Smog Plan Altered to Aid Power Plants

Southern California air quality officials Friday approved sweeping reforms of their most ambitious anti-smog program to avoid constraining electricity production during an upcoming summer of predicted blackouts.

The action approved by unanimous vote of the governing board of the South Coast Air Quality Management District will allow power plants to pollute more now in exchange for more cleanup later.

The reforms are an attempt by AQMD officials to inoculate themselves against charges from President Bush, Republican leaders and power producers that environmental protections are exacerbating California’s energy crisis.

At the same time, the AQMD board hopes to improve the program’s poor record of reducing industrial air pollution by requiring a variety of businesses to develop more effective cleanup plans. The program, known as RECLAIM, was launched eight years ago and hailed as a revolutionary way to cut smog.

RECLAIM, short for the Regional Clean Air Incentives Market, is the primary tool for cutting smog-forming emissions from nearly 400 of the largest industrial polluters in Los Angeles, Orange, Riverside and San Bernardino counties.

The AQMD board felt compelled to take action after soaring energy demand last year led to a stampede for emissions credits, the stock in trade of the RECLAIM program.

Each participating facility receives a certain number of credits representing pounds of pollutants.

Companies that do not pollute to maximum allowable levels can sell credits to firms that emit more than their limits. The total credit supply shrinks about 8% annually over a decade in an effort to trim pollution.

As the energy crisis mounted, manufacturers, oil refineries and power companies, which had grown accustomed to swapping cheap and abundant credits since the program began, were forced to pay astronomical prices for the credits or face steep penalties.

The AQMD decision is an attempt to stabilize the RECLAIM market and lower compliance costs by reducing demand for credits, increasing the supply of credits and relaxing regulatory demands on power plants.

“The ship hit the iceberg, and we’re trying to bring it back up,” said Mike Scheible, deputy executive officer for the state Air Resources Board.

But the changes, which are the most far-reaching for the pioneering program since its inception, left environmentalists and many business groups disappointed, although for different reasons.

Business representatives called provisions that will hold them more accountable for cleanup onerous and unnecessary, even though the program has achieved a fraction of the expected emissions reductions.

“We don’t believe RECLAIM is broken. The program is based on flexibility, but it would benefit from some enhancements,” said Ron Wilkniss of the Western States Petroleum Assn.

Environmentalists, however, charged the AQMD with bending over backward to accommodate industry’s concerns. They say revisions that rankle industry officials are actually anemic and will do little to jolt companies into installing the pollution controls that they have avoided under RECLAIM for the past several years.

“The RECLAIM program is badly broken and needs a big fix, and this is just a Band-Aid,” said Gail Ruderman-Feuer, senior attorney for the Natural Resources Defense Council.

Pollution Reduction Falls Far Short

The program has produced minimal reductions in pollution. Business has cut emissions just 4,000 tons annually, or 16%, far less than expected by this point.

The electricity crisis sent shock waves through the program because energy producers, forced to run dirty, old plants full tilt to keep the lights on, required massive infusions of credits to offset their pollution. And that drove up credit prices for everyone else.

To remedy that, the AQMD board decided to remove the power plants from the credit-trading market for the next three years. Officials say that will settle the marketplace and allow sufficient time for power plants to install controls that can cut emissions up to 95%. Fourteen of the 16 major power plants in the Los Angeles region expect to retrofit their boilers before summer and the others plan to do so by autumn, although many very dirty turbines, or “peakers,” are not scheduled for stringent cleanup.

In the meantime, the AQMD will require power plants to pay a fee of $7.50 per pound of pollution to compensate for the extra smog created.

To make more credits available, AQMD officials approved rules that will enable companies to directly fund cleanup of mobile sources, including tugboats, barges and farm equipment, in lieu of paying for controls on their smokestacks, which tend to be more costly.

Also, 36 major polluters will be required to submit plans spelling out how and when they plan to clean up their operations. Business groups opposed that measure as too strict, but the AQMD says it is necessary to prevent backsliding. Smaller polluters will be required to prepare “forecast reports,” which are similar but not enforceable, a decision that angered environmentalists.

“We need advance planning and firm commitments in terms of how they are going to achieve reasonable and cost-effective reductions,” said Elaine Chang, deputy executive officer for the AQMD.

The state air board and the U.S. Environmental Protection Agency are expected to approve the amendments.