Report Faults Emissions Trades
For Dirty Air in Some U.S. Areas

WASHINGTON -- A federal emissions-trading program that has helped power plants cut their sulfur-dioxide output by 32% since 1990 has left some areas of the U.S. with dirtier air than they had before, according to a report from an environmental group.

The study, produced by the former enforcement chief of the Environmental Protection Agency, says one result of emissions trading is that residents of 16 states face an increased health hazard from small particles of soot.

"We've got some places that have been left behind," said Eric V. Schaeffer, noting that antipollution efforts have been uneven. He blamed emissions-trading laws that allow owners of coal-fired plants that don't meet tighter air-quality controls to keep operating by buying credits from plants that exceed their emissions-reduction target.

Congress might expand the so-called cap-and-trade system next year, as the Bush administration proposes to make deeper cuts in emissions of sulfur dioxide, nitrogen oxides and mercury during the next 20 years. The plan calls for expanded emissions trading.

Mr. Schaeffer left the EPA in February and heads the Environmental Integrity Project, a nonprofit research center in Washington that is backed by the Rockefeller Family Fund.

Two troublesome clusters of increasingly polluted air occur over the Carolinas and Virginia and over western Pennsylvania, according to the study. The clusters could worsen, Mr. Schaeffer said, if the EPA relaxes a separate set of rules covering maintenance of older coal-fired power plants. The rule change could be announced later this week.

Mr. Schaeffer said emissions-trading programs would be beneficial, but only if the deadlines before tighter emissions controls are imposed are shortened. The 20-year deadline proposed by the Bush administration, he said, "means that these big plants aren't going to have to do very much for a while."

The theory behind emissions trading is that it allows a specific plant more flexibility in meeting lower emissions limits. Plant owners can help finance pollution-fighting equipment that lowers emissions below the limits by selling credits to other plants. Buyers might be owners of older plants who don't want to invest in equipment.

Overall, pollution levels are lowered by the trading. The problem comes from increased health risks around the credit-buying, older plants, where so-called hot spots, or high-pollution areas, can form. EPA spokeswoman Steffanie Bell said the Bush administration's "Clear Skies" proposal, along with other U.S. pollution laws, will eliminate hot spots over time.

Dan Riedinger, a spokesman for the Edison Electric Institute, which represents most of the nation's power-plant owners, said the Schaeffer study appears to conflict with EPA data that show sulfur-dioxide emissions dropping in every state. "There are no hot spots being created from emissions trading," he said.

Write to John J. Fialka at john.fialka@wsj.com¹

Updated November 20, 2002