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Buying Pollution
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The News

ACID RAIN 
RETIREMENT FUND 
MAKES LARGEST AUCTION PURCHASE
EVER OF OVER 1,200 TONS! 


Casco Bay Weekly:

A CONVERSATION WITH MATT McDONALD: "WE'RE LITERALLY BUYING POLLUTION OUT OF THE SKY"

Kennebec Journal 

"Playing By the Rules:
College environmentalists beat the system fairly"
 

PRESS RELEASE: April 1, 2013

U Magazine: Acid Rain Drain

The Free Press:
"Psssst: Anybody wanna buy some Sulfur Dioxide? USM Professor helps to orchestrate clean air buy-out"

"Save the Earth, buy some pollution?" 

Kennebec Journal, 2/22/96

Playing By the Rules
"College environmentalists beat the system fairly"
By DOUG VANDERWEIDE Staff Writer
 


"It's not your typical environmental stance, where you're trying to force a law on someone. We're playing on the same ball field as the corporate players..."
ARRF Board Member 
Matt McDonald

SCARBOROUGH - Matt McDonald believes he can beat the acid rain pollution problem by joining the polluters.

Employing the very tool that coal-fired power plants use to get around anti-pollution regulation, McDonald hopes to cut down the amount of sulfur dioxide pumped into the atmosphere each year, and to force those plants into cleaning up.

The "Acid Rain Retirement Fund," a non-profit company created by McDonald and his friends at the University of Southern Maine, will "buy" from the federal government the same rights to pollute the air which electrical plants can purchase.

The difference is, the fund won't use those rights, and thus will cut down on the total amount of acid rain in the nation, said McDonald, a 25-year-old student at the University of Southern Maine. "It's not your typical environmental stance, where you're trying to force a law on someone," said McDonald, president of the fund. "We're playing on the same ballfield as the corporate players." We're saying, "We're going to play by your rules."

"That's what a market is all about," said Peter Jump of the Edison Electric Institute, a lobbying group for power companies in Washington, D.C. "I can't really criticize them for doing it.

"What matters is how we take care of the environment" he said. "Whether that happens because these groups buy all the credits, or because we become a cleaner industry (on our own), doesn't really matter."

Casco Bay Weekly, 2/22/96

A CONVERSATION WITH MATT McDONALD:
"WE'RE LITERALLY BUYING POLLUTION OUT OF THE SKY."
interview by Christopher Barry
photo by Colin Malakie
 


Companies with smokestacks spewing sulfur dioxide (SO,) can purchase "pollution allowances" from the Environmental Protection Agency (EPA). These allowances permit the company to emit 1 ton of SO2,. Matt McDonald is a senior at USM and president of the Acid Rain Retirement Fund (ARRF), a nonprofit corporation that raises money to purchase these pollution credits, then retires them. On Feb. 14, ARRF and students from the Village School and Shaw Junior High in Gorham collected about 10,000 pounds of newspaper to sell to a recycler. They plan to use the proceeds to purchase two credits.

How much does a credit cost?

When they first did this in 1990, they figured the price would be around $700-800. Right now, the price is about $120. That's like 6 cents a pound. Potatoes are more expensive. That's why it's easy for us. We only have to collect a little bit of money. When we buy (credits) and take them out of circulation, it drives the price of the rest of the [credits] up a little bit. It makes it more expensive to pollute.

How did you come up with the idea?

Mike Hamilton, a political science professor at USM , bought one credit last year as an experiment and mentioned it in class. I thought it was a fascinating idea that you can buy the right to pollute and then not pollute. A couple of us decided we wanted to form a corporation and really go for it. We want to make the biggest dent [in air pollution] we can.

Where do the SO2 emissions come from?

We can only buy from coal-fired electric utilities, [most of which] are in the Ohio River Valley. The closest one to Maine is near Manchester, N.H. In the Clean Air Act, they actually name the 105 dirtiest plants. All of them are up wind from Maine Those are the ones we are going after.

How many credits have you bought So far?

None. We bid in March. We're raising funds right now. At this moment we're looking at 4 tons of SO2. That's before we hold our benefit concert. [Mocha Java and Beyond Reason will play the Hedgehog Pub at 8 p.m. on Feb. 29.]

