
based
upon
USPIRG
data
is
calculated
from
multiplying
the
2,705,092
excess
tons
of
NOx
emissions
by
the
minimum
and
maximum
dollar
values
per
ton.
The
market
value
of
these
excess
tons
of
NOx
is
between
$
10,762,735,000
and
$
16,771,570,400.
That
range
of
values
can
be
translated
into
an
amount
of
units
of
pollution
control
equipment
for
manufacturing
facilities
than
can
be
purchased
to
produce
emissions
credits
which
could
offset
these
(
NOx)
emissions
for
a
limited
amount
of
time.

The
number
of
units
of
pollution
control
equipment
for
manufacturing
facilities
that
can
be
purchased
by
this
market
value
of
emission
credits
can
be
calculated.
The
emissions
reductions
of
ozone
precursors
and
hazardous
air
pollutants
by
the
pollution
control
equipment
which
would
be
installed
on
the
manufacturing
facilities
would
be
used
to
offset
the
NOx
emissions
from
these
older
coal­
fired
power
plants.
For
this
discussion,
the
standard
size
of
pollution
control
­
24
­

24
equipment
is
2500
SCFM
(
standard
cubic
feet
per
minute)
and
the
standard
cost
for
this
size
of
pollution
control
equipment
is
$
225,000.
The
number
of
units
of
pollution
control
equipment
for
manufacturing
facilities
is
calculated
by
dividing
the
minimum
and
maximum
market
values
of
the
excess
NOx
emissions
($
10,762,735,000
to
$
16,771,570,400)
by
the
cost
of
a
unit
of
pollution
control
equipment
($
225,000).
The
number
of
units
from
this
calculation
ranges
between
fortyfive
thousand
(
45,000)
and
seventy­
five
(
75,000)
units.

This
number
of
units
is
consistent
when
one
considers
the
USEPA's
estimated
costs
for
reducing
nitrogen
oxide
emissions
from
these
older
coal­
fired
power
plants
under
the
Clinton
Administration.
The
Clinton
Administration
estimated
that
the
cost
would
be
fourteen
billion
dollars
($
14
Billion)
over
tens
years.
This
cost
estimation
would
be
the
equivalent
of
allowing
for
the
purchase
of
over
sixty­
thousand
(
60,000)
pollution
control
units.

These
calculations
demonstrate
the
great
capability
of
interpollutant
emissions
credits
trading
to
act
locally
in
communities
to
improve
the
air
quality
by
reducing
emissions
at
local
manufacturing
facilities.

A
timetable
for
reducing
emissions
from
both
coal­
fired
power
plants
and
manufacturing
facilities
needs
to
be
established,
and
through
compromise
the
likelihood
of
reducing
more
pollution
may
be
achieved.
Both
the
Bush
Administration
and
the
U.
S.
Senate
have
timetables
to
reduce
multiple
species
of
pollution
from
coal­
fired
power
plants
by
70%,
whereas
the
reduction
targets
for
all
species
of
emissions
by
this
proposed
interpollutant
emissions
credits
trading
(
Apples
for
Oranges)
is
90%.
Many
legal
battles
have
been
fought
and
many
fights
continue
over
the
amount
of
reductions
and
a
specific
timetable.
A
compromise
will
be
needed.

Many
older
plants
have
also
been
subject
to
law
suits
by
Northeastern
States
that
argue
for
tighter
emission
controls.
The
NOx
emissions
from
these
older
coal­
fired
plants
contribute
to
­
25
­

25
the
poor
local
air
quality
in
the
Northeast
through
transportation
of
NOx
in
the
Ozone
Transportation
Region.
In
the
Spring
of
2001,
the
U.
S.
Supreme
Court
upheld
the
decision
in
favor
of
the
Northeastern
States.
Subsequently,
the
Bush
Administration
and
the
U.
S.
Senate
have
proposed
new
regulations
and
laws
with
different
target
emissions
reductions
and
timetables.

Both
the
Bush
Administration
and
the
US
Senate
propose
a
multipollutant
reduction
strategy
with
intrapollutant
species
trading,
not
interpollutant
species
trading.
In
2001,
the
U.
S.
Senate
introduced
the
Clean
Power
Act
which
addresses
reductions
in
sulfur
dioxide
(
SO2),
nitrogen
oxides
(
NOx),
mercury
and
carbon
dioxide
(
CO2)
emissions
by
2007,
whereas
the
Bush
Administration
proposed
a
timetable
for
its
multipollutant
emissions
reduction
limits
to
be
met
by
2010
or
later
under
the
Clear
Skies
Initiative.

Regardless
of
the
legal
battles,
open
market,
interpollutant
emissions
credits
trading
with
an
emission
cap
has
the
ability
to
reduce
pollution
in
local
communities
by
reducing
the
emissions
of
ozone
precursors
and
hazardous
air
pollutants
from
local
manufacturers
while
at
the
same
time
creating
a
more
competitive
marketplace
for
electric
utilities
and
local
economic
growth.

Emissions
reductions
of
ozone
precursors
and
hazardous
air
pollutants
can
occur
in
between
45,000
and
75,000
smokestacks
of
local
manufacturers
with
an
open
market,
interpollutant
emission
credits
trading
with
an
emissions
cap,
providing
great
improvements
in
the
local
air
quality.
26
26
Chapter
7
REAL
LIFE
SCENARIOS:

INTERPOLLUTANT
VS.
INTRAPOLLUTANT
EMISSIONS
CREDITS
TRADING
27
27
REAL
LIFE
SCENARIOS
APPLICABLE
TO
INTRAPOLLUTANT
EMISSION
CREDITS
TRADING
The
good
intentions
and
current
strategies
of
environmental
regulations
in
this
country
continue
to
produce
adverse
affects
on
the
health
and
economies
of
local
communities.
These
adverse
effects
are
often
overlooked
or
not
understood
by
most
law
makers,
regulatory
agencies,

communities
and
environmental
groups.
There
is
no
question
that
emissions
in
this
country
from
industrial,
commercial
and
transportation
sources
need
dramatic
reductions
during
the
course
of
next
decade.
The
effect
of
current
and
proposed
emission
credits
trading
programs
and
their
true
effect
on
the
local
air
quality
and
local
economic
growth
need
to
be
addressed.

The
following
real
life
scenarios
in
this
section
are
related
to
two
similar
geographic
regions
within
the
United
States.
These
regions
are
South
Carolina
and
New
Jersey:


South
Carolina
is
between
large
cities,
Charlotte
and
Atlanta,
while
New
Jersey
is
between
large
cities,
New
York
City
and
Philadelphia.


Both
South
Carolina
and
New
Jersey
thrive
as
manufacturing
centers
for
two
larger
cities
and
their
surrounding
metropolitan
regions,
producing
products
for
the
nation
and
the
global
marketplace.


The
boundary
metropolitan
regions
of
these
large,
cities
have
some
of
this
country's
worst
air
quality.


Air
pollution
from
the
boundary
regions
of
these
cities
affect
the
air
quality
of
South
Carolina
and
New
Jersey,
respectively.


In
conjunction
with
the
transient
air
quality
effects
of
these
large
metropolitan
regions,
the
economic
growth
of
these
States
is
increasingly
affected
by
the
Federal
air
quality
regulations
and
will
be
subject
to
new,
more
stringent
air
quality
regulations
soon.

The
following
scenarios
are
base
on
real
life
situations
that
occur
in
communities
throughout
the
U.
S.,
whether
one
is
located
in
South
Carolina,
New
Jersey,
North
Carolina,

Virginia,
Massachusetts,
Wisconsin,
Texas,
California,
Oregon,
Ohio,
Tennessee,
Illinois
or
28
28
elsewhere.
Members
of
communities,
families,
industry,
commercial
businesses
and
institutions
are
greatly
affect
by
air
quality
regulations,
and
have
to
consider
the
effect
of
Federal
air
quality
regulations
on
the
local
air
quality
and
economic
growth
Scenario
1:
THE
CITY
AND
THE
DIESEL
PARTICULATE
(
Only
with
Interpollutant
Emissions
Credits
Trading)

Urban
areas
and
inner
city
regions
rely
on
public
transportation,
bus
lines.
Many
bus
lines
use
older
diesel
engines
to
power
their
buses.
Particulate
and
volatile
organic
compounds
(
VOC's)
emissions
from
diesel
engines
worsen
the
local
air
quality
in
urban
areas
and
innercity
regions.
Cleaner
alternatives
to
diesel
engines
are
available
which
reduce
the
particulate
and
VOC
emissions.
These
alternatives
include
engines
that
use
either
electric,
propane,
fuel
cell
or
natural
gas.
With
an
open
market,
interpollutant
emissions
credits
trading
approach
with
an
emission
cap,
the
local
air
quality
in
the
urban
and
inner­
city
regions
can
be
improved
readily.
Local,
County
and
State
governments,
private
businesses
and
individuals
can
pool
their
influence
as
a
large
group
of
customers
to
choose
an
energy
supplier
which
will
assist
in
the
retiring
of
older
diesel
buses
in
exchange
for
their
business.
The
energy
supplier
uses
the
emission
credits
from
the
reduction
of
particulate
and
VOC
emissions
to
offset
NOx
or
SOx
emissions
for
a
limited
period
of
time.

