ARCO OUTLINES ALTERNATIVE TO EMISSIONS TRADING

ARCO has proposed an alternative to southern California's proposed air emissions trading program.

ARCO Products Co. Pres. George Babikian warned that unless the controversial Regional Clean Air Incentives Market (Reclaim) program under development by the South Coast Air Quality Management District (Scaqmd) is dramatically changed, many local businesses would shut down, thus driving more jobs from the state.

Speaking at a Scaqmd workshop on developing Reclaim rules, Babikian said ARCO's plan would achieve significant emissions reductions while still encouraging business and industry development in the region.

RECLAIM CRITICIZED

Introduced in January, Reclaim has been promoted as a market based permit program under which trading of ever declining "smog credits" would enable stationary sources such as factories and refineries to meet strict emissions reduction goals.

ARCO's objections stem from Reclaim's simplistic approach, Babikian said. He cited the likelihood that because of Scaqmd's strict emissions limits, very few credits will be available for trading because most plants will need them to maintain their operations.

As currently proposed by Scaqmd, Reclaim seeks to cut each stationary source's emissions by the same amount for the next 17 years regardless of that source's specific technological capability to meet the target, ARCO contends. The program also would effectively punish a plant that already has invested in emissions control projects by disregarding improvements made to date, the company said.

Reclaim's objectives, equal to 80-85% in additional cuts from stationary sources that reduced emissions 70% under previous regulations, are unrealistic and can't be met without further damaging southern California's economy, ARCO says. In addition, meeting those objectives would trim less than 10% of the total smog forming emissions in the South Coast air basin, where 62% of total emissions come from cars, trucks, and other vehicles.

Since Reclaim was introduced, Scaqmd has not given serious consideration to technological, economic, or industry concerns, Babikian said.

"For Reclaim to be successful, Scaqmd must drop the minor tinkering and implement the fundamental changes necessary to create a fair and workable emissions reduction strategy," he said.

ARCO'S ALTERNATIVE

Babikian contends ARCO's alternative proposal would take into consideration technological and economic concerns by:

Delaying the program's effective date to January 1994 from January 1993 to give Scaqmd enough time to complete details and share them with industry.
Cutting the duration of the program to 2000 from 2010 and drafting a second program for 2000-10 using Scaqmd's planned inventory of emissions in 1997 along with then-current improvements in technology and ozone science.
Reducing emissions at each plant at variable rates according to technological feasibility and controls currently in place instead of the current proposal to require the same annual rates of reduction across the board for all plants.
Recommending economic checkpoints to be monitored biannually. Scaqmd now is required to consider cost effectiveness when determining best available technology (BAT) for emissions controls. Scaqmd's BAT cost ceilings at present are $17,500/ton for reactive organic gases, $24,500/ton for nitrogen oxides, and $18,500/ton for sulfur oxides. Reclaim excludes those ceilings, and ARCO contends that if the cost per ton of emissions credits exceeds 110% of the ceilings, the entire Reclaim program should be reexamined.