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PROPOSED AIR POLLUTION
CONTROLS ARE ALREADY CAUSING RISE IN PRICE OF AVOIDING CLEANUP
Companies Installing Smokestack Controls Because They're Cheaper
Than Polluting
Released, Tuesday, May 11, 2004
WASHINGTON, D.C. - The mere idea
that the US Environmental Protection Agency plans to impose new
air pollution controls on electric power plants has already caused
some companies to begin cleaning up their emissions, the Adirondack
Council reported today.
"The price of a pollution allowance has doubled from just
one year ago and has reached an all-time high. It now costs
more to avoid cleanup than it does to install a pollution control
device on many of the power plants causing acid rain in the Adirondack
Park," said Adirondack Council Executive Director Brian
L. Houseal. "We have been looking forward to this day for
nearly a decade. For the first time since the federal acid rain
program -- and its sulfur dioxide trading system -- began in
1995, market forces are finally starting to work in favor of
the environment.
"This appears to be a reaction to two recent developments
in federal pollution controls," he said. "First, the
final phase of the acid rain cuts required under the Clean Air
Act Amendments of 1990 is limiting the total number of available
allowances. Second, the proposed Interstate Air Quality Rule
is expected to be approved by the US Environmental Protection
Agency later this year. That would mean another 70 percent cut
in sulfur dioxide pollution and a corresponding drop in the number
of available allowances."
Power plant emissions of sulfur dioxide are a leading cause of
acid rain. New York's six-million-acre Adirondack Park is suffering
from the worst acid rain damage in the United States. The Adirondack
Council has been pressing federal officials for a solution to
acid rain since the late 1970s.
As a result of decades of acid rain, more than 500 of the Adirondack
Park's 2,800 lakes and ponds are too acidic to support their
native life. Thousands of acres of high-elevation red spruce
and fir forests have been wiped out and acid-rain-cause mercury
contamination has been documented in more than 20 Adirondack
lakes, making the fish unfit to eat.
"The basic idea behind pollution allowance trading is to
use the laws of supply and demand to reward those who clean up
their emissions faster and deeper than the law requires,"
Houseal said. "Companies are free to find their own methods
for reducing pollution, as long as they turn in one allowance
each year for every ton of sulfur dioxide they emit. The slow
ones buy leftover allowances from the faster ones, until they
can catch up to federal standards. But the price keeps rising.
"Over time, the EPA decreases the number of allowances it
issues until the reduction goals are met. As a result, the price
continues to climb. After awhile, the cost of avoiding cleanup
gets too high," he said. "Then, it makes more financial
sense for the company to install pollution control equipment.
Often, they won't even have a choice. In most states, the Public
Service Commission or Public Utility Control Board will force
power company officials to choose the least costly option."
On January 13, 2004 securities brokerage house Merrill Lynch
released a study (which echoes an earlier EPA study) that concluded:
"We believe that allowances prices over $300/(ton) makes
scrubbing a very attractive alternative and will be keeping a
close eye on prices … We believe that any price over $300
makes construction of a scrubber economic."
On Friday, May 7, the price of a federal sulfur dioxide pollution
allowance reached $326. Today's price is $320. In January,
when the Merrill Lynch report was issued, the price was $228.50.
One year ago, the price was $168, or about half of today's price.
The price of allowance was $56 when the program began in 1995.
"We have seen announcement after announcement in the past
couple of months from power companies whose emissions affect
the Adirondacks," Houseal said. "Each one touts the
health benefits and environmental benefits of their decisions
to clean up emissions. But for most of them, it was a simple
question of dollars and sense."
"This is a real turning point for the Adirondack Park in
terms of acid rain," Houseal concluded. "If the Interstate
Air Quality Rule is finalized and goes into effect in early next
year, we can expect an end to acid rain damage in the Adirondacks
by 2010. Then, the long, complex process of recovery can begin.
Stopping the damage is the first step."
The Adirondack Council's mission is to ensure the ecological
integrity and wild character of the Adirondack Park. Founded
in 1975, the Adirondack Council is an 18,000-member, privately
funded, not-for-profit organization with offices in Elizabethtown
and Albany.
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