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FIRST EMISSION CREDIT TRADING PROGRAM APPROVED

Release Date: 10/21/1996
Contact Information: Lucy Edmondson, Transportation Specialist, (617) 918-1004

BOSTON -- In a move that will significantly reduce the cost of complying with the Clean Air Act in Massachusetts, EPA's New England Administrator John P. DeVillars today announced the establishment of the nation's first emission reduction credit trading program.

The EPA action enables Massachusetts to issue federally enforceable emissions trading certificates and eliminates the need for EPA approval of each proposed credit and trade. This reduces administrative costs and allows market forces to develop a more responsive and efficient trading system. EPA will retain a counseling and oversight role.

"Emission trading is one of the smartest, most cost effective ways to reduce ozone air pollution," DeVillars said. "This rule slashes red tape, and allows market forces and innovation to cut our region's air pollution at less cost."

"Our two years of experience with emissions trading has yielded more pollution reductions at a lower cost than we would have achieved otherwise," said David B. Struhs, commissioner of the Massachusetts Department of Environmental Protection. "This federal endorsement will make emissions trading even easier in the future."

"We are pleased that this innovative program has received EPA's approval. It significantly reduces transaction costs and regulatory delays, and will accelerate the emissions trading market here in Massachusetts," said Jeffrey D. Tranen, president of the New England Power Company.

Companies in Massachusetts can use emission reduction credits or emissions averaging to meet federal air pollution requirements, including those approved in the state's air quality plan. This program is available to all companies in the Commonwealth which are regulated by the Clean Air Act, including utilities and manufacturing facilities such as metal finishing, paper goods and other products.

By enabling companies to meet pollution standards with credit purchases, this program simplifies the process of expanding business operations in Massachusetts, and will make it easier for new companies to open here.

The program also allows companies to average emissions among their facilities in order to meet certain pollution control requirements. Emissions averaging in this way is often referred to as "bubbling," and can save a company millions of dollars in compliance costs while still meeting state air quality goals.

The emissions banking and trading portions of the Massachusetts program were adopted as a voluntary economic incentive program pursuant to EPA's guidance on Economic Incentive Programs in September of 1993. The emissions averaging portion was adopted in January of 1995. This new rule formally establishes each program in the state's air quality plan.