In 1994, the [Regional Clean Air Incentive Market] (RECLAIM) will operate in four counties in the Los Angeles area, affecting 390 companies that emit in excess of 3.6 tonnes of nitrogen oxides (NOx) or sulphur dioxide (SO2) annually. RECLAIM is based on an emission trading system. It provides firms economic incentives to reduce pollution by enabling them to sell pollution credits if they beat set emission reduction targets, whilst credits will be marketable to companies that do not meet the target. It is considered that this flexibility will enable pollution to be cut in the most economically efficient way. Cumulatively, these firms will be obliged to reduce their emissions by 5 to 8% a year for ten years, so that their emissions of NOx are cut 75% by 2003.
The Protocol adopted in Sofia on 31 October 1988 concerning the [Control of Emissions of Nitrogen Oxides or their Transboundary Fluxes] (1991) ([NOx Protocol]), has been ratified by 25 Parties. Concerning the emissions of nitrogen oxides, the general reference year is 1987 with the exception of the United States, which chose to relate its emission target to 1978. Taking the sum of emissions of parties to the [NOx Protocol] in 1994, or a previous year, where no recent data are available, a reduction of 9% compared to 1987 can be noted. In the whole of Europe, including non-parties to the Protocol, that sum of emissions is less than 20,000 kt, which corresponds to a reduction of 15% compared to 1987. Nineteen of the 25 Parties to the 1988 [Sofia Protocol] have reached the target and stabilized emissions at 1987, or in the case of the United States 1978, levels or reduced emissions below that level according to the latest emission data reported. Eight parties to the Convention (including three non-party to the [Sofia Protocol]) have reduced NOx emissions by more than 25%. Seven of these are countries with economies in transition. Based on available data, it can be concluded that eighteen Parties to the Protocol (Austria, Belarus, Bulgaria, Canada, Czech Republic, Denmark, Finland, Germany, Hungary, Liechtenstein, Netherlands, Norway, Russian Federation, Slovakia, Sweden, Switzerland, Ukraine and United Kingdom) have fulfilled their obligation under article 2, paragraph 1, of the Protocol, to stabilize emissions at 1987 levels by 1994 at the latest. Another Party (United States) has specified the year 1978 as reference year and stabilized emissions at that level, but has, in addition, to limit its average emissions or transboundary fluxes for the period between 1 January 1987 and 1 January 1996 at levels of the year 1987.