The purpose of this report is to present a stakeholder analysis regarding current clean air initiatives in the Houston-Galveston eight county region. It is not an exhaustive report on clean air initiatives, but rather, an overview of policies affecting diesel engines and industries emitting nitrogen oxide (NOx) and particulate matter. This report will discuss the following: 1) Health, social, and economic costs due to NOx, ozone, and PM emissions and 2) Current and potential market-based air pollution policies. The above-mentioned points will be discussed in the context of several stakeholders in the region including the Environmental Protection Agency (EPA), the Texas Natural Resource Conservation Commission (TNRCC), the City of Houston, regional industries, and individual consumers.

The Houston-Galveston region, comprised of eight counties, is currently in non-attainment for ozone under the Clean Air Act (CAA). Because of EPA rules, the area is required to reach attainment in ozone levels by November 15, 2007. However, several challenges prevent the area from reaching attainment status. To comply with federal standards, the TNRCC has

Ultra Low Sulfur Diesel is not yet available for mass use in the Texas market, and refineries will not be required to produce it nationally until June 2006. Refineries currently offer ULSD to fleets in California and in the Northeast but not to regions in Texas, even though much of the ULSD used in these places is produced in refineries in the Houston area. The problem is that demand for the fuel is not sufficient to transport it to fleets in the area. Demand is increasing, however, as evidenced in a recent low sulfur diesel conference in Austin (July 2002), where over 100 million gallons of diesel fleet users were represented, revealing new area demand for the fuel. The City of Houston has also attempted to take a leadership role in ULSD. To do their Phase I testing under the Diesel Demonstration Project, the lab was able to use 30 ppm diesel. In addition, the City, along with the Texas Department of Transportation, is seeking to expand the usage of ULSD in the area. Their goal is to assemble sufficient market for the fuel and reduce costs.

Funding city retrofit projects is a continual challenge. For this reason, the State, through Senate Bill 5, created several grant vehicles that could fund Houston fleet retrofits. One of these is the Texas Emission Reduction Plan (TERP). TERP funding is provided for cleaner on and off road engines, research and development. Recently, TERP awarded $501,000 to the City to retrofit 33 off-road construction vehicles. If viable technologies come forth, Senate Bill 5, if further funded by the Texas legislature, will provide additional resources for future retrofits of both public and private diesel-powered equipment.

In Texas, the legislature created an added incentive for the Houston Galveston region to seek credits through Senate Bill 5. If emission sources use certified EPA technologies, the state will pay for the retrofits through TERP and CMAQ funds. If the City of Houston finds effective technologies through the Diesel Demonstration Project, it can certify its technology through the EPA and then receive funds to buy the technology. Then, by reducing their sources beyond their baseline levels, they can receive a tradable credit for that source.

Some topics in this essay:
NOx SO2, Cap Trade, City Houston, Air Act, Externalities Negative, Consumer Income, Retrofit Program, Demonstration Project, Technology Technology, EPA TNRCC, cap trade, air pollution, clean air, houston-galveston region, nox emissions, city houston, command control, cap trade programs, trade programs, acid rain, demonstration project, low sulfur diesel, diesel demonstration project, ultra low sulfur, clean air act,