Carbon Reduction Credit Program Working Paper

This report presents a credit-based carbon dioxide emission rate reduction program for existing power plants that provides an easy-to-administer system for state policymakers and regulators to comply with federal guidelines under Section 111 of the Clean Air Act (CAA), currently being developed by the Environmental Protection Agency (EPA). The proposal awards carbon reduction credits (CRCs) to generators and others based upon their output and CO₂ emission rate relative to EPA-approved standards. Owners or operators of regulated facilities then retire CRCs in sufficient amounts to demonstrate emission rate compliance. The standard is flexible, technology neutral, and market based. CRCs are tradable, and the program is designed so that policymakers can begin implementation at the state level and later merge into multi-state or regional efforts, if desired. An appendix provides model regulatory language.

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