
The Clean Air Act was very successful legislation for improving air quality (with an initial focus on acid "rain"). The three images below show significant reductions that occurred between 1980 and 1999 concerning the SO2 and NOX concentrations. These reductions have continued into the 2020's and will continue to improve with renewable energy and vehicle electrification (see the chart below the maps).

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These reductions have continued! The reduction is even more impressive when you factor in population growth, increase in the gross domestic product, and the increases in miles driven and energy used. Here the 6 common pollutants are CO, lead, NOx, VOC's, PM10 / PM2.5, and SO2.
Acid deposition problems prompted the “Acid Rain Program” within the Clean Air Act of 1990. This, along with the Amendments of 1992 and some later amendments, tackled the point sources of SO2 and NOX. Mostly the larger coal-fired utilities were impacted (about 110) and started to reduce emissions in 1995, and further reduced emissions in 2000. Obviously, from the figures above, we have had great success in reducing the emissions of these gases. So how was this achieved?
Limits were placed on how much these large, mostly coal-fired utilities, could emit. Simple, right? Well, perhaps not as simple as you might expect. If all the utilities had to reduce emissions by the same percentage we would lower the emissions but at drastically different costs. So what? Well, this had been the approach used in other countries and the approach used in the past, but there is a better way: Emissions Trading!
This was the centerpiece of the acid rain program and now the preferred approach for some emission reductions. Limiting the total number of permits controls the quantities of emissions permitted. By requiring that a utility provide a permit for every ton of SO2 (the program started with SO2 so let's look at that scenario) they emit. If a permit is not available they have to clean up those excess emissions. Okay, so far this is not any different from mandated reductions. Here is the key; you can buy or sell permits at market value. The market controls the cost of permits. Overall this is a lower cost reduction strategy since a utility company can calculate if it will be cheaper to purchase permits, clean up the emission to the minimum (depending on how many permits they have), or reduce emissions to below the number of permits and sell off the excess permits to lower the cost of meeting the reduction. This lowers the cost of meeting the emission reduction, and so hopefully the cost associated with meeting the reductions will not impact the price of electricity as much (lower increases in the cost of electricity for you and me)! Given that most companies own at least several utilities much of the “trading” can occur in-house.
How do utilities get permits?
There are several methods:
- An old utility will be given permits to the point where they can release 1995 numbers - 2.5 Lbs of SO2 per million BTUs of thermal input. After 2000 those numbers were reduced to 1.2 Lbs SO2 per million BTUs of thermal input. If you built a utility after 1995 tough luck for you! No permits for you, you have to buy what you need (essentially you will have to employ modern technology to prevent or capture emissions.)
- There are several auctions during the year where the EPA will sell off permits.
- There are also several brokerage firms that will help you buy or sell permits in the open market.
- Permits do not run out so you can save them to use later.
The EPA provides a nice site explaining the Air Markets Program. Give it a quick look over. - It is a good reiteration of the acid rain story (helpful for good exam scores).
This market-based approach worked well and was a major US success when it was included in the Kyoto Protocol (more on that in the next lesson). The NOX emissions were more complex as it depends on boiler type and size. The next few pages look at how the emissions were reduced either by preventing their formation or by cleaning up the flue gas prior to it going out of the stack.
A summary of the Clean Air Act aimed at creating a healthy, productive environment, linked to sustainable economic growth and sound energy policy:
- encourages the use of market-based principles and other innovative approaches, like performance-based standards and emission banking and trading;
- provides a framework from which alternative clean fuels will be used by setting standards in the fleet and California pilot program that can be met by the most cost-effective combination of fuels and technology;
- promotes the use of clean low sulfur coal and natural gas, as well as innovative technologies to clean high sulfur coal through the acid rain program;
- reduces enough energy waste and creates enough of a market for clean fuels derived from grain and natural gas to cut dependency on oil imports by one million barrels/day;
- promotes energy conservation through an acid rain program that gives utilities the flexibility to obtain needed emission reductions through programs that encourage customers to conserve energy.
A more modern examination of the Acid Rain Program results can be found on the EPA website.