The
same
type
of
trading
can
be
used
for
the
trucking
industry.
Trucking
companies
can
exchange
emission
credits
with
power
companies
after
the
trucking
company
installs
diesel
29
29
particulate
emission
reduction
equipment
on
their
trucking
fleet.
The
USEPA
has
public
disclosed
that
they
are
considering
trading
emission
credits
from
diesel
particulate
reductions
for
NOx
emissions
from
power
plants.
Robert
Brenner,
the
USEPA
deputy
assistant
administrator,
Office
of
Policy
Analysis
and
Review,
Office
of
Air
and
Radiation,
USEPA
disclosed
on
January
18,
2002
that
the
USEPA
has
been
considering
allowing
the
trade
of
a
diesel
particulate
emission
credit
for
NOx
emissions.

Scenario
2:
THE
POWER
OF
A
THE
LARGE
CONSUMER
­
A
CUSTOMER
APPROACH
A
Tire
Manufacture
in
South
Carolina
(
Only
with
Interpollutant
Emissions
Credits
Trading)

A
large
tire
manufacturer
in
South
Carolina
calls
up
Duke
Energy,
the
Southern
Company
(
Mirant),
Carolina
Power
and
Lighting
or
Santee
Cooper
and
says,
"
If
you
want
my
business,

then
you'll
have
to
reduce
my
emissions
of
ozone
precursors
and
hazardous
air
pollutants,

then
purchase
my
emissions
credits
with
your
electricity...
And...
at
a
low
cost."
Then,
the
power
company
which
earns
the
business
can
use
these
emissions
credits
to
offset
NOx
emissions
at
one
of
the
power
company's
coal­
fired
power
plant
for
a
given
period
of
time.

This
type
of
free
enterprise
cannot
occur
under
current
Federal
regulation.
30
30
Scenario
3:
CREATING
JOBS
IN
AN
ECONOMICALLY
DEPRESSED
REGION
Camden,
NJ
needs
Industry
Under
Current
USEPA
Regulations
for
Open
Emission
Trading
Program:

A
large
manufacturing
company
wants
to
locate
a
pharmaceutical
plant
with
500
jobs
in
Camden,
NJ.
The
tax
incentives
are
attractive.
The
air
quality
laws
of
NJ
and
the
air
quality
in
Camden
may
require
the
potential
job­
provider
to
install
pollution
control
equipment.
For
example,
the
air
quality
regulations
for
Camden
County
may
require
the
manufacturing
plant
of
this
example
to
emit
less
than
50
tons
of
emissions
of
ozone
precursor.
However,
the
proposed
manufacturing
plant's
process
will
emit
75
tons
of
emissions.
The
company
decides
to
move
Salem
County,
NJ
where
the
company
does
not
need
any
pollution
control
and
emits
75
tons
into
the
environment.
This
is
how
present
laws
and
regulations
work;
the
incentives
under
the
recently
approved
USEPA
Open
Market
Emissions
Trading
program
for
New
Jersey
forbids
companies
by
USEPA
regulation
from
interpollutant
emissions
credits
trading,

allowing
only
intrapollutant
emissions
credits
trading.
By
law
and
design
of
New
Jersey's
31
31
Open
Market
Emissions
Credits
Trading
Program,
air
quality
can
decrease
from
an
increase
in
ozone
precursors
and
hazardous
air
pollutants..
One
can
say,
"
there
were
not
enough
VOC
credits
available
under
New
Jersey's
program."
­
Good­
bye
jobs
in
Camden,
hello
more
air
pollution.

Under
the
Proposed
INTERPOLLUTANT
EMISSION
CREDITS
TRADING
PROGRAM:

The
same
large
manufacturing
company
wants
to
locate
a
pharmaceutical
plant
with
500
jobs
in
Camden,
NJ.
The
tax
incentives
are
attractive.
The
air
quality
laws
of
NJ
and
the
air
quality
in
Camden
may
require
the
potential
job­
provider
to
install
pollution
control
equipment
because
Camden
requires
the
company
to
emit
less
than
50
tons
of
emissions
of
ozone
precursors.
The
Company's
new
plant
would
emit
75
tons
of
emissions
ozone
precursors
or
hazardous
air
pollutants.
The
large
manufacturing
company
goes
to
the
electric
companies
bidding
on
the
facilities
energy
(
GPU/
First
Energy,
PSE&
G,
Exelon,
Enron,
etc.)
and
says,
"

I
want
to
build
this
facility
in
Camden.
If
you
want
my
business,
then
you'll
have
to
reduce
my
emissions
of
ozone
precursors
&
hazardous
air
pollutants,
purchase
my
emission
credits
from
the
pollution
control
equipment
which
you
will
install
and
pay
for
the
operating
costs
with
your
electricity...
And...
at
a
low
cost."
Then,
the
power
company
which
earns
the
business
can
use
these
emissions
credits
to
offset
NOx
emissions
for
a
given
period
of
time
at
a
coal­
fired
power
plant.

Or,
a
power
company
can
come
into
the
offices
of
this
potential
job­
providing
manufacturer
and
says,
"
I'd
like
your
business,
how
about
some
low
cost
electricity.
I'll
clean
up
your
ozone
precursor
and
hazardous
air
pollutant
emissions,
then
purchase
them
with
electricity...
Not
only
will
I
cover
the
generation
cost,
but
I'll
cover
the
transmission
and
32
32
distribution
fees,
too."
If
the
power
company
can
trade
electricity
fractionally,
environmental
emission
credits
could
be
paid
by
generation
costs,
transmission
costs
and
distribution
costs.

Fractional
energy
trading
would
provide
for
a
greater
open
market
for
emission
credits
trading.
Hence,
GPU/
First
Energy
could
trade
generation
costs
for
some
emission
credits,

Excelon
could
trade
transmission
fees
for
some
emission
credits
and
the
PSE&
G
could
trade
distribution
costs
for
some
emission
credits.
Fractional
energy
trading
is
similar
to
emission
credits
trading
under
New
Jersey's
Open
Market
Emission
Trading
program.
New
Jersey's
trading
program
trades
emission
credits
in
increments
of
100
lbs
instead
of
increments
of
one
ton.

Similarly,
fractional
energy
trading
pays
for
emissions
credits
with
parts
of
the
total
cost
of
a
delivered
kilowatt.

Scenario
4:
PREVENTING
A
LOSS
OF
JOBS
­
A
COMMUNITY
EFFORT
Boat
Manufacturers
and
Other
Manufacturing
Facilities,
Atlantic
County,
NJ
Under
Current
USEPA
Regulations
for
Open
Emission
Trading
Program:

In
the
next
two
years
Atlantic
County,
NJ
may
become
a
nonattainment
area,
and
new
regulations
from
the
USEPA
will
require
drastic
changes
to
the
operations
of
manufacture
of
boats,
pools
and
other
products
using
styrene.
Instead
of
installing
pollution
control
33
33
equipment
to
reduce
their
styrene
emissions,
a
hazardous
air
pollution
(
HAP),
the
yacht
manufacturers
decide
that
they
will
move
operations
to
an
attainment
region
of
Florida,

thereby
avoiding
the
high
costs
for
pollution
control
equipment
­
$
1.0
million
dollars.
The
effect
is
that
Atlantic
County
losses
jobs
and
the
tax
revenues
generated
from
the
sale
of
$
2
million
luxury
yachts
which
may
also
result
in
increased
property
taxes.
To
avoid
the
same
environmental
costs,
the
pool
manufacturers
and
the
other
fiberglass
manufacturers
consider
moving
to
Virgina.
The
overall
result
is
that
Atlantic
City
and
the
Pine
Barrens
region
of
New
Jersey
is
out
of
more
jobs
and
tax
revenue.

Under
the
Proposed
INTERPOLLUTANT
EMISSIONS
CREDITS
TRADING
PROGRAM:

Assume
AFO
is
in
place.
Now
when
the
yacht
manufacturers
decide
that
they
will
move
operations
to
Florida,
instead
of
installing
pollution
control
equipment,
the
business
and
local
communities
step
in!
In
Atlantic
County,
NJ,
Stockton
State
University,
casinos
in
Atlantic
City
and
local
communities
announce
that
they
are
sticking
by
industry,
because
the
county
needs
jobs
and
tax
revenue.
Since
New
Jersey
has
a
deregulated
retail
electricity
market,
this
consortium
of
local
and
business
groups
decide
to
exercise
the
power
of
the
marketplace.