What's the bidding process like?

It's not very exciting. We just fill out a check and send it off. It's through the Chicago Board of trade. I was actually thinking of going out there if it was some sort of exciting, high-powered event. But it's not.

U Magazine, Sept. 10th, 1996 (1.5 million distribution)

Acid Rain Drain

Talk about a disappearing act: A group of students at the U. of Southern Maine spent five months raising $1,280 just so the fruits of their efforts would vanish into thin air.

Sounds like a dirty scheme, but it's all in the name of clean air. The students are charter members of the Acid Rain Retirement Fund (ARRF), a nonprofit corporation that buys pollution out of the sky - literally.

That hard-earned $1,280 bought ARRF the right to belch 16 tons of sulfur dioxide - a byproduct of coal burning that creates acid rain - into the atmosphere. But unlike power plants that buy shares to skirt federal clean air regulations, ARRF retires, or gives up, its right to pollute.

"Once we buy it, that's it," says ARRF president and USM senior Matthew McDonald. "No one else can have it."

The nonprofit corporation bills itself as bureaucracy-free - every cent from its recycling drives and benefit concerts pays for shares. ARRF membership is open to anyone who'll plunk down $10 for the cause, but so far most of the members are from USM's campus.

"The granola crowd is pretty prevalent here," says senior Lori Roth, an ARRF board member.

Together with environmental law societies, such as those at the U. of Michigan (which bought four shares) and Catholic U. of America in Washington, D.C. (which bought two shares), ARRF makes up a small but growing number of groups trying to bankroll better air. The ultimate goal is to drive the cost of a share so high that re-equipping plants to reduce pollution is more cost-effective than coughing up cash to buy pollution shares.

The EPA sells shares to the highest bidders each March. This year, the 150,000 shares on the auction block cost companies some $ !0 million, says EPA spokesperson Dave Ryan. Approximately 950 shares (that's more than 950 tons) have been retired by various environmental groups in the United States.

So far, corporate complaints about ARRF aren't exactly pouring in, says Linda Schoumacher, a spokesperson for Edison Electric Institute, a lobbying group for power companies. "It's a free market. What can we do?" she asks. Uh, cut off ARRF's electricity?

By Courtney Rubin, Georgetown U. / Illustration by Judy Tsat, Harvard U

Free Press May 1, 1995

University of Southern Maine Community Newspaper

Psssst! Anybody wanna buy some Sulfur Dioxide?
USM Professor helps to orchestrate clean air buy-out
by J.T. Leonard Executive Editor

USM Professor Michael Hamilton is now the proud owner of one ton of sulfur dioxide, the pollutant precursor that eventually becomes acid rain.
Well, sort of.

The associate professor of Political Science was a successful bidder in the 1995 Air Emissions Allowance Auction conducted by the Chicago Board of Trade for the U.S. Environmental Protection Agency, and now holds a license permitting him to release up to one ton of sulfur dioxide into the atmosphere.

According to a CBOT notice, the average winning bid for the quantity of S02 was $132. While Hamilton paid a relatively economical $170 for his share of pollutants, the highest bid belonged to the Duke Power Company, which shelled out $2,332,500 for 17,750 tons of airspace.

The Clean Air Act of 1990 established a ceiling on S02 emissions in the United States of 13.95 million tons per year in 1995, decreasing to 8.95 million tons per year in 2000. According to Hamilton, every ton purchased by someone who will not use it reduces the allowable emissions available for others to use, and may put upward pressure on the price of remaining tons.

In his own celebratory observance of Earth Day 1995, Hamilton permanently retired his ton of S02 emissions, hoping to make the air over Maine a little cleaner and the state's lakes a little less acidic in future years. As an instructor in USM's new Environmental Science and Policy major, Hamilton hopes to work with students who share an interest in cleaning up the air and lakes in Maine and other states as well.

"This is one way people can make a real, tangible contribution orchestrate clean air buy-out to cleaning up the air and lakes in Maine," he said.

