On Feb 22, 2022, EPA proposed a revised and strengthened Cross-State Air Pollution Rule (CSAPR) NOx Ozone Season Group 3 to include 26 states in an ozone-season (May 1 – Sep 30) NOx allowance program. Oxides of nitrogen (NOx) are created through combustion of fossil fuels. Included will be fossil-fuel fired power plants & industrial sources in 26 states. Immediately following the EPA proposal (Feb 22) will be a 60-day comment period followed by a public hearing. The program, set to begin in 2023, will have an allowance budget based on the level of reductions achievable through installation of pollution controls known as selective catalytic reduction (SCR) on the 30% of coal-fired plants not currently running SCRs. EPA estimates a 29% reduction in ozone-season NO. The expansion beyond the power sector is a major shift by EPA. Sectors affected: gas pipelines and facilities manufacturing steel, paper, glass, cement, chemicals, and oil & gas products. EPA estimated the cost will be $1.1B (2016 dollars) or ~$1.3 billion in 2022 dollars.
(Source: EPA.gov)
Group 3, which only began in 2021, currently includes only 12 states. The cost of allowances has ranged from $2,500 - $10,000 per ton, and the supply of 2022 ozone-season allowances is shorter than it was in 2021. The proposed changes add uncertainty to the future cost of compliance. As with other cap & trade programs, AEGIS proactively works with each CSAPR Group 3 client to build a unique strategy as early as practicable.