They
form
a
large
electricity
buying
group
with
lots
of
purchasing
power.
The
new
electricity
buying
group
decides
to
purchase
their
$
20
million
dollar
market
value
of
electricity
each
year
for
the
next
five
years
from
a
electricity
provider
that
will
install
pollution
control
equipment
at
the
manufacturing
sites
of
select
companies,
and
the
selected
power
company
will
purchase
the
generated
emissions
credits
to
offset
emissions
from
power
plants,
for
example
in
Ohio,

which
contribute
to
the
pollution
on
the
East
Coast.
Not
only
does
the
community
retains
job,

but
there
is
a
greater
improvements
on
the
local
air
quality
compared
to
the
current
USEPA
regulations
for
the
current
open
market
emission
credits
trading
program
for
New
Jersey.
34
34
Scenario
5:

THE
POWER
OF
A
LARGE
CONSUMER
­
AN
ELECTRICITY
PROVIDER
APPROACH
An
Automobile
Manufacturer
in
South
Carolina
(
Only
with
Interpollutant
Emissions
Credits
Trading)

If
open
market,
interpollutant
emissions
credits
trading
with
an
emissions
cap
would
be
allowed,
a
power
company
could
come
into
the
offices
of
a
large
automobile
manufacturing
facility
in
South
Carolina
and
say,"
I'd
like
your
business,
how
about
some
low
cost
electricity,
and
I'll
clean
up
your
emissions
of
ozone
precursor
and
purchase
them
with
electricity.
Not
only
will
I
cover
the
generation
cost,
but
I'll
cover
the
transmission
and
distribution
fees,
too."
Then,
if
the
power
company
can
trade
electricity
fractionally,
several
power
companies
obtain
emissions
credits
by
paying
for
environmental
emission
credits
with
generation
costs,
transmission
costs
and
distribution
costs.
For
example,
Mirant
could
trade
generation
costs
for
some
emissions
credits,
Duke
Power
could
trade
transmission
fees
for
some
emissions
credits
and
the
City
of
Seneca
could
trade
distribution
costs
for
some
emissions
credits
to
assist
Seneca's
local
industry.
35
35
Scenario
6:

COMPANY
EXPANSION
­
EXERCISING
OPTIONS
Commercial
Bakery
in
Bergen
County,
NJ
Under
Current
USEPA
Regulations
for
Open
Emission
Trading
Program:

The
Commercial
Bakery
Industry
is
coming
under
new
USEPA
regulations
in
a
couple
of
years
for
nonattainment
areas,
such
as
Bergen
County.
A
commercial
bakery
wants
to
expand,
but
the
bakery
has
to
install
pollution
control
equipment
to
meet
the
new
regulations.

The
commercial
bakery
needs
VOC
emissions
credits
to
offset
the
commercial
bakery's
emissions
from
the
expansion.
This
commercial
bakery
in
Bergen
County
realizes
that
there
are
not
enough
VOC
credits
under
New
Jersey's
Open
Market
Emission
Credits
Trading
Program
to
meet
its
needs.
The
recently
USEPA
approved
Open
Market
Emissions
Credits
Trading
Program
for
New
Jersey
forbids
The
bakery
from
interpollutant
emissions
credits
trading,
allowing
only
intrapollutant
emission
credits
trading,
thus
reducing
the
actual
market
for
emissions
credits.
The
company
makes
plans
to
move
to
New
York
State
where
the
transportation
cost
may
be
greater.
This
commercial
bakery
decides
to
move
to
New
York,

and
as
a
result
Bergen
County
losses
jobs
and
tax
revenue,
and
the
amount
of
pollution
increases
in
the
New
York/
New
Jersey
metropolitan
region.
36
36
Under
the
Proposed
INTERPOLLUTANT
EMISSIONS
CREDITS
TRADING
PROGRAM
In
New
Jersey's
deregulated
marketplace
with
open
market,
INTERPOLLUTANT
emissions
credits
trading
with
an
emission
cap
(
Cap
&
Earn),
when
the
same
commercial
bakery
wants
to
expand
and
has
to
install
pollution
control
equipment
to
meet
the
new
regulations,
it
has
the
electricity
providers
in
the
State
bid
on
a
new
electricity
contract
which
includes
1)
low
cost
electricity
and
2)
a
package
which
will
install
pollution
control
equipment
and
a
purchase
agreement
for
the
VOC
emissions
credits
which
will
be
used
to
offset
the
NOx
emissions
traveling
to
the
New
York/
New
Jersey
region
from
a
coal­
fired
power
plant
in
Pennsylvania
for
a
limited
amount
of
time.

Cap
&
Earn,
an
open
market,
interpollutant
emission
credits
trading
program
allows
for
an
equal
or
greater
amount
of
ozone
precursors
and
hazardous
air
pollutants
to
be
reduced
in
a
local
community
as
opposed
to
reducing
NOx
emissions
at
great
distances
from
a
community.

In
addition,
interpollutant
emission
credit
trading
allows
for
the
local
improvements
in
the
local
air
quality
and
the
local
economy
to
be
sustained
or
to
grow,
whereas
intrapollutant
trading
does
not
perform
to
this
level
of
local
impact,
environmentally
or
economically.
37
37
Scenario
7:
THE
POWER
OF
THE
LARGE
CONSUMER
AND
IT'S
SUPPLIER
­
A
COOPERATIVE
APPROACH
TO
CLEAN
AIR
An
Automobile
Manufacturer
and
Regional
Parts
Suppliers
in
South
Carolina
(
Only
with
Interpollutant
Emissions
Credits
Trading)

A
power
company
would
come
into
the
offices
of
a
large
automobile
manufacturing
facility
in
South
Carolina
and
would
say,"
I'd
like
your
business,
how
about
some
low
cost
electricity,
and
I'll
clean
up
your
emissions
and
purchase
them
with
electricity.
Not
only
will
I
cover
the
generation
cost,
but
I'll
cover
the
transmission
and
distribution
fees,
too."
The
large
power
company
might
tell
the
power
supplier
that
more
emissions
of
ozone
precursors
can
be
removed
from
the
environment
and
at
less
costs
if
the
power
company
reduces
ozone
precursor
and
hazardous
air
pollutant
emissions
from
the
automobile
manufacturer's
suppliers.
The
auto
manufacturer
might
tell
the
power
company
that
under
Federal
law
its
suppliers
are
exempt
from
reducing
their
emissions
of
ozone
precursors,
because
of
the
suppliers'
locations
and
permitted
emissions
levels.
The
automobile
manufacturer
would
further
state
that
if
all
the
suppliers'
emissions
were
reduced,

then
more
air
pollution
will
be
cleaned
from
the
environment
through
free
enterprise
compared
to
under
Federal
laws
and
regulations.
If
the
power
company
could
trade
electricity
38
38
fractionally,
the
environmental
emissions
credits
could
be
brought
by
several
power
companies.
Each
power
company
would
pay
for
a
fraction
of
emission
credits
in
exchange
for
generation
costs,
transmission
costs
and
distribution
costs.
Fraction
energy
trading
would
create
a
greater
open
market
for
emission
credits
trading.
For
example,
Mirant
could
trade
generation
costs
for
some
emission
credits,
Duke
power
could
trade
transmission
fees
for
some
emission
credits
and
the
City
of
Seneca
could
trade
distribution
costs
for
some
emission
credits
to
assist
Seneca's
local
industry.
This
cannot
happen
under
the
current
and
proposed
Federal
Laws
and
current
and
proposed
USEPA
regulations.
This
could
only
happen
using
an
interpollutant
emissions
credits
trading
program
in
an
open
market,
such
as
Apples
for
Oranges.

Free
Enterprise
and
the
Power
of
the
Consumer
of
electricity
can
radically
change
the
way
our
Nation
increase
its
air
quality
and
provide
for
economic
growth.
39
39
Chapter
8
KEY
ISSUES:

ESTABLISHING
REASONABLE
GUIDELINES
FOR
INTERPOLLUTANT
TRADING
PROGRAMS
40
40
KEY
ISSUES:
REASONABLE
GUIDELINES
All
trading
programs
need
reasonable
guidelines.
These
guidelines
sometimes
tend
to
be
arbitrary
in
nature
as
opposed
to
being
pointed
with
certainty
and
exactness.
Nevertheless,

reasonable
guidelines
are
needed
to
ensure
public
health.
Apples
for
Oranges'
open
market,

interpollutant
trading
programs
with
Cap
&
Earn
implementation
would
need
reasonable
guidelines,
also.
Case
law
has
assisted
in
minimum
guidelines
for
trading
programs
as
well
as
upheld
reasonable
arbitrary
regulations
which
were
put
in
place
by
the
USEPA
to
protect
the
public
health
and
safety.
Therefore,
guidelines
for
an
open
market,
interpollutant
emissions
trading
program
with
an
emission
cap
could
be
developed
with
the
same
focus
of
public
health
and
safety,
and
built
upon
current
intrapollutant
emissions
trading
programs
to
establish
rules
specifically
for
interpollutant
emissions
credits
trading.

