RECLAIM
RECLAIM (The Regional Clean Air Incentives Market) is a cap-and-trade program designed to reduce air pollution in the Los Angeles area. Under RECLAIM, facilities were allocated a set number of allowances known as RECLAIM Trading Credits (RTCs), which they can swap, buy, or sell, encouraging cost-effective pollution reductions. South Coast Air Quality Management District (SCAQMD) announced they are sunsetting the program, but trading will continue until the last compliance period (still TBD). South Coast is comprised of Orange County and the non-desert portions of Los Angeles, Riverside, & San Bernardino counties. Adopted in 1993, RECLAIM was the first of its kind, a regional cap & trade program to manage NOx & SOx pollution in one of the worst polluted airspaces in the US. The program initially regulated 394 facilities which has dwindled to 228 facilities. NOx emissions have decreased 88% from an initial baseline of ~38,300 tons per year, to ~4,432 tons in 2023. Similarly, SOx emissions have fallen 62% from a ~3,650 ton/year initial baseline to below 1,400 ton/year.
South Coast Air Basin
In 2025, RECLAIM NOx has a total allocation of 10,522,802 RTCs (~5,200 tons). The RECLAIM SOx allocation was 4,436,697 lbs. (~2,200 tons). Years of reductions have caused the allowance pool to be oversupplied although significant cuts in the NOx program led to a much tighter market over the past several years. In 2022 (the most recent year for which South Coast published a comprehensive RECLAIM Annual Report), only 11% of NOx allowances expired as surplus. Facilities are divided into either cycle 1 or cycle 2 with annual compliance years running from Jan 1 – Dec 31 and July 1 to Jun 30 respectively. Additionally, South Coast is divided into an inland zone and a coastal zone. Because inland pollution is particularly difficult to manage, inland facilities are required to use credits from facilities in the inland zone (This does not apply to facilities whose emissions are less than their initial allocation) while coastal facilities are free to use inland or coastal credits.
Trading is heaviest during annual reconciliation periods (January/February for cycle 1 facilities and July/August for cycle 2 facilities). However, some facilities must purchase RTCs quarterly with leads to regular trading in April and October. Because SOx was limited to 33 facilities originally, the SOx market has always been very small and has only become smaller with time. Timing and strategy are impactful on RECLAIM trades. Emissions Experts seeks to advise clients to execute strong trades that reflect our years of experience and knowledge in this niche market. When the RECLAIM market finally sunsets, permitting NOx & SOx emissions in South Coast will be very different. Facilities will need to understand how this complex new environment affects them in both expansion and in downsizing/shutdowns.