Los Angeles?Area Plants Reenter Emissions Trading

Los Angeles?area generators will rejoin the regional emissions-trading market in the coming year under a deal worked out between the local air district and the California Air Resources Board. The South Coast Air Quality Management District (SCAQMD) amended its Regional Clean Air Incentives Market (RECLAIM) program December 5. Under the new RECLAIM, 14 power plant owners will return to trading in 2004. At first, plant owners will be able to trade their credits only with other power plant operators. Beginning in September, they will be able to trade with some 350 other facilities covered by the emissions-trading program. In the interim, SCAQMD pledged to amend the program to reduce the allocation of emissions credits for all facilities covered?from metal smelters and cement plants to refineries and power plants. Environmental organizations had advocated making the so-called ?shave? simultaneous with restarting trading. However, the agency promised to make the shaves eventually, according to Sam Atwood, district spokesperson. How much to cut the emissions allocations may continue to be a contentious issue, with the environmental groups wanting a closer shave than promised by the district. Reentry of the power plants into the market had been held up last month after the California Air Resources Board raised concerns that it could increase air pollution in the smoggy region (see Energy Circuit, November 14, 2003). Plant operators hold 2,330 tons of nitrogen oxide emissions credits but use only 930 tons a year. The plants were removed from RECLAIM in 2001 because they caused huge credit-market price distortions. Credit prices soared from an average of $4,284 per ton in 1999 to $45,000/ton in 2000, effectively crowding other industries out of the market. The RECLAIM program placed major industrial facilities under an aggregate emissions cap for both nitrogen and sulfur oxides. Facility operators also receive an individual annual emissions allocation. Those that emit less may sell their excess credits to facility operators that emit more, as long as total emissions stay under the aggregate cap.

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Los Angeles?Area Plants Reenter Emissions Trading

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