The
section
discusses
some
guidelines
for
emissions
credits
trading.
It
hopes
to
touch
on
all
pertinent
issues,
but
by
no
means
is
complete.
This
section
is
meant
to
begin
the
discussion
on
guidelines
for
AFO
programs,
interpollutant
trading.
The
section
discusses
A)
guidelines
for
trading
between
pollutant
species,
B)
guidelines
for
emissions
reductions
from
utilities
and
industry,
C)
the
`
hot
spot'
issue,
D)
geographic
scale
of
trading,
E)
Federal
and
State
oversight
of
air
quality
management,
F)
ensuring
credible
record
keeping
and
monitoring
and
G)
fractional
energy
trading
(
FRACTRAD).

A.
GUIDELINES
FOR
TRADING
BETWEEN
POLLUTANT
SPECIES
The
guidelines
for
trading
between
pollutant
species
should:

1.
exclude
trading
of
mercury
emissions
2.
work
within
established
hazardous
air
pollutant
(
HAP)
frameworks
3.
establish
trading
ratios
between
species
4.
establish
local
and
regions
trading
ratios
41
41
5.
provide
credible
incentives
for
early
emissions
reduction
6.
provide
credible
incentives
for
emissions
reduction
beyond
the
amount
which
is
required
under
Federal
and
State
regulations
7.
must
be
cost­
effective.

Open
Market,
interpollutant
emissions
credits
trading
would
exclude
trading
of
mercury
emissions
form
coal­
fired
power
plants
for
other
pollutant
species.
The
support
for
reducing
mercury
emissions
is
extremely
strong.
USPIRG,
the
Southern
Alliance
for
Clean
Energy,
Izaak
Walton
League
of
America,
the
National
Environment
Trust,
National
Wildlife
Federation,

Natural
Resources
Defense
Council
and
others
strongly
support
great
reductions
in
mercury
emissions.
Mercury
emissions
from
coal­
fired
power
plantssshould
be
addressed
separately,

however
interpollutant
trading
could
be
effected
by
installing
equipment
which
reduces
mercury
emissions.
Therefore,
certain
mercury
emissions
reduction
strategies
could
produce
emissions
credits
for
nitrogen
oxides
and
sulfur
dioxide.
These
NOx
and
SOx
credits
should
be
allowed
to
be
traded
in
an
AFO
("
Apples
for
Oranges"/
open
market,
interpollutant
emission
credits
trading)

program.

Open
market,
interpollutant
emissions
credits
trading
programs
with
an
emission
cap
(
AFO/
Cap
&
Earn)
should
provide
strong
incentives
to
reduce
air
toxins
(
HAP)
and
follow
the
di
minimis
standards
of
trading
emissions
credits
under
current
HAP
frameworks
such
as
those
found
in
the
Michigan's
and
New
Jersey
`
s
open
market
emissions
trading
programs.
Cap
&
Earn
programs
would
concentrate
their
initial
thrust
on
reducing
and
provide
strong
incentives
to
reduce
air
toxins
during
the
first
stage
of
trading.
A
trading
ratio
favoring
HAP
emissions
should
be
developed
when
trading
occurs
between
two
pollutant
species.

Reasonable
trading
ratios
would
be
established
for
the
species.
As
chemical
species,
HAP
emissions
have
the
most
adverse
effects
on
public
health
and
the
environment
as
compared
to
42
42
NOx,
SOx
and
other
VOC
emissions.
HAP
emissions
should
carry
the
most
weight
in
any
trade
in
an
interpollutant
trading
program.
VOC
emissions
from
industry
represent
a
carrot
incentive
for
electrical
utilities
to
increase
market
share
and
to
retain
customers,
therefore
VOC
emissions
should
carry
more
weight
in
any
trade
between
NOx
and
SOx
emissions.

Local
impacts
of
emissions
reductions
which
effect
public
health
should
carry
more
weight
than
distant
reductions.
For
example
local
emissions
reductions
of
NOx
and
VOC's
should
weigh
more
in
a
trade
than
distant
reductions
in
NOx.

Ratios
between
species
and
local
factors
would
be
used
for
trading
in
AFO
programs.
For
example,
one
ton
of
local
VOC
reduction
credits
could
be
traded
to
offset
two
tons
of
NOx
emissions.
Or,
one
ton
of
local
HAP
reduction
credits
could
be
traded
to
offset
ten
distant
tons
of
NOx
emissions.
Or,
one
ton
of
local
NOx
emissions
could
be
traded
to
offset
1.3
tons
of
distant
NOx
emissions.
Ratios
and
a
different
categories
of
emissions
reduction
already
exist
in
trading
programs.
Currently,
several
States
have
different
rules
for
emissions
credits
during
ozone
seasons.
Input
from
discussions
with
stakeholders
would
serve
to
establish
agreement
on
trading
ratios.

Guidelines
for
trading
between
pollutant
species
should
provide
credible
incentives
for
early
emissions
reductions,
provide
credible
incentives
for
emissions
reductions
beyond
an
amount
which
is
required
under
Federal
and
State
regulation,
and
be­
cost
effective.
AFO
trading
systems
should
allow
for
the
value
of
emission
credits
to
cover
the
cost
of
the
emissions
reduction.
For
example,
if
pollution
control
equipment
is
required
to
reduce
VOC
emissions
from
an
industrial
smokestack
which
produces
25
tons
of
emissions
annually
and
has
a
flow
rate
of
2500
CFM,
then
the
cost
of
the
pollution
equipment
in
relation
to
the
value
of
emissions
credits
must
be
determined
and
be
an
incentive
to
install
the
equipment.
Otherwise,
there
is
no
incentive
to
43
43
reduce
pollution.
If
the
cost
of
this
pollution
control
equipment
is
$
225,00.00,
then
an
reasonable
incentive
has
to
be
established.

From
previous
discussion,
the
value
of
a
ton
of
NOx
for
2003­
2007
is
between
$
3750.00
and
$
6200.00.
The
annual
value
of
emissions
credits
for
twenty­
five
(
25)
tons
of
VOC
emission
given
this
range
is
between
$
93,000.00
and
$
150,000.00.
The
higher
value
of
the
range
still
does
not
cover
the
cost
of
the
pollution
control
equipment
under
current
discrete
emissions
reductions
(
DER)
credits
guidelines.
Hence,
new
guidelines
must
be
established
to
create
reasonable
incentives
to
make
AFO
programs
effective.

Using
ratios
between
pollutant
species
during
interpollutant
trading
or
extending
the
duration
of
credits
may
be
necessary.
A
trading
ratio
of
2
to
1
for
NOx
to
VOC
would
provide
a
reasonable
incentive
producing
between
$
186,000.00
and
$
300,000.00
towards
the
purchase
of
pollution
control
equipment.
Similarly,
extending
the
duration
of
the
emissions
credits
from
one
year
to
two
years
and
maintaining
a
1
to
1
trading
ratio
between
NOx
and
VOC
would
produce
the
same
dollar
value.

Dollar
values
of
emissions
could
vary
from
smokestack
to
smokestack.
Not
every
smokestack
produces
the
same
tonnage
of
emission.
Interpollutant
trading
guidelines
would
have
to
address
these
issues
so
incentive
can
be
real
and
effective.

B.
GUIDELINES
FOR
EMISSIONS
REDUCTIONS
FROM
UTILITIES
AND
INDUSTRY
Guidelines
for
emissions
reductions
from
utilities
and
industry
would
have
to
be
established.
These
guidelines
should
be
flexible
and
cover
a
certain
percentage
of
emissions
reductions
in
coal­
fired
power
plants
through
the
AFO
program.
AFO
programs
should
initially
focus
the
majority
of
emissions
reductions
on
industrial
smokestacks
and
part
of
the
reductions
44
44
would
come
from
coal­
fired
power
plants.
Since
one
of
the
main
driving
forces
is
the
customer,

the
majority
of
emissions
reductions
should
come
from
industrial
smokestacks
initially.
This
focus
should
concentrated
on
air
toxins.
Emissions
reductions
from
coal­
fired
power
plants
would
be
done
on
a
partial
basis.
Generally,
coal­
fired
power
plants
have
more
than
one
boiler
and
more
than
one
smokestack.
Emissions
from
a
fraction
of
the
total
number
of
smokestacks
of
coal­
fired
power
plants
could
be
reduced.

