The feasibility of effluent trading in the energy industries

In January 1996, the U.S. Environmental Protection Agency (EPA) released a policy statement endorsing effluent trading in watersheds, hoping to spur additional interest in the subject. The policy describes five types of effluent trades - point source/point source, point source/nonpoint source, pretreatment, intraplant, and nonpoint source/nonpoint source. This report evaluates the feasibility of effluent trading for facilities in the oil and gas industry (exploration and production, refining, and distribution and marketing segments), electric power industry, and the coal industry (mines and preparation plants). Nonpoint source/nonpoint source trades are not considered since the energy industry facilities evaluated here are all point sources. EPA has administered emission trading programs in its air quality program for many years. Programs for offsets, bubbles, banking, and netting are supported by federal regulations, and the 1990 Clean Air Act (CAA) amendments provide a statutory basis for trading programs to control ozone and acid rain. Different programs have had varying degrees of success, but few have come close to meeting their expectations. Few trading programs have been established under the Clean Water Act (CWA). One intraplant trading program was established by EPA in its effluent limitation guidelines (ELGs) for the iron and steel industry. The other existing effluent trading programs were established by state or local governments and have had minimal success.