U.S.-Canada Cooperation: The U.S.-Canada Air Quality Agreement

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U.S.-Canada Cooperation The U.S.-Canada Air
Quality Agreement

• Brian McLean, U.S. EPA
• Jane Barton, Environment Canada
• October 17, 2006
• Vancouver, BC, Canada

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The Impetus to Cooperate

• In the 1980s, Canada and the US faced a common
  problem impacting eastern ecosystems acid rain
• Signed in 1991, the US-Canada Air Quality
  Agreement was designed to be flexible framework
  to address not only acid rain but other
  transboundary air pollution problems
• U.S. and Canada committed to
• Specific emission limitations or reductions and
  timetables/programs
• Notification and consultation mechanism
• Compliance monitoring
• Prevention of air quality deterioration and
  visibility protection
• Coordinate/cooperate on scientific and technical
  activities, economic research
• Review, assess, and regularly report on progress

3
Air Quality Agreement Structure

• Agreement established Air Quality Committee to
  implement commitments, measure/report progress,
  identify evolving areas in transboundary air
  pollution
• Co-chaired by U.S. State Department and
  Environment Canada
• Membership includes relevant federal agencies and
  States/Provinces
• Subcommittee on Program Monitoring and Reporting
• Subcommittee on Scientific and Technical
  Cooperation
• Obligations recognize different approaches taken
  by U.S. and Canada in their efforts to reduce air
  pollution
• Success rests on supportive/cooperative working
  relationships and experience of trust

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Acid Rain Annex 1991
Established specific emission reduction
commitments (caps for SO2), and detailed
timetable for meeting commitments

• U.S. emission reduction commitments
• National SO2 reductions of 10 million tons,
  including caps of 8.95 million tons for power
  generation and 5.6 million tons for industrial
  sources
• NOx reduction of 2 million tons from power
  generation and vehicles
• Canada emission reduction commitments
• Cap SO2 emissions in seven eastern provinces at
  2.3 million tonnes by 1994, and cap national SO2
  emissions at 3.2 million tonnes by 2000
• By 1995, reduce stationary source NOx emissions
  100,000 tonnes below the forecast level and
  develop further annual national emission
  reduction requirements to be achieved by 2000
  and/or 2005
• Implement NOX control program for mobile sources

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Ozone Annex 2000

• Scope of AQA extended in 2000 to address ozone
  transport between the U.S. and Canada and health
  effects
• Established Pollutant Emission Management Area
  (PEMA) in transboundary region (18 states and the
  District of Columbia central and southern
  Ontario and southern Quebec)
• U.S. commitment Cap on summertime utility and
  industrial boiler NOx emissions (NOX SIP Call)
  mobile source controls implement new source
  standards for NOx and VOC reductions
• Estimated U.S. transboundary region NOx
  reductions of 36 annual and 43 ozone season by
  2010
• Canada commitment NOx and VOC emission reduction
  measures including annual NO2 power plant cap by
  2007 in transboundary region Tier 2 engines and
  fuel regulations solvents, paints, and consumer
  products measures to achieve Canada-wide
  Standards for ozone
• Estimated Canada transboundary region reductions
  from 1990 NOx 39 annual by 2010 and VOC 35
  annual by 2010

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Results Reduced SO2 and NOx Emissions in
the U.S.
Total U.S. SO2 and NOx Emissions

• Total U.S. SO2 emissions have decreased 11.3
  million tons (44) from 1980 levels as of 2005.
• Total U.S. NOx emissions have decreased 8.4
  million tons (31) from 1980 levels as of 2005.

Power industry emissions are measured by CEMS
emissions for other sources were estimated by
interpolating from the 2002 final NEI data.
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Results Reduced SO2 and NOx Emissions in
Canada
Total Canadian SO2 and NOx Emissions

• Total Canadian SO2 emissions in 2005 have
  decreased by 1.5 million tons (37) since 1985.
• Total Canadian NOx emissions in 2005 have
  decreased by 0.1 million tons (3) since 1985.

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Results Environmental Benefits of Reduced
Acidic Deposition
SO4 Concentrations 1990-1994
2002-2004

• These reductions have had tremendous
  environmental and health benefits the Acid Rain
  Program will result in 122 billion annually in
  U.S. benefits in 2010, including 6 billion in
  benefits to Canada
• Future reductions under these programs, the Clean
  Air Interstate Rule, and new auto and diesel
  requirements are key components in the attainment
  of ozone and PM standards in the U.S.

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Scientific and Technical Activities

• Key Accomplishments
• Acid Rain and ecological monitoring and
  assessment
• Development of extensive shared emission
  inventories
• Ozone assessment report (1999)
• PM science assessment report (2004)
• Coordinated tracking of ozone air
  quality/deposition along the border
• Informal consultations/collaborations on specific
  industrial facilities
• Other collaborative efforts Border Air Quality
  Strategy (2005)
• The Great Lakes Basin Airshed Management
  Framework
• Georgia Basin/Puget Sound International Airshed
  Strategy
• Emissions Cap and Trading Feasibility Study for
  SO2 and NOx

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Great Lakes Basin Airshed Study Area Southeast
Michigan/Southwest Ontario Region
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The Great Lakes Basin Airshed Management Framework

• Objective To improve air quality coordination
  and information exchange between the two
  countries
• - Administrative and structural frameworks
• - Control strategies and jurisdictional plans
• - Permitting systems for existing, new and
  modified sources
• - Compliance and enforcement systems
• - Policy uses for scientific tool and research
• Conclusions Coordinated management of the
  airshed is feasible and desirable
• Barriers and obstacles can be overcome with
  sustained effort
• Existing mechanisms and new opportunities are
  needed
• Applicability to other areas within the Great
  Lakes Basin
• Next step Proposed guidelines for airshed
  management