The
emissions
reduction
targets
in
the
AFO
program
are
provided
in
this
document
and
initially
propose
smaller
target
reductions
for
NOx
and
SOx
by
2007
in
comparison
to
other
proposed
Federal
legislation
and
regulations,
but
AFO
program
has
additional
requirements
on
coal­
fired
power
plants
by
2007.
The
coal­
fired
power
plants
must
also
reduce
carbon
monoxide
emissions,
produce
electricity
from
renewable
sources,
and
reduce
emission
from
industrial
and
commercial
sources.
In
additional
by
2007,
participating
industry
would
have
to
increase
their
energy
efficiency
by
fifteen
percent
(
15%).
By
2012,
ninety
percent
(
90%)
of
all
industrial
smokestack
emissions
would
be
reduced,
eighty­
five
percent
of
(
85%)
of
NOx
and
SOx
emissions
from
coal­
fired
power
plants
would
be
reduced
and
ninety
percent
(
90%)
of
all
mercury
emissions
would
be
reduced.
AFO
programs
would
reduce
more
pollution
than
the
US
Senate's
Clean
Power
Act
and
the
Bush
Administration's
multipollutant
reduction
targets
for
2012
under
the
Clear
Skies
Initiative.

C.
THE
"
HOT
SPOTS"
ISSUE
The
"
hot
spot"
issue
is
of
concern
by
many
stakeholders.
The
Southern
Alliance
for
Clean
Energy,
National
Environmental
Trust,
the
Clean
Air
Task
Force,
the
American
Lung
Association
and
USPIRG
stand
strong
on
the
position
that
any
emissions
trading
program
must
take
into
45
45
account
the
potential
for
"
hot
spots".
A
Cap
&
Earn
emission
credits
trading
programs
could
effectively
minimize
the
potential
for
"
hot
spot"
by
reducing
the
air
toxins
from
local
industries
near
and
adjacent
to
power
plants.
Emissions
reductions
under
an
AFO
program
could
be
designed
for
specific
regions
to
decrease
the
likelihood
of
developing
"
hot
spots".

D.
THE
GEOGRAPHIC
SCALE
OF
INTERPOLLUTANT
TRADING
The
geographic
scale
for
interpollutant
trading
would
primarily
be
designed
to
effectively
reduce
emissions
in
non­
attainment
areas.
Obviously,
emissions
in
Georgia
should
not
be
traded
for
emissions
credits
in
California.
An
AFO
trading
program
would
build
upon
current
regional
and
State
programs
as
well
as
evidence
provided
in
recent
court
decisions
regarding
ozone
transportation.
VOC
ozone
precursor
emissions
may
be
more
localized
due
to
the
heavier
weight
of
the
molecular
species,
therefore
AFO
programs
would
be
more
effective
in
reducing
"
hot
spots"
which
are
associated
with
industry.

Geographic
scales
of
different
interpollutant
trading
regions
could
require
different
trading
rules.
The
Southeast
has
much
industrial
growth,
so
the
Southeast
could
have
a
regional
Cap
&

Earn
program
that
addresses
a
relationship
between
industry
and
utilities.
The
Northeast
has
much
ozone
transportation
from
the
Midwest,
so
the
Northeast
could
have
a
regional
Cap
&
Earn
program
that
addresses
this
large
amount
of
ozone
transportation
with
a
relationship
that
address
its
needs.

Regional
trading
zones
would
have
to
be
established,
and
one
would
suspect
that
there
would
be
overlapping
regions.
The
rules
may
be
different
for
each
region,
but
could
be
cooperative
between
regions.
46
46
E.
FEDERAL
AND
STATE
OVERSIGHT
OF
AIR
QUALITY
MANAGEMENT
Federal
and
State
oversight
of
air
quality
management
would
continue.
Geographic
regions,
non­
attainment
area
and
trading
programs
would
be
under
the
management
of
Federal
and
State
agencies.
These
agencies
would
ensure
that
trading
is
producing
air
quality
improvements
and
that
these
improvement
are
meeting
the
requirements
under
the
Clean
Air
Act
(
CAA)
or
amendments
to
the
CAA.

G.
ENSURING
CREDIBLE
RECORD
KEEPING
AND
MONITORING
AFO
program
would
build
upon
guidelines
already
established
for
intrapollutant
trading.

Additionally,
participants
would
be
required
report
emissions
inventory
with
production
records
online
to
monitoring
agency.
These
reports
would
be
available
for
public
review.
Continuous
emissions
monitoring
(
CEM)
devices
would
be
installed
on
participating
smokestacks
when
possible.

F.
FRACTIONAL
ENERGY
TRADING
(
FRACTRAD)

Fractional
energy
trading
(
FRACTRAD)
is
a
new
concept
which
could
be
used
in
regulated
and
deregulated
energy
markets.
FRACTRAD
allows
for
emissions
credits
to
be
purchased
with
electricity.
Fractional
energy
trading
is
introduced
for
the
first
time
under
this
Apples
for
Oranges'
interpollutant
trading
program.
Emission
credits
could
be
purchased
under
FRACTRADing,
and
the
fractional
dollar
amounts
could
pay
for
pollution
control
equipment
and
the
equipment's
operating
costs.

FRACTRAD
increases
the
market
reach
of
power
companies,
and
would
allow
for
more
than
one
power
company
to
be
part
of
an
emissions
credits
trade.
The
power
cost,
transmissions
47
47
cost
and
distribution
cost
for
a
delivered
kilowatt
could
be
separated
out
of
emissions
credits
purchases,
and
distributed
to
more
than
one
power
company.
48
48
Chapter
9
SUMMARY
OF
KEY
POINTS
49
49
SUMMARY
OF
KEY
POINTS
Apples
for
Oranges
Version
2:
Cap
&
Earn
An
Open
Market,
Interpollutant
Species
Emission
Credits
Trading
Program.

1.
Apples
for
Oranges
and
Cap
&
Earn
are
open
market,
an
interpollutant
emissions
credits
trading
programs
with
an
emission
cap.
The
progams
are
incentive
methods
for
cleaning
the
environment
that
provide
vehicles
for
economic
growth
of
the
Nation
and
focuses
on
the
local
environment
and
economic
growth
of
a
community.

2.
Interpollutant
Trading
­
Interpollutant
trading
occurs
when
one
type
of
emissions
credit
is
traded
for
a
different
type
of
emission.
Nitrogen
oxide
(
NOx)
emissions
credits
are
traded
for
volatile
organic
compound
(
VOC)
emissions.
Sulfur
dioxides
(
SOx)
emissions
credits
are
traded
for
carbon
dioxide
(
CO2)
emissions.

3.
Intrapollutant
Trading
­
Intrapollutant
trading
occurs
when
a
specific
type
of
emissions
credit
is
traded
for
the
same
type
emission.
Nitrogen
oxides
(
NOx)
emissions
credits
are
traded
for
nitrogen
oxide
emissions
(
NOx)
only.
VOC
emissions
credits
are
traded
for
VOC
emissions,
only.

4.
The
emissions
credits
trading
programs
can
contain
incentives
contain
obligations
such
as
decreasing
carbon
dioxide
emissions
through
increased
efficiency
and
renewable
energy
requirements,
as
well
as
target
reductions
for
emissions
of
air
toxins,
mercury,
sulfur
dioxide
and
nitrogen
oxides.

5.
The
best
incentive
for
cleaning
the
environment
is
to
allow
for
power
companies
to
competitively
increase
market
share
with
an
environmental
agenda
with
aggressive
emissions
reduction
targets
and
focusing
on
increasing
the
air
quality
in
local
communities
.

6.
The
nationwide
goal
of
Apples
for
Oranges/
Cap
&
Earn's
open
market,
interpollutant
emissions
credits
trading
program
is
to
reduce
two­
thirds
(
2/
3)
of
all
present
day
air
pollution
(
mercury,
air
toxins,
nitrogen
oxides
and
sulfur
dioxide)
by
eighty
percent
(
80%)
in
the
next
ten
years
and
ninety
percent
(
90%)
of
air
pollution
from
new
sources.

7.
The
Apples
for
Oranges
program
aims
to
reduce
the
potential
for
"
hot
spots"
to
occur
in
local
communities
by
creating
reasonable
guidelines
for
emissions
reductions
of
ozone
precursors
and
hazardous
air
pollutants
in
local
communities.

8.
Interpollutant
emission
credits
trading
reduces
the
methods
in
current
regulations
and
laws
that
decrease
air
quality.
50
50
9.
These
methods
are
a)
adjusting
smokestack
height,
b)
dilution
methods
with
fans,
c)
"
skipping
to
the
next
county"
and
d)
duplicating
facilities.

