RECLAIM audit shows market-based program on track; more than $10 million in trades.

DIAMOND BAR, Calif.--(BUSINESS WIRE)--Jan. 12, 1996--The world's largest emissions trading market has been a success so far, according to a South Coast Air Quality Management District audit of the program released Friday.

The audit shows that emissions trading has taken off and that the program

Since RECLAIM began in January 1994, participating firms have traded more than 100,000 tons of nitrogen and sulfur oxide emissions for more than $10 million, according to the audit.

``In just two years, RECLAIM has fostered a brisk emissions trading market,'' said James M. Lents, AQMD's executive officer. In addition to individual trades, two firms have sponsored a total of six auctions for RECLAIM credits.

``At the same time, the audit shows that firms in RECLAIM are on track toward meeting the program's requirement of reducing nitrogen oxide (NOx) emissions by 77 tons per day and sulfur oxide (SOx) emissions by 15 tons per day by 2003,'' Lents said.

No Significant Adverse Economic Impacts

During the program's first year, trading prices for NOx credits ranged from an average of $24 per ton for 1994 to $1,529 for 2009. SOx prices ranged from $13 per ton for 1994 to $960 in 1998. Those prices are far below a $15,000 per ton level that would trigger an extensive review of the program's cost effectiveness.

The total number of facilities in NOx/SOx RECLAIM decreased slightly, from 391 when the program began, to 353 today. The main reason for the decrease was a further analysis of facility emissions showing that some fell below the four ton-per-year emissions threshold, a minimum criterion for inclusion in RECLAIM.

Overall the report showed no significant adverse economic impacts from RECLAIM.

Compliance on Track

AQMD inspectors visited each RECLAIM facility at least three times during the first year and found that 86 percent of facilities complied with their initial emission allocations. Since the main reason for non-compliance was a lack of familiarity with the program, AQMD plans additional education programs to make sure that facility operators understand RECLAIM rule requirements.

The inspections also found that 26 facilities had an ``A+'' compliance record with RECLAIM program requirements. Accordingly, AQMD Friday awarded those businesses as ``Clean Air Partners.'' A list of those facilities is attached.

AQMD is the air pollution control agency for Los Angeles, Orange and portions of San Bernardino and Riverside counties. -0-

                              AQMD
               Clean Air Partners Award Recipients

RECLAIM Facility                                 Location

AES Placerita Inc.                               Newhall
Atkinson Brick Co.                               Los Angeles
Color America Textile Process Inc.               Los Angeles
Consolidated Film Industries                     Hollywood
Exxon Company USA, Castaic Junction              Saugus
FPB Cogen Inc.                                   Los Angeles
Granite Construction                             San Juan Capistrano
OLS Energy -- c/o Energy Initiatives             Chino
Onsite Energy                                    Los Angeles (LAX)
Owl Rock Products                                Irwindale
Queen Carpet Corp., Tuftex Carpet Division       Santa Fe Springs
J. Noble Co.                                     Orange
San Diego Gas & Electric                         Moreno Valley
Southern California Gas Co.                      Monterey Park
Southern California Gas Co.                      Pico Rivera
Southern California Gas Co.                      Playa del Rey
Southern California Edison                       Alamitos
Southern California Edison                       Etiwanda
Southern California Edison                       Avalon
Southern California Edison                       San Bernardino
Sully-Miller                                     Irvine plant
Sunlaw Cogeneration Partners                     Vernon
Union Oil Co. of California OCS                  offshore oil platform
                                                 Edith
Union Oil Co. of California                      Santa Fe Springs
United States Tile Co.                           Corona
City of Vernon Light & Power Department          Vernon

CONTACT: AQMD, Diamond Bar

Bill Kelly or Sam Atwood, 909/396-3456

e-mail: atwoods@aqmd.gov