§7651c Phase I sulfur dioxide requirements

Summary

After January 1, 1995, any power plant unit listed in Table A must not release more sulfur dioxide (SO2) than the number of allowances shown for that unit unless the unit has met the required emission cuts or the owner holds enough allowances to cover the unit’s yearly emissions. After January 1, 2000, these Phase I limits are replaced by the Phase II rules. The EPA must, by December 31, 1991, estimate how many tons of SO2 will be cut by 1995 and set aside a reserve of allowances up to 3.50 million tons based on each unit’s baseline and 1985 rates and using a 2.50 lbs/mmBtu figure in the calculation. From 1995–1999 the EPA also gives extra allowances to certain Illinois, Indiana, and Ohio units using a 200,000 × pro rata share formula. Owners may ask EPA to let them move a unit’s reduction duty to other units they control; the request must show the units, baselines and calculations, prove total reductions will not be less, and get EPA approval before any switch. An owner can ask for a 2-year delay in meeting the limit if the unit will use qualifying Phase I technology (or transfer its duty to a unit that will). Such extension requests must include a construction contract (which can be conditional), baselines and 1985 rates, projected use for 1995–1999, and must have continuous emissions monitors (CEMS) by January 1, 1995. The EPA will award reserve allowances for approved extensions using formulas that compare 1988–1989 averages (or projected 1995/1996 emissions) to baseline times 2.50 lbs/mmBtu, and may give extra 1997–1999 allowances based on baseline times 1.20 lbs/mmBtu (with a factor-of-3 adjustment). If an approved extension unit emits more than its allowed tons after January 1, 1997, the EPA will subtract allowances equal to the excess the following year. Governors may authorize early reductions before 1995 that earn allowances if they meet the rules and the reductions come from physical or operational changes after November 15, 1990. The EPA will create a Conservation and Renewable Energy Reserve of 300,000 allowances. For each ton of SO2 avoided by approved conservation or renewable projects, the EPA will award one allowance, up to 300,000 total. To count, the utility must pay for the work, have it measured under EPA rules, follow a least-cost plan approved by the regulator, and own or operate at least one affected unit. Only savings or renewable generation after January 1, 1992 and before December 31, 2000 (or before the unit becomes covered) qualify. Each qualifying kilowatt-hour saved or generated is treated as avoiding 0.004 tons of SO2. The EPA must write the rules within 18 months after November 15, 1990. To fund the 300,000 reserve, each unit’s Phase II allocation is reduced by 30,000 allowances each year from 2000 through 2009; any reserve left after January 2, 2010, is reallocated pro rata to affected units. Special low-emitting units that meet strict tests as of November 15, 1990, may elect an alternate baseline and receive Phase II-style allocations using the lower of their 1989 rate or 1.0 lbs/mmBtu. Definitions: "qualified energy conservation measure" = a cost‑effective way to use electricity more efficiently; "qualified renewable energy" = energy from biomass, solar, geothermal, or wind; "electric utility" = any person or government agency that sells electric power.