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Georgia Basin/Puget Sound International Airshed

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Georgia Basin/Puget Sound International Airshed
Project

• Results of the Project so far
• Partner agencies have adopted the International
  Airshed Strategy for the Georgia Basin-Puget
  Sound
• Health research focused on particulate matter is
  underway to better define regional issues of
  concern and priorities for remedial action
• Transboundary collaboration on scientific
  research is continuing to better define air
  pollution causes and solutions
• Ongoing regional collaborative measures to reduce
  emissions from motor vehicles, marine vessels,
  agricultural activities and woodstoves

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Informal Consultations/Collaborations on
Specific Facilities

• Conners Creek Power Plant, Detroit, Michigan,
  U.S.
• Successful discussion which ended when the power
  plant was required by EPA and Michigan to refuel
  with natural gas instead of coal
• Algoma Steel Mill, Sault Ste. Marie, Ontario,
  Canada
• Ongoing discussion with joint monitoring of air
  toxics and PM, information exchange on abatement
  at the plant, and reporting to the public
• Boundary Dam Power Plant, Estevan, Saskatchewan,
  Canada
• Successful conclusion this year with joint
  monitoring demonstrating that no air quality
  levels are being exceeded in the region

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U.S. Experience with SO2 and NOx Cap and Trading

• Traditional Regulation Command and Control
• Reduced emissions significantly
• Typically a technology or rate based method with
  limited monitoring
• Very effective in many situations
• Limited expertise about air quality management
• Control or reduction options are limited or
  obvious
• Control or reduction costs are reasonable
• Established what needed to be done
• Prescribed how and when each source was to do it

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Experiments in Flexibility Bubbles, Offsets, and
Credits

• Assumed command and control infrastructure
• Provided some flexibility in how a source could
  comply, i.e., by getting reductions from another
  source
• Required government approval to prevent
• Paper Credits
• Anyway Tons
• Unacceptable air quality impacts

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Cap and Trade

• An alternative to traditional regulation and
  credit trading
• Not simply a trading feature added to existing
  regulation
• Certainty that a specific emissions level is
  achieved and maintained
• More regulatory certainty, compliance
  flexibility, and lower permitting and transaction
  costs for sources
• Fewer administrative resources needed by industry
  and government (if kept simple)
• Government focused on setting goals assuring
  results, not on approving individual compliance
  actions
• An incentive for innovation and early reductions
• Can be compatible with other mechanisms
• Lower costs make further improvements feasible

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Why Cap and Trade Works

• Full sector coverage All sources (existing and
  new) included
• Minimizes shifting of production and emissions
  (leakage)
• Assures achievement of emission reduction goal
  without case-by-case review
• Reduces administrative costs to government and
  industry
• Cap on emissions Government issuance of a fixed
  quantity of allowances
• Limits emissions to achieve and maintain
  environmental goal
• Limits creation of paper credits and anyway
  tons
• Provides certainty to allowance market
• Monitoring Accurate measurement and reporting
  of all emissions
• Assures accountability and results
• Establishes integrity of allowances and
  confidence in the market
• Trading Unrestricted trading and banking (with
  source-specific limits allowed to protect local
  air quality
• Allows companies to choose (and change)
  compliance options
• Minimizes compliance cost
• Ensures that trading will not cause hotspots

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Public Access to Hourly Emissions Data
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Public Access to Allowance Data
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Results Major Reductions in SO2 Emissions and
Acid Rain
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Summertime NOx Emissions Reductions
Daily Emission Trends for NOx Budget Trading
Program Units in 2003, 2004 and 2005
Total NBP Ozone Season NOx Emissions
NOx Emissions (Thousand Tons)
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National SO2 and NOx Power Plant Emissions
SO2
NOx
Projected, w/ CAIR
Source EPA
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Feasibility Study

• The U.S.-Canada AQA identified market-based
  mechanisms for information exchange, including
  emissions trading. In 2003, a joint study on SO2
  and NOx emissions cap and trading was undertaken,
  and completed in 2005.
• The key conclusions of the economic and air
  quality modeling were
• Acid rain, smog, and regional haze are problems
  in both countries that would be improved if SO2
  and NOx emission caps were implemented in both
  countries at levels comparable to U.S. caps.
• Cross-border trading would not alter the overall
  level of emission reductions nor the consequent
  benefits to air quality and the environment.
• The costs to industry of complying with the
  caps would be cheaper with trading than without
  trading.
• Significant technical advances and cooperation
  resulted from this study, such as development of
  analytical tools, shared emission inventories,
  integrated electricity and emission modeling and
  cross-border air quality modeling.

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Feasibility Study
The study concluded that caps and cross-border
trading would be feasible if certain critical
elements were in place

• In Canada, enforceable SO2 and NOx emission caps
  for the electricity sectorand other sectors, if
  appropriateand rigorous emissions monitoring and
  public reporting requirements, comparable in
  stringency to those in the U.S.
• In both countries
• Legislative and/or regulatory changes to give the
  allowances in each country equivalency so that
  they could be traded freely and used for
  compliance in either country.
• A commitment to pursue implementation of
  cross-border SO2 and NOX cap and trade.

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Summary of Progress

• Over past 30 years, witnessed transition from
  identifying transboundary issues to developing
  binational solutions
• 2006 Biennial Progress Report and Third Five-Year
  Review of Program (15 year anniversary)
• With recognition of different governmental
  authorities, but commitment to common goals,
  expect continued progress working collaboratively
• U.S.-Canada Air Quality Agreement provides an
  example for international agreements, providing
  real progress in improving the environment