Noting Chat a group of fifth graders in Glens Falls, NY, raised enough money to purchase and retire 21 tons of sulfur dioxide, Hamilton hopes USM students will join him in figuring out ways to take a larger amount of S02 out of circulation in the next EPA Air Emissions Auction, to be held in March of 1996.

"Maybe we'll call it the Acid Rain Retirement Fund," he said.

Hamilton also hopes students will help research and design a legal document that owners of pollution allowances can sign which will make it impossible for such emissions ever to used in the future.

For more information, Hamilton can be contacted at 126 Bedford St., in Portland, and. by calling 780-4190.

Free Press October 16, 1995

University of Southern Maine Community Newspaper

Save the Earth, buy some pollution?

by Jerrod Ferrari Contributing Writer  



Concerned about the environment? Checkout the new campus group Acid Rain Retirement Fund. A.R.R.F.'s first meeting of the year was held last Wednesday. 

Michael Hamilton, an associate political science professor and founding member of USM's new Environmental Science and policy program says, "the principal objective of the fund will be to purchase air pollution emission allocations on the open market and retire them forever." He hopes to make air over Maine cleaner, and make lakes less acidic.

Hamilton successfully bid in the 1995 Air Emissions Allowance Auction and paid $170 to retire one ton of sulfur dioxide from use on Earth Day 1995. "If I can do this anyone can do this," states Hamilton.

A group of fifth graders in Glens Falls, NY raised enough money to purchase 21 tons of sulfur dioxide in 1995. Hamilton hopes to get students from USM involved. He says, "This would be good as an environmental education program."

Last year allowances sold for $120 to $450 per ton and Duke Power Company alone spent over $2,332,500 to buy up 35.1% of all E.P.A. allowed airspace. The group decided this year to be non-profit so people can make tax deductible contributions.

It would like to hold a benefit a paper drive and with grade school projects and an end of the year celebration "to let people know we'll be back next year." says, a group member.

Hamilton says, "We want people to know that they are buying a future in our environment." Rick Clay-Storm, a USM student suggested holding a benefit concert at a restaurant with local bands. Hamilton hopes that he will get legal help in making a future contract which will prelude sales of banked sulfur dioxide.


PRESS RELEASE: April 1, 2013

ARRF MAKES LARGEST AUCTION PURCHASE EVER


OF OVER 1,200 TONS!

The Acid Rain Retirement Fund was a successful bidder for the right to emit 1,202 tons of air pollution per year in the annual auction of sulfur dioxide emissions allowances conducted March 29, 2013 by the U.S. Environmental Protection Agency.  With their bid of $0.75 per ton, A.R.R.F. purchased the legal right to emit 2,404,000 pounds of sulfur dioxide in 2013.

Along with allowances purchased in prior years, A.R.R.F. now owns the right to emit 2,826,000 pounds (1,413 tons) of sulfur dioxide per year, plus whatever amount it has not emitted in previous years.    That amount will increase by another 100 tons in 2018, when allowances A.R.R.F.purchased in the 7-year advance auction in 2011 are eligible for use. One ton of sulfur dioxide makes enough acid rain to kill any lake in Maine. Because A.R.R.F. did not exercise its right to emit any pollution during 1996-2013, "banking" its emissions allowances for the future, A.R.R.F. now holds the legal right to emit a total of 4,644,000 pounds--or 2,322 tons--of sulfur dioxide in 2013.  This is considerably more than the 760 tons/year allocated by law to the Miami Fort #5 generating unit in Ohio.

Because ARRF does not use its rights, the air we breathe is cleaner by that amount. New England is downwind of the 105 dirtiest coal-fired power plants in the U.S., most of which are located in the Ohio River Valley.  One is in New Hampshire, five in New York, 21 in Pennsylvania.  They pollute so much they're listed by name in the Clean Air Act of 1990.

Each year the U.S. Environmental Protection Agency auctions off to the highest bidder about 250,000 pollution allowances that enable companies to emit one ton of sulfur dioxide.  A non-profit, all-volunteer, community educational group, the Acid Rain Retirement Fund raises money and bids alongside polluters for as many allowances as their funds can buy.  But instead of using or trading them, A.R.R.F. retires them permanently, taking allowances off the market and keeping sulfur dioxide out of the air.