10.
There
are
two
fundamental
questions
that
we,
as
Americans,
have
to
ask
ourselves
when
our
leaders
choose
a
Federal
environmental
protection
program
either
through
Administrative
regulation
or
Federal
laws
made
by
the
Legislative
Branch.

11.
One
question
to
ask
families
is,
"
If
they
have
a
choice
between
having
the
pollution
from
a
manufacturing
facility
next
to
their
homes
cleaned
or
emissions
from
the
a
power
plant
over
100
miles
away
cleaned,
which
would
they
want?"

12.
The
other
fundamental
question
that
needs
to
be
answered
is,
"
Should
Federal
Regulations
and
Laws
provide
opportunity
for
communities
to
choose
between
reducing
air
pollution
from
local
sources
and
reducing
air
pollution
from
source
hundreds
of
miles
away?"

13.
INTERPOLLUTANT
emissions
credits
trading
allows
for
power
companies
to
have
greater
ability
to
improve
the
local
and
national
air
quality
by
reducing
their
customers'
air
pollution
whereas
intrapollutant
emissions
credits
trading
does
not.

14.
Interpollutant
emissions
credits
trading
programs
such
as
Apples
for
Oranges
uses
the
market
value
of
the
multipollutant
emissions
from
power
plants
to
reduce
emissions
from
local
manufacturing
plants
prior
to
or
in
conjunction
with
reducing
multipollutant
emissions
from
the
older
coal­
fired
power
plants.

15.
The
Apples
for
Oranges
program
creates
a
shift
in
the
way
individual
segments
of
society
which
desire
reduced
emissions
would
be
grouped.
The
shift
would
occur
from
the
current
aggregation
of
emissions
producers
and
community
to
electricity
producers
and
electricity
consumers.

16.
This
shift
allows
for
the
environmental
marketplace
to
be
polarized
with
an
economic
weight
never
before
seen
in
any
environmental
regulatory
program.

17.
The
value
of
1%
market
share
of
the
electric
power
marketplace
is
almost
greater
than
the
entire
annual
pollution
control
marketplace
for
air
emissions,
while
the
current
value
of
"
excess"
nitrogen
oxide
emissions
based
on
USPIRG
data
demonstrates
the
strength
of
market
forces
for
cleaning
the
environment.

18.
The
current
2003­
2007
market
value
for
the
excess
nitrogen
oxide
(
NOx)
emissions
from
USPIRG's
Dirtiest
100
Utility
Plants,
older
coal­
fired
power
plants,
is
between
$
10.1B
and
$
16.7B
dollars
($
10,144,095,000
to
$
16,771,570400).

19.
This
market
value
can
be
translated
into
an
amount
of
units
of
pollution
control
equipment
for
manufacturing
facilities
than
can
be
purchased
to
produce
emission
credits
which
could
offset
these
nitrogen
oxide
(
NOx)
emissions
for
a
limited
amount
of
time.
51
51
20.
The
current
2003
­
2007
market
value
for
the
excess
nitrogen
oxide
(
NOx)
emissions
from
USPIRG's
Dirtiest
100
Utility
Plants
(
older
coal­
fired
power
plants)
can
reduce
90%
of
the
emissions
from
between
45,000
and
75,000
local
smokestacks
of
manufacturers
in
local
communities.

21.
With
interpollutant
emission
credits
trading,
emissions
reductions
can
occur
in
between
45,000
and
75,000
smokestacks
of
local
manufacturers
providing
great
improvements
in
the
local
air
quality
by
greatly
reducing
air
toxins.

22.
The
good
intentions
and
current
strategies
of
environmental
regulations
in
this
country
continue
to
produce
adverse
affects
on
the
health
and
economies
of
local
communities.
These
adverse
effects
are
often
overlooked
or
not
understood
by
most
law
makers,
regulatory
agencies,
communities
and
environmental
groups.

23.
By
law
and
design
of
New
Jersey's
Open
Market
Emissions
Credits
Trading
Program
,
pollution
can
increase.

24.
Both
the
Bush
Administration
and
the
US
Senate
propose
a
multipollutant
reduction
strategy
with
intrapollutant
species
trading,
not
an
interpollutant
species
trading
program.
The
current
USEPA
regulations
only
allow
for
intrapollutant
emissions
credits
trading
under
40
CFR
Part
51
Subpart
U.
Neither
the
Administration
through
new
regulatory
proposals
nor
the
US
Senate's
Clean
Power
Act,
S.
556
address
changes
to
the
current
USEPA
regulations
which
would
create
an
interpollutant
emissions
credits
trading
program.

25.
Key
Issues
which
would
need
reasonable
guidelines
would
be
A)
rules
for
trading
between
pollutant
species,
B)
rules
for
emissions
reductions
from
utilities
and
industry,
C)
the
`
hot
spot'
issue,
D)
geographic
scale
of
trading,
E)
Federal
and
State
oversight
of
air
quality
management,
F)
ensuring
credible
record
keeping
and
monitoring
and
G)
fractional
energy
trading
(
FRACTRAD).

26.
The
guidelines
for
trading
between
pollutant
species
should:
1.
exclude
trading
of
mercury
emissions,
2.
work
within
established
hazardous
air
pollutant
(
HAP)
frameworks,
3.
establish
trading
ratios
between
species,
4.
establish
local
and
regions
trading
ratios,
5.
provide
credible
incentives
for
early
emissions
reduction,
6.
provide
credible
incentives
for
emissions
reduction
beyond
the
amount
which
is
required
under
Federal
and
State
regulations
7.
must
be
cost­
effective.

27.
Interpollutant
emissions
trading
would
exclude
trading
of
mercury
emission
for
other
pollutant
species.

28.
AFO
programs
should
provide
strong
incentives
to
reduce
air
toxins
(
HAP)
and
follow
the
di
minimis
standards
of
trading
emissions
credits
under
current
HAP
frameworks.
52
52
29.
Ratios
between
species
and
local
factors
would
be
used
for
trading
in
AFO/
Cap
&
Earn
programs.

30.
AFO
trading
systems
should
allow
for
the
value
of
emission
credits
to
cover
the
cost
of
the
emissions
reduction.

31.
New
guidelines
must
be
established
to
create
reasonable
incentives
to
make
AFO
programs
effective
such
as
using
a
ratios
between
pollutant
species
during
interpollutant
trading
or
extending
the
duration
of
credits
may
be
necessary.

32.
Guidelines
for
emissions
reductions
from
utilities
and
industry
would
have
to
be
established.

33.
Cap
&
Earn/
AFO
programs
should
initially
focus
the
majority
of
emissions
reductions
on
industrial
smokestacks
and
part
of
the
reductions
would
come
from
coal­
fired
power
plants.

34.
Cap
&
Earn/
AFO
programs
would
reduce
more
pollution
than
the
US
Senate's
Clean
Power
Act
and
the
Bush
Administration's
multipollutant
reduction
targets
for
2012
under
the
Clear
Skies
Initiative.

35.
Emissions
reductions
under
an
AFO
program
could
be
designed
for
specific
regions
to
decrease
the
likelihood
of
developing
"
hot
spots".

36.
The
geographic
scale
for
interpollutant
trading
would
primarily
be
designed
to
effectively
reduce
emissions
in
non­
attainment
areas.

37.
VOC
emissions
may
be
more
localized
due
to
the
heavier
weight
of
the
molecular
species,
therefore
AFO
programs
would
be
more
effective
in
reducing
"
hot
spots"
which
are
associated
with
industry.

38.
Geographic
scales
of
different
interpollutant
trading
regions
could
require
different
trading
rules.

39.
Fractional
energy
trading
(
FRACTRAD)
is
a
new
concept
which
could
be
used
in
regulated
and
deregulated
energy
markets.
FRACTRAD
allows
for
emissions
credits
to
be
purchased
with
electricity.

