The Regional Clean Air Incentives Market (RECLAIM) is an emissions trading program operated in greater Los Angeles since 1994. Under the trading program, 300+ polluting facilities must cut their nitrogen oxide (NOx) and sulfur oxide (SOx) emissions.
A first-of-its-kind system, RECLAIM, was designed to achieve significant emissions reductions efficiently. Market pressure creates an incentive to decrease emissions far more cheaply than the traditional ‘command and control regulations. The program is administered by the South Coast Air Quality Management District (SCAQMD) and is targeted at entities that emit greater than four tons of NOx/year, effectively every industrial, refining, and power generating facility in LA. The program requires stationary-source emitters of NOx and SOx to reduce emissions each year by capping available credits, called RTCs, and allowing RTC holders to trade with one another.
With the cap decreasing over time, upward price trends should incentivize facilities to install control technologies and improve operating efficiencies. From 2016-2022, SCAQMD implemented a reduction in allowances that cut the supply by ~50%. As a result, prices have risen more than 1,600% since 2014. However, South Coast AQMD is ending the program in favor of returning to 'command and control.' However, due to the complexity of unwinding the program, RECLAIM is expected to continue for several more years.