Examination of EPA Auction results 1993-2013 indicates "groups or individuals like A.R.R.F. who purchased emissions allowances for purposes other than releasing air pollution now own the right to emit 3,188 tons per year," according to Michael Hamilton, Emeritus Professor of Political Science at the University of Southern Maine.  Although most have purchased only one or a few tons, every little bit counts, and it all adds up to a significant reduction of air emissions in the aggregate.

Since many purchases were made in earlier years, and unused allowances have accumulated, these groups now own the right to emit 23,012 tons of sulfur dioxide in 2013.  That's more than the annual allocation of allowances to 168 of the 250 dirtiest generating units in the United States (some are allowed to emit almost 95,000 tons/year).  This means "someday one of these plants will need emissions allowances owned by someone like A.R.R.F. who won't sell them, and they'll have to clean up their pollution," according to Hamilton.

Sulfur dioxide is the principal contributor to acid rain that falls on New England, causing respiratory disorders, impairing visibility, harming the health of fish and wildlife, and degrading Maine lakes.  Acid rain brings with it mercury deposition, and together they cause tremendous damage to our health and environment in Maine.  People are warned not to eat more than a little fish taken from lakes and streams in Maine, due to unhealthy levels of mercury contamination.  Research at the University of Maine shows lakes and streams in New England have been slow to recover from the effect of acid rain, compared to some in Wisconsin, New York and Pennsylvania. Research by the Hubbard Brook Research Foundation recently identified nine suspected mercury hotspots in northeastern U.S. and Canada, including three in central Maine.  Two others are in New Hampshire along the Merrimack River, near the Merrimack power plant run by Public Service Co. of New Hampshire, which does not use air pollution control equipment.

Many lakes in Maine are affected by acid precipitation.  Rain is considered abnormally acidic when it has a pH below 5.0, and lakes are considered acidified with a pH of less than 5.5.  According to the Maine Department of Environmental Protection, about 100 lakes in Maine have pH lower than 5.5.  They say about half these lakes are naturally acidic, the other half caused by acid rain.  The pH of rain and snow in Maine varies between 3.9 and 5.0.  The pH of precipitation recorded in December 2001 was 4.6 at Acadia National Park, 4.5 at Bridgeton, 4.7 at Caribou, and 4.5 at Greenville.  "These readings indicate abnormal acidification" according to Hamilton.  A measurement of 4.5 pH is ten times more acidic than 5.5pH, which is the normal pH of rainfall.

On March 29, 2013 the U.S. Environmental Protection Agency sold allowances to emit 125,000 tons of sulfur dioxide first usable in 2013 in its "spot auction."  The highest successful bid was for $5.00/ton.  In an auction notable for its lack of participation, an otherwise unknown speculator named Nouvelle Ligne De Base purchased 98.03% of spot auction allowances.  The lowest successful bid was $0.17/ton.  These prices are considerably lower than the cost of installing scrubbers on power plants to remove SO2 from exhaust gases, which most units purchasing  allowances do not currently utilize.

Another 125,000 tons worth of allowances first usable in 2020 were auctioned off for $0.04-$0.50/ton.  Nouvelle Ligne De Base bought the largest portion (99.2%), apparently on speculation.   In total, only $40,642.96 was spent on emissions allowances in these two auctions, the lowest amount since thier inception in 1993.  Yet Harvard University researcher Robert Stavins estimates we've saved about $1 billion per year in the U.S. by cleaning up acid rain since the program went into effect.

The Acid Rain Retirement Fund is incorporated as a nonprofit environmental education organization in the State of Maine. A.R.R.F. uses participation in pollution markets as a way to educate children and adults about the sources and detrimental affects of air pollution and acid rain, and actions people can take to reduce such pollution. This year, A.R.R.F. purchased emissions allowances with funds donated by folks in Maine and from all over the U.S., including 6th graders at South Kortright Central School in South Kortright, New York.

Official EPA Auction results can be viewed at www.epa.gov/airmarkets/trading/auction.html
 
 





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