40.
The
power
cost,
transmissions
cost
and
distribution
cost
for
a
delivered
kilowatt
could
be
separated
out
of
emission
credits
purchase,
and
distributed
to
more
than
one
power
company.
53
53
Chapter
10
APPENDIX
A
USPIRG
Data
and
Calculations
FROM
USPIRG:
The
Dirtiest
100
Utility
Plants
­
ExcessNOx
Emissions
based
on
the
differenc
between
current
and
1970
standards
Page
1
of
3
Facility
Owner
state
total
emissions
excess
emissions
1
Cumberland
Tennessee
Valley
Authority
TN
159,893
142,448
2
Paradise
Tennessee
Valley
Authority
TN
149,828
137,303
3
Belews
Creek
Duke
Energy
Corporation
NC
103,736
91,687
4
Gen
J.
M.
Gavin
American
Electric
Power
Service
OH
96,798
84,683
5
Johne
E.
Amos
American
Electric
Power
Service
WV
68,060
56,165
6
Baldwin
Illinois
Power
IL
63,447
55,431
7
J.
M.
Stuart
Dayton
Power
&
Light
Co.
OH
63,815
52,884
8
Clitty
Creek
Ohio
Valley
Electric
Corporation
IN
59,470
52,737
9
New
Madrid
Associated
Electric
Cooperative
MO
53,473
47,033
10
Roxboro
Carolina
Power
&
Light
Company
NC
56,428
45,824
11
Kyger
Creek
Ohio
Valley
Electric
Corporation
OH
48008
42,426
12
W.
H.
Sammis
Ohio
Edison
OH
51,470
40,798
13
Gibson
Cinergy
Corp.
IN
58740
40,687
14
Cardinal
American
Electric
Power
Service
OH
45901
38,117
15
Muskingum
River
American
Electric
Power
Service
OH
44839
37,462
16
Powerton
Commonwealth
Edison
Company
IL
43897
36,661
17
Tanners
Creek
American
Electric
Power
Service
IN
39343
34,852
18
Monroe
The
Detroit
Edison
Company
MI
50163
34,487
19
Mt.
Storm
Virginia
Power
WV
43039
34,269
20
Four
Corners
Arizona
Public
Service
Company
NM
44,244
32,516
21
Crystal
River
Florida
Power
Company
FL
45982
32,347
22
Big
Bend
Tampa
Electric
Company
FL
40417
31,765
23
Clinch
River
American
Electric
Power
Service
VA
34949
24
James
G.
Miller
Jr.
Alabama
Power
Company
AL
45947
30,467
25
Bowen
Georgia
Power
Company
GA
44506
28,960
26
Big
Sandy
American
Electric
Power
Service
KY
38086
28,455
27
Scherer
Georgia
Power
Company
GA
44647
28,296
28
Barry
Alabama
Power
Company
AL
36647
27,686
29
F.
J.
Gannon
Tampa
Electric
Company
FL
32738
27,649
30
Shawnee
Tennessee
Valley
Authority
KY
34322
27,363
31
Kammer
American
Electric
Power
Service
WV
30713
27,249
32
Harilee
Branch
Georgia
Power
Company
GA
33064
27,137
54
54
APPENDIX
A
USPIRG
Data
and
Calculations
facility
owner
state
actual
emissions
excess
emissions
33
Ghent
KentuckyUtilities
Company
KY
37949
26,065
34
Coffeen
Central
Illinois
Public
Service
Co.
IL
28473
25,137
35Miami
Fort
Cinergy
Corp.
OH
30921
24,859
36
Allen
TennesseeValley
Authority
TN
28486
24,812
37
LaCygne
Kansas
City
Power
andLight
Co.
KS
29538
24,029
38Gorgas
AlabamaPower
Company
AL
30444
23,721
39
Fort
Martin
Allegheny
Power
System
WV
29197
23,706
40Mountaineer
(
1301)
American
Electric
Power
Service
WV
27565
23,518
41W.
A.
Parish
Houston
Lighting
&
Power
Company
TX
38595
23,295
42
Harrison
Allegheny
Power
System
WV
33615
22,889
43
Sioux
Union
Electric
Company
MO
26414
22,637
44Widows
Creek
TennesseeValley
Authority
AL
28779
22,188
45
Kincaid
Commonwealth
Edison
Company
IL
24747
21,705
46
Coal
Creek
CooperativePower
Association
ND
28832
21,176
47
Rockport
American
Electric
Power
IN
36509
20,862
48
Kingson
TennesseeValley
Authority
TN
28010
20,274
49
Lewis
&
Clark
Montana­
DakotaUtilities
Co.
MT
32189
20,126
50
Jim
Bridger
PacifiCorp
WY
33507
20,124
51
San
Juan
Public
ServiceCo.
of
New
Mexico
NM
33515
19,908
52
AllenS.
King
Northern
States
Power
Co.
MN
22590
19,789
53
Navajo
Salt
River
Project
Ag.
Imp.
&
Power
AZ
32184
13,642
54
J.
H.
Campbell
Consumers
Energy
Company
MI
25980
19,627
55Marshall
Duke
Energy
Corporation
NC
29723
19,545
56
Big
Stone
Otter
Tail
Power
Company
SD
22389
19,518
57
Bailly
Northern
IndianaPublic
ServiceCo.
IN
21873
19,494
58Warrick
Southern
IndianaGas
andElectric
Co.
IN
23885
19,474
59Milton
R.
Young
MinnkotaPower
Cooperative
ND
23907
19,400
60
Homer
City
GPUGeneration
Corporation
(
GENCO)
PA
29379
19,332
61
Thomas
Hill
AssociatedElectric
Cooperative
MO
25546
19,102
APPENDIX
A
55
55
USPIRG
Data
and
Calculations
65
Limestone
Houston
Lighting
and
Power
Company
TX
27589
17,613
66
Hatfield's
Ferry
Allegheny
Power
System
PA
24288
17,599
67
Winyah
Santee
Cooper
SC
22279
17,287
68
St.
John's
River
Power
Plant
Jacksonville
Electric
Authority
FL
25112
17,284
69
Morgantown
Potomac
Electric
Power
Company
MD
22189
16,944
70
Martin
Lake
TU
Electric
TX
30286
16,565
71
Chesterfield
Virginia
Power
VA
22475
16,437
72
Mitchell
American
Electric
Power
Service
WV
23105
16,309
73
Sibley
Missouri
Public
Service
MO
18538
16,277
74
Pleasant
Prairie
WI
24055
16,211
75
Brandon
Shores
Baltimore
Gas
and
Electric
Company
MD
22898
15,756
76
Intermountain
Los
Angles
Dept.
fo
Water
&
Power
26269
15,720
77
C.
P.
Crane
PNG
Corporation
17423
15,691
78
St.
Clair
The
Detroit
Edison
Company
21454
15,650
79
Walter
C.
Beckjord
Cinergy
Corp
OH
20775
15,473
80
Keystone
GPU
Generation
Corporation
(
GENCO)
PA
25090
15,440
81
Wateree
South
Carolina
Electric
&
Gas
Co.
SC
18039
15,234
82
Joliet
29
Commonwealth
Edison
Company
IL
21102
15,197
83
E.
O.
Gaston
Alabama
Power
Company
AL
23515
15,172
84
Reid
Gardner
Nevada
Power
Company
NV
18904
15,109
85
Bruce
Mansfield
Ohio
Edison
Company
PA
25503
15,066
86
Conemaugh
BPU
Generation
Corporation
(
GENCO)
PA
24525
14,975
87
Kanawha
River
American
Electric
Power
Service
WV
16893
14,928
88
Dave
Johnston
PacifiCorp
WY
21173
14,840
89
Williams
South
Carolina
Electric
&
Gas
Co.
SC
17905
14,371
90
Jeffrey
Energy
Center
Western
Resources,
Inc.
KS
25360
14,099
91
Michigan
City
Northern
Indiana
Public
Service
Co.
IN
15544
13,664
92
Mountainer
(
1301)
American
Electric
Power
Company
WV
19142
13,376
93
Craig
Tri­
State
G&
T
Association,
Inc.
CO
21124
13,376
94
Hunter
(
Emery)
PacifiCorp
UT
21176
13,687
95
W.
H.
Zimmer
Cinergy
Corp.
OH
19906
13,270
96
Seminole
Seminole
Electric
Cooperative,
Inc.
FL
20895
13,256
97
Merrimack
Northeast
Utilities
Service
Co.
NH
15777
13,192
98
J.
T.
Deely
City
Public
Service
TX
22580
13,172
99
Avon
Lake
Centerior
Energy
OH
15979
13,128
100
Bull
Run
Tennessee
Valley
Authority
TN
17434
13,076
TOTAL
EXCESS
TONS
2,705,094
OF
EMISSIONS
ANNUALLY
The
average
8­
year
cost
for
add­
on
pollution
control
equipment
for
a
flow
rate
of
2500
SCFM
flow
(
equipment
and
installation
cost
only)
is
$
225,000.
Therefore,
one
can
calculate
the
number
of
MARKET
VALUE
OF
THESE
EXCESS
$
10,144,102,500
machines
that
can
be
purchase
with
the
market
value
of
the
AT
$
3750
PER
TON
excess
tonnage
of
NOx
emissions
This
calculation
uses
a
2500
SCFM
unit
as
the
standard,
The
number
of
local
control
te
 =($
10114102500)/($
225,000)
because
the
price
of
pollution
control
equipment
with
the
can
be
purchase
by
the
excess
emission
in
the
pollution
control
industry
is
estimated
senario
above:
45085
by
$
225,000
per
2500
SCFM.
This
estimate
is
valid
up
to
25,000
SCFM
and
assumes
that
the
25,000
SCFM
is
derived
from
multiple
process
lines
no
greater
than
5,000
SCFM.
The
number
of
local
control
te
=($
14,000,000,000)/$
225,000)
can
be
purchase
by
the
USEPA
market
value
of
$
14
billion
for
reducing
NOx
62222
Based
upon
the
market
value
of
excess
emissions
the
number
of
from
the
Clinton
Administration,
Carol
Browner
USEPA
2500
SCFM
units
that
can
be
installed
is:
45,085
Sources:

