SO2 and NOx Allowances Trading

The United States Environmental Agency (EPA) 1990 Clean Air Act set the objective of reducing acid rain-causing emissions in the atmosphere, concentrating specifically on sulfur dioxide (SO2) and Nitrogen Oxide (NOx).

EPA allows utilities to trade SO2 and NOx allowances within their systems and/or buy or sell allowances to and from other affected sources. Each source must have sufficient allowances to cover its annual emissions. If not, the source is subject to a $2,000 /ton excess emissions fee and a requirement to offset the excess emissions in the following year.

EPA’s final goal for SO2 allowances is to reduce emissions to a level equal to 10 million tons under the emissions levels measured in 1980. In order to meet this new standard, the government initiated a two-phase plan tightening the emissions from all fossil-fuel fired plants.

NOx allowances were originally created through the implementation of the Ozone Transport Commission (OTC) to control inter-state ozone pollution in the Northeastern states, including the District of Columbia. This was accomplished by creating a summertime (ozone season) cap for emissions (between May 1st and September 30th), which affected all major emission sources, including: utilities, electrical generators larger than 15 MW and industrial boilers with a heat input exceeding 250 MMBtus/hr.

OTC clearing is available for acid rain SO2 allowances and NOx allowances through NYMEX and the CCFE.

Region Specific SO2 and NOx:

• California Reclaim
• Houston/Galveston
• New York

Spectron team’s experience and knowledge makes them well-placed to offer guidance to anyone seeking to do business in the SO2 and NOx trading market.

Contacts
SO2 and NOx Trading Enquiries: Mike Ferguson +1 360 892 3300