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CEIC-01-05

"The First Year of the NO_X Budget"

Alexander E. Farrell

Abstract:
One of the largest and most innovative emissions trading programs yet was started up last year, the northeast’s NO_X Budget. Designed to address the region’s chronic problem of summertime ozone (or smog) problem, it controls emissions of nitrogen oxides (NO_X) from large stationary sources, most of which are power plants. It is important to understand the NO_X Budget for several reasons. First, controlling power plant NO_X may be on the horizon in many places, especially the Midwest. Second, the NO_X Budget has several unique features which might be useful in other proposed emissions trading programs. Third, it shows how restructuring helps make market-based environmental regulation work better.

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