1)
USPIRG:
The
Dirtiest
100
Utility
Plants
­
Excess
NOx
Emissions
based
on
the
difference
between
current
and
1970
standards
2)
Conversations
with
professionals
within
the
pollution
control
industry
concerning
the
cost
of
state­
of­
the­
art:
regenerative
thermal
oxidizers
(
RTO's)
and
catalytic
oxidizers.
56
56
APPENDIX
B
TERSE
OVERVIEW
OF
PROPOSED
CHANGES
TO
SECTION
113
OF
HR
655
ELECTRIC
CONSUMERS'
POWER
TO
CHOOSE
ACT
OF
1997
Proposed
changes
which
will
be
sent
to
U.
S.
Rep.
L.
Graham,
R­
SC
within
three
weeks
of
8/
7/
98
current
tittle
of
section
113:
Renewable
Energy
proposed
title
after
conversation
with
U.
S.
Rep.
L.
Graham,
R­
SC:
Renewable
Energy
and
Environmental
Restoration
Overview
of
Proposed
changes
by
R.
C.
Dalton;
Apples
for
Oranges
Trading.
Proposed
changes
to
the
USEPA's
emissions
credits
trading
programs
would
allow
for
VOC's,
ozone,
NOx,
CO,
CO2
and
SOx
emissions
credits
to
be
traded
to
offset
emission
of
another
pollutant
species.
Currently
NOx
emission
credits
are
traded
for
NOx
emissions,
and
SOx
emission
credits
are
traded
for
SOx
emissions.
Apples
for
Oranges
trading
would
provide
a
greater
incentive
for
companies
to
reduce
their
emissions
by
providing
a
market
for
all
types
of
air
emissions.
For
emissions
trading
to
work
well
in
all
industries,
each
type
of
emission
needs
to
be
able
to
be
traded.
With
apples
for
oranges
trading,
a
coal­
burning
utility
can
purchase
a
VOC
emissions
credit
from
a
industrial
client
for
the
utility's
NOx
emissions.
The
same
utility
could
trade
their
emissions
for
NOx
emissions
credits.
Or,
the
same
utility
can
trade
VOC
credits
for
NOx
emissions.
Or,
a
utility
could
sell
VOC
credits
to
another
utility
for
its
NOx
emission.
Again,
the
principle
is
to
produce
a
larger
and
freer
market
to
reduce
the
overall
pollution
within
the
U.
S.
Apples
for
oranges
trading
would
help
assist
competitiveness
in
the
deregulated
energy
markets
by
providing
more
items
for
bargaining
in
contractual
agreements
between
utilities
and
their
prospective
clients
and
would
allow
for
industrial
and
commercial
business
to
fund
pollution
reduction
measures
by
emissions
credits.

Propose
an
Expansion
of
Emission
Credits
Trading
to
be
Borderless
within
the
U.
S.
For
example,
South
Carolinian
companies
can
trade
emissions
credits
with
Maryland
companies,
instead
of
the
current
program
which
restricts
trade
to
be
within
local
regions
or
EPA
regions.
Expanded
and
freer
trade
will
add
greater
value
to
the
emissions
credits
by
creating
a
larger
market.
Industrial
and
commercial
business
will
have
a
greater
market
to
sell
their
emissions
credits
to
provide
for
pollution
reduction
measures.
The
expansion
of
trade
will
allow
communities
greater
opportunity
to
work
with
surrounding
business
to
restore
their
local
environment
to
healthy
and
clean
levels.
Additionally,
a
community's
real
estate
value
can
be
effected
by
cleaner
air
and
water
within
local
communities;
Cleaner
water
and
air
should
increase
property
values.
The
land
next
to
industry
that
does
not
pollute
should
be
more
valuable
than
land
next
to
industry
that
does
pollute.

*
*
*
*
*
57
57
APPENDIX
C
E­
mail
from
Dr.
Bruce
Yandle
[
Original
Message]
°
From:
<
byandle@
att.
net>
°
To:
<
rcd2001@
earthlink.
net>
°
Date:
9/
6/
01
10:
52:
32
AM
°
Subject:
Re:
Help
Please,
Emission
Credit
Trading
from
a
Clemson
grad.>
°
Bob
 
Your
idea
has
merit,
and
is
well
expressed.
Let
me
°
suggest
that
you
contact
Wendy
Gramm
at
the
Mercatus
°
Center,
George
Mason
University.
Also,
Susan
Dudley,
°
same
organization.
Go
to
their
web
page
and
you
will
°
see
what
they
do.
°
Please
keep
me
posted.
°
yandle@
clemson.
edu
°
Room
201
Sirrine
Hall
°
Clemson
University
°
Clemson,
SC
29634
°
864.656.3970
>
>
Dear
Dr.
Yandle,

°
>
I'm
trying
to
attend
and
participate
in
a
meeting
which
is
closed
to
the
°
>
public.
The
meeting
is
sponsored
by
the
US
Senate
Environment
and
Public
°
>
works
committee
with
Sen.
Jeffords.
The
meeting
contains
electric
utility
°
>
executives,
environmental
groups,
state
regulators
and
observers
which
are
°
>
negotiating
revisions
to
the
Clean
Air
Act.
I
cannot
even
obtain
a
list
of
°
>
negotiators
from
Jefford's
committee.
°
>
I
want
one
simple
change
to
the
USEPA
Open
Market
Emission
Trading
Program
°
>
and
the
Environmental
Incentive
Program
(
EIP).
The
simple
change
is
to
be
able
°
>
to
have
interpollutant
trading
­
VOC
for
a
NOx
credit.
Current
regulation
°
>
has
intrapollutant
trading,
NOx
for
NOx
and
VOC
for
VOC.
°
>
With
the
arguments
that
Mike
Maloney,
Bobby
McCormick
and
Chad
°
>
McGowan
provided
for
deregulation
of
electricity,
one
can
image
the
°
>
profound
effect
that
trading
a
VOC
for
a
NOx
will
have
on
cleaning
the
°
>
environment
in
a
deregulated
marketplace,
especially
locally.
°
>
Imagine
if
Michelin
could
call
up
Duke
Energy,
the
Southern
Company
(
Mirant),
°
>
Carolina
Power
and
Lighting
or
Santee
Cooper
and
say,
"
If
you
want
my
business,
°
>
then
you'll
have
to
reduce
my
emission
and
purchase
my
emission
credits
with
°
>
your
electricity...
And...
at
a
low
cost."
Then,
the
power
company
°
>
which
earns
the
business
can
use
the
VOC
credits
to
offset
NOx
emissions
for
a
°
>
given
period
of
time.
°
>
Or,
even
better...
the
power
company
can
come
into
°
>
BMW
and
say,"
I'd
like
your
business,
how
about
some
low
cost
electricity,
°
>
and
I'll
clean
up
your
emissions
and
purchase
them
with
electricity...
Not
°
>
only
will
I
cover
the
generation
cost,
but
I'll
cover
the
transmission
58
58
°
>
and
distribution
fees,
too"
Then
if
the
power
company
can
trade
°
>
electricity
fractionally
­
generation
costs,
transmission
costs
and
distribution
°
>
costs
for
environmental
emission
credits,
the
open
market
will
be
°
>
greater.
For
example,
Mirant
can
trade
generation
costs
°
>
for
some
emission
credits,
Duke
power
can
trade
transmission
fees
for
some
°
>
emission
credits
and
the
City
of
Seneca
can
trade
distribution
costs
for
some
°
>
emission
credits."
­
I
believe
that
the
environment
and
economic
growth
°
>
can
coexist.
°
>
I
proposed
this
interpollutant
trading
and
°
>
fractional
energy
trading
idea
for
legislative
changes
to
Rep.
Lindsay
Graham.
°
>
Is
there
anything
that
can
be
done
to
get
into
that
meeting
and
is
there
a
°
>
interpollutant
trading
representative
that
exist
besides
myself?
Thank
you
for
your
time.

>
Most
Sincere,

>
>
Robert
C.
Dalton,
Ceramic
Engineering
`
83
°
>
609­
294­
0975
°
>
­­­
Robert
Dalton
>
­­­
rcd2001@
earthlink.
net
°
>
­­­
EarthLink:
It's
your
Internet.
10­
59
10­
59
