The new plan by the South Coast Air Quality Management District would attempt to fix a program that officials acknowledge has it made it cheaper for oil refineries, power plants, factories and other large facilities to buy up rights to emit smog-forming pollution than to clean up their operations
The air district's Regional Clean Air Incentives Market, or RECLAIM, was adopted in 1993 to regulate hundreds of the region's largest-emitting facilities under one of the nation's first cap-and-trade programs.
The program sets a limit on smog-forming nitrogen oxides from each facility, allocates a set amount of credits and requires operators to hold enough of them to cover annual emissions. The credits are tradeable, allowing facilities that pollute less to sell their credits on an open market, where those that pollute more can buy them.
But the South Coast air district's program has long faced criticism for being flooded with too many credits, making it easier for polluters to continue business as usual.
Now, air quality officials want to cut the number of nitrogen oxide emissions credits by half over the next seven years. Lowering the cap, they say, will help drive down smog levels by giving dozens of facilities, including the region's six major oil refineries, financial incentive to upgrade their pollution controls.
The South Coast air district's 13-member governing board is scheduled to vote on the long-debated proposal at a public hearing Friday in Diamond Bar.
Business groups and oil interests have resisted the cuts as too steep too fast, and say the cost of new pollution controls, which air quality officials estimate at $1.1 billion, is too high.
Environmentalists are urging the air board to adopt agency staff's proposal to reduce the supply of emissions credits from 26.5 tons of nitrogen oxides per day to 12.5 tons by 2023.
"The fundamental question is whether the board is going to protect the health of people in this basin or cave to industry," said Angela Johnson Meszaros, an attorney for the nonprofit law firm Earthjustice. "This is the single most important vote to reduce smog that this board will take in this generation."
Southern California air quality officials devised RECLAIM during an economic downturn in the early 1990s, when they were under pressure to make emissions regulations less of a burden on businesses.
They followed the same model the federal government turned to at the time to reduce acid rain-causing sulfur dioxide emissions from the nation's power plants: a market-based approach like the cap-and-trade program that California now uses to target carbon dioxide emissions fueling climate change.
Instead of drafting separate emissions rules for each piece of equipment that releases pollution, South Coast regulators at the time opted to put "the universe of sources on an air pollution diet," said Executive Officer Barry Wallerstein.
The program they established pledged guaranteed pollution reductions every year and flexibility for businesses through a cap on emissions that would decline over time.
But the program has not worked as intended.
The last time air quality officials acted to reduce the cap on emissions in the RECLAIM program, a decade ago, they projected that nitrogen oxides would decline by 7.7 tons per day by 2012. But the program cut pollution by only 4 tons per day by that year — little more than half of what was pledged.
If the district had opted to regulate each pollution source directly, as the Bay Area and other regions have, those emissions cuts would have been assured. Instead, nitrogen oxide emissions from the 275 facilities regulated under the program have remained flat in recent years, even as the region has blown past federal deadlines to clean the nation's worst smog.
Environmentalists and public health advocates blame air quality officials, who they say have given the industry a free ride and put off much-needed reductions in health-damaging smog. They ask why officials didn't act years ago to correct the market.
"RECLAIM was a detour from reducing emissions through direct regulation," said V. John White, a former lobbyist for the South Coast air district and the Sierra Club who now directs the Sacramento-based Center for Energy Efficiency and Renewable Technologies. "It delayed the installation of controls and emissions reductions and damaged public health."
Nitrogen oxides are combustion gases that disperse throughout the region. They cook in the sunlight to form ozone, a lung-damaging component of smog that is linked to asthma, heart disease and premature deaths and is at the nation's highest concentrations in the inland valleys and mountains of Southern California. Decades of regulations have reduced emissions of the smog-forming gas, but South Coast officials say nitrogen oxides must be cut an additional 75% if the region's air is to meet the new federal ozone limit of 70 parts per billion by the 2037 deadline.
The cuts in emissions credits would apply to 56 of the region's largest air pollution sources, falling most heavily on the L.A. Basin's six major oil refineries in El Segundo, Torrance, Carson and Wilmington. Those facilities hold so many pollution credits, regulators say, that they have lagged in installing equipment to scrub and break down smog-forming emissions from massive heaters, boilers and other combustion sources.
Despite a 2005 projection by the air district that Southern California refineries could afford to install 51 pollution-cutting selective catalytic reduction devices, or SCRs, they deployed only four. Now, air regulators estimate, refineries should be able to outfit their operations with 95 SCRs, which are considered long-established, off-the-shelf technology.
The air district has weakened the proposal slightly as it has been developed over the last two years, but business interests have demanded it be scaled back further.
Curtis Coleman, who directs the Southern California Air Quality Alliance, one of the trade groups that have led the fight against the proposal, said recent modifications by the air district have made it even less acceptable to the industry. "That's why our groups are so upset and pushing back so hard."
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