The Clean Air Act is a work in progress. The implementation of the amendments passed in 1990 is expected to take 20 years or more. During this period there will be several opportunities for administrative action by EPA to build renewable energy resources into air quality planning. More important, recent court decisions that have either struck down or stayed EPA regulatory actions mean that there is a distinct possibility that Congress will amend the act again early in this decade and that the amendments could include renewable energy incentives.⁸

This part of the report describes briefly the history of the CAA as it relates to renewable energy resources and the electricity industry. Also included is a brief explanation of emission cap-and-trade systems. The 1990 CAA amendments strongly encourage the use of cap-and-trade instruments to control air pollution. The most prominent of these are the national acid rain control program (addressing SO₂ emissions) and emerging regional cap-and-trade systems (addressing NO_x emissions). These programs could be modified to encourage development of renewables. Additional emissions trading programs being developed that could include tradable emission reduction credits for renewables are also identified.

Brief History of the Clean Air Act

The Clean Air Act of 1970 ("the Act") was the first substantive and comprehensive environmental statute enacted by Congress.⁹ The Act underwent a major revision in 1977 as a result of congressional impatience with the pace of air quality improvement. For a variety of reasons, the 1977 amendments also proved ineffective against several air pollution problems that became especially prominent and controversial early in the 1980s. Public concerns over acid rain, regional smog, and air toxics increased as efforts to amend the law continued from 1982 to 1990. The CAA took its current form on November 15, 1990.

The central pillars of the 1990 amendments are:

• Title I: seeks to prevent smog and attain national air quality standards;

• Title II: imposes tighter tailpipe and fuel standards for vehicles;

• Title III: focuses on protecting human health from air toxics (pollutants that have serious health effects, such as cancer, birth defects, immediate death, or catastrophic accidents);¹⁰

• Title IV: seeks to control acid rain;

• Title V: creates a new comprehensive permitting system; and

• Title VI: protects the stratospheric ozone layer and monitors greenhouse gases.

The parts of the Act that matter most for renewables are those that cut emissions from electric power generation and provide a framework within which incentives for renewables can be added: Titles I, III, and IV. The 1990 amendments rely heavily on market-based control methods and pollution prevention strategies. All key titles of the amended law require or allow some form of emissions trading, marketable permit programs, emissions fees, or early reduction credits. These amendments ignited a regulatory explosion. EPA must set emission standards for 90 separate air toxic compounds, cut power plant SO₂ emissions by 40%, bring 100 urban areas into compliance with air quality standards for ground-level ozone, lower tailpipe emissions dramatically, and require completely reformulate motor vehicle fuels.

Aggressive as it was, however, the amended act is deficient in several areas and needs to be strengthened further. This is especially true for persistent air pollution problems associated with the electric utility industry. The sulfur dioxide emission reductions in the 1990 amendments, though important, will not suffice to prevent acid rain.¹¹ Utilities remain largely exempt from regulations on air toxics. The United States continues to experience widespread violation of health-based standard for ozone and fine particles.

The 1990 amendments also failed to address two increasingly prominent global air pollution problems. First, aside from emission inventory and monitoring requirements, the Act does not address greenhouse gas emissions directly. Carbon dioxide is the most important of these emissions and, as noted earlier, electric power plants emit one-third of total U.S. CO₂ emissions.¹² Second, mercury pollution from coal combustion is becoming a crucial regional and global issue due to contamination of essential food supplies. Thus despite the 1990 Clean Air Act, electricity production continues to be a principal cause of atmospheric pollution and health damages.

How Does the Clean Air Act Work?

Air Quality Standards and State Implementation Plans

The National Ambient Air Quality Standards (NAAQS) have been a cornerstone of the Act since 1970. Set by EPA, the NAAQS limit the allowable concentrations of six specific "criteria pollutants" in the outdoor air. Table 3 describes the six pollutants¹³ for which NAAQS have been set and their principal environmental and health effects. (See Table 3)

To implement the NAAQS, state air agencies develop State Implementation Plans (SIPs) containing a variety of emission controls to reduce pollution. Typical control measures include stack-gas cleaning devices for power plants and factories, inspection and maintenance requirements for motor vehicles, and changes in motor vehicle fuel composition. States usually have a great deal of discretion in choosing among strategies to achieve the NAAQS. The plans are submitted to EPA for approval.

If EPA approves the SIP, its emission control strategies are incorporated into "permits" issued for all major air pollution sources.¹⁴ Almost all electric utility generators are major sources. If the EPA rejects the SIP, which rarely happens, and the state does not submit a satisfactorily revised SIP, EPA then develops its own air quality plan for the state (including emission control strategies and permits).

Visibility protection is accomplished by a similar process. EPA sets goals for eliminating haze in national parks, and states develop and implement plans to achieve those goals.¹⁵

If a new source of air pollution is built or an existing source is modified in a way that increases emissions, the operators must obtain a "new source" permit that ensures the new emissions will not degrade clean air areas or interfere with plans to "attain" the NAAQS in regions that violate EPA's standards ("nonattainment areas"). New and modified sources must control emissions through the use of "best available control technology" or "lowest achievable emission rate," depending on location.¹⁶

Direct Federal Controls

In several instances, the federal government has power to impose emission controls directly, independent of the states. This can take several forms:

• Acid Rain: Congress did not entrust this issue to EPA and the states, and in 1990 imposed plant-by-plant SO₂ emission limits (expressed as tons/year) on hundreds of electric generators and allowed use of a "cap-and-trade" system to comply with the limits.

• Air Toxics: EPA is directed to set national emission performance standards for 189 ultra-toxic substances, applicable to several hundred named categories of industrial air pollution sources (such as chemical plants and refineries). Electric utilities were exempted, at least for the time being, from these "Maximum Achievable Control Technology"emission limits.

• Interstate Air Pollution: EPA is authorized to impose tighter controls (either by calling for SIP revisions or by imposing controls directly) to prevent emissions in one state from interfering with the ability of another state to attain air quality consistent with the NAAQS.

• "Mobile" Source & Fuel Standards: According to congressional formulas and guidelines, EPA sets tailpipe emission standards for cars and trucks and reformulation standards for gasoline and diesel fuel.

Finally, any discussion of "who's in charge" is not complete without a reminder that Congress or the federal courts may intervene and change emission control requirements.

A Guide to the Clean Air Act for the Renewable Energy Community

Abstract
Message from REPP Staff
Executive Summary

1. The Clean Air Act and Renewables
2. An Introduction to the Clean Air Act
3. Emissions Trading Under the Clean Air Act
4. Future Cap-and-Trade Programs
5. Recommendations and Action Plan

copyright © 2000 by Renewable Energy Policy Project