Offset Credits Research Articles

PSD and Nonattainment Regulation: Implications of a Settlement Agreement

The EPA recently issued an internal memorandum and a settlement agreement in the case of Chemical Manufacturers Association et al. vs. EPA. The agreement reflects potential changes to the PSD regulations and the Emissions Offset Interpretive Ruling for nonattainment areas. The information presented in this paper is a summary of the significant aspects of the agreement, as it will affect future industrial sources. This paper also discusses other recent changes to the PSD and nonattainment regulations. The changes to the regulations provide for significant relaxation of some aspects of PSD and the nonattainment regulations. The most significant aspect is the proposed change in the method of tabulating net increases of emissions due to source modifications. The change would allow offset credit for decreases in emissions due to shutdown of equipment based on the potential emission rate rather than the actual.

Air pollution control by economic incentives in the U.S.: Policy, problems, and progress

This paper deals with cost-effectiveness of the economic incentive policies of the bubble concept and offset credits relative to the policy of direct regulations of air emissions. The second section discusses single- and multi-plant bubbles, their adoption across regions and industries, the methods used to control emissions and the extent of savings in costs. We conclude that despite the delay resulting from duplication of review of state implementation plans by both the state and the Environmental Protection Agency, the required technological commands, the requirement to model air quality and the restrictions to permit bubbling only in the attainment areas, the policy is progressing successfully and should be encouraged by eliminating the restrictions. The third section analyzes the policy of emission offset credit, trading, and banking which can permit economic growth in nonattainment areas. It reviews the available literature, which deals only with aggregation of offsets across cities instead of individual offset trades. Progress by individual offset trades is analyzed in terms of the number of offsets, their acceptance across regions, the extent of reductions in emissions, and the classification of the offsets into internal and external trades. Comparison of estimated capital costs and prices of individual offsets with direct regulation costs reveals that the former are economical. We conclude that despite the problems of high tradeoff ratios, the short and uncertain life of the emission offset credits and the technological commands, the policy is progressing successfully and should be encouraged further by relaxing restrictions.