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Savings from Economic Incentives

The 1990 Clean Air Act Amendments provide for fees on "excess" emissions of volatile organic compounds in certain ozone nonattainment areas. To give these areas time to reduce their ozone levels, the fees will not enter into effect until the next century. Areas with ozone design values of 0.18 to 0.19 ppm have 15 years to comply with ozone standards; areas with values of 0.19 to 0.28 ppm have 17 years; and areas with values over 0.28 ppm, referred to as extreme ozone non-attainment areas, have 20 years. (California's South Coast Air Quality Management District is currently the only extreme non-attainment area.) Failure to attain specified levels by the deadlines will subject major stationary sources to VOC emissions fees of $5,000 (adjusted for inflation) for each ton emitted in excess of 80% of a baseline quantity. The baseline amount is the lower of actual or allowable VOC emissions. For details, see Title I, Section 185 of Clean Air Act.

At $5,000 per ton, such fees equal or exceed incremental control costs in all but the Los Angeles area. Consequently, they could have a significant impact and should be more cost-effective than command and control alternatives. Any cost savings, however, would be well in future, since the fees would be unlikely to affect compliance decisions until well after the turn of the century.

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