A U.S. Environmental Protection Agency report on the region’s innovative emission credit trading program cannot be used as a roadmap for future improvements because it is not based on an objective analysis of program data, local air quality officials said.

"We are always open to suggestions for improving our emissions trading program," said Barry Wallerstein, executive officer of the South Coast Air Quality Management District.

"However, EPA’s conclusions are based on selected opinions rather than scientific data," he said. "For that reason, the report can’t be relied on as guidance for improving our trading program or others across the country."

EPA recently released its report, titled "An Evaluation of the South Coast Air Quality Management District’s REgional Clean Air Incentives Market (RECLAIM) – Lessons in Environmental Markets and Innovation."

EPA’s key observation was that RECLAIM has not reduced emissions as much as originally projected, nor as much as would have been reduced by the so-called command-and-control, equipment-based regulations it replaced. According to EPA, this is primarily due to inflation of RECLAIM facilities’ initial emission allocations in 1994.

In response, Wallerstein said that facilities’ initial allocations represent the amount they could have emitted in 1994, had it not been for the region’s severe recession in the early 1990s. Had facility allocations been less, they could have been hobbled by a recessionary level of production and the region’s economy could have been harmed, he said.

EPA’s conclusion that RECLAIM has reduced emissions less than planned is based on a misinterpretation of the program’s stated goals. RECLAIM was designed to ensure that facilities’ nitrogen oxide emissions would decline by 11 percent per year in aggregate from their initial allocations, and that has occurred. Their actual emissions may have declined by a different amount depending on their production level. Similarly, the overall mass emission reduction rate under the command-and-control regulations is also dependent on the facilities’ production level. Consequently, the actual rate of reduction under command-and-control may also be different that the original projected rate.

In addition, there is no way to know whether greater emission reductions would have occurred without RECLAIM, since AQMD’s Board may not have adopted all of the equipment-specific rules called for in the agency’s Air Quality Management Plan.

"RECLAIM has met all the emission reduction target and performance requirements in state law," Wallerstein said.

"To take it to the next level, we will consider lowering facilities’ final emission allocations as part of our 2003 Air Quality Management Plan."

To gain detailed information about RECLAIM program performance, AQMD recommends review of the annual RECLAIM audit reports, available on AQMD’s website. These public reports contain extensive data and analysis regarding facility compliance and program performance trends.

AQMD’s Governing Board adopted RECLAIM in October 1993. It is an emissions "cap-and-trade" program for more than 350 of the largest-emitting facilities in Southern California. Under RECLAIM, each facility is issued an annual allocation for a specified number of pounds of nitrogen oxide and sulfur oxide emissions. Both pollutants contribute to formation of the region’s ozone smog and particulate pollution.

If a facility reduces its emissions below its annual cap -- for example by installing a pollution control device -- it can sell its excess credits to other companies in the program that want to emit more than their annual allocation. Each year from 1994 to 2003, each company’s allocation declines significantly, helping to improve the region’s air quality.

AQMD is the air pollution control agency for Orange County and major portions of Los Angeles, San Bernardino and Riverside counties.

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AQMD Home Page
This page updated: March 01, 2004
URL: http://www.aqmd.gov/news1/epa_reclaim_report.htm