Environmentalists Chalk Up Pollution for Clean Air : Ecology: National Healthy Air License Exchange buys sulfur dioxide emission license so that no one can use it. The nonprofit group intends to expand the practice.

CLEVELAND —  A new environmental group is trying to clean up the air by buying a government permit allowing it to spew a ton of sulfur dioxide, the key ingredient of acid rain.

The National Healthy Air License Exchange bought the permit so no one would ever use it. The nonprofit group is entering the new market of buying U.S. Environmental Protection Agency pollution allowances.

“We will spend as much money on these permits as people donate. That’s the whole idea here,” said David B. Webster, founder and president of the group, formed last year. He is a lawyer with