EPA looks to tighten timing on SO2 limits

New York, 19 November: The US Environmental Protection Agency (EPA) wants to set more timely limits on sulphur dioxide (SO2) emissions.

The EPA recommended establishing a national one-hour SO2 standard, between 50 and 100 parts per billion (ppb), to protect against short-term exposures ranging from five minutes to 24 hours. At present, SO2 is regulated based on average emissions over a year, 24-hour and three-hour periods, meaning that shorter spikes are not regulated. Because the revised standards would be stricter, the EPA wants to revoke the 24-hour and annual SO2 health standards. SO2 emissions are predominantly from fossil fuel combustion at power plants (66%) and other industrial facilities (29%), the EPA said. 

The market implications of the proposed changes are unclear because states have to make determinations about which facilities must comply and have years after the proposal becomes final to develop those plans, said Allison Wood, a Washington, DC-based partner at law firm Hunton & Williams.

“There is a potential impact, but it is years in the future,” she said.

For example, a state could decide to apply the standard to paper mills, which would have no market impact because those facilities are not included in the Acid Rain programme's SO2 market, Wood said.

Alternatively, a state could decide to apply the rules to power plants, which are subject to the programme’s requirements, she said. If the plants are forced to install scrubbing technology, that would lower demand for allowances and would likely lead to a drop in allowance prices.

“But that’s all speculation at this point,” Wood emphasised.

The December 2009 contract for SO2 allowances settled Wednesday at $69.90 on the Chicago Climate Futures Exchange, up $1.80 from the previous day’s close.

The market implications may be a moot point if the EPA is unable to develop a trading programme to replace the current one, rejected by the DC Circuit Court in July 2008.

The EPA first set National Ambient Air Quality Standards for SO2 in 1971, establishing a 24-hour primary standard at 140 ppb and an annual average standard at 30 ppb. EPA also set a three-hour average secondary standard at 500 ppb.

The current proposal addresses only the primary standards – the agency plans to tackle the secondary standard as part of a separate proposal in 2011.

The EPA also recommended placing monitors in areas with high SO2 emission levels and urban areas and changing the Air Quality Index, which is used by government agencies to characterise the quality of the air at a given location, to reflect the revised standards. This would improve the ability of states to alert the public to short-term spikes in SO2 levels that may affect their health. Exposure to SO2 can aggravate asthma, cause respiratory difficulties and result in emergency room visits and hospitalisation.

The agency must issue final standards by 2 June, 2010