Market-based Solutions Sought
Compliance for affected sources comes on a staggered 12-month cycle. At the end of
the year, operators of affected sources make their final annual report to the SCAQMD,
but still have the benefit of a two-month reconciliation period. During this time, a
facility lacking sufficient RTCs to cover their emissions can enter the RTC market to make up
for its shortfall. Similar to the U.S. Acid Rain Program, stiff penalties strongly
encourage compliance. Facilities failing to meet requirements have RTCs deducted from
their account the following year and are subject to monetary penalty.
With a fully operational cap and trade program in place in the Los Angeles area for more than a half-decade, the results are already apparent. SOx and NOx emissions from affected sources have been successfully reduced, although there is still much more to go. The most striking benefit of the RECLAIM program has been its dramatic effect on the economic impact of reductions. It was once thought that NOx credits would trade at around $25,000 per ton, however, the recent RECLAIM market price is roughly $640 to $5,560 per ton. At the outset of the program, the SCAQMD projects annual savings in compliance costs relative to command and control regulation averaging $58 million annually or 42%. However, while RTC costs are far below projections, actual savings have been far greater. These gains notwithstanding, additional environmental benefits and the real economic test for the RECLAIM program will occur next year when the next set of reductions are mandated.
For more information check this Web address:
http://www.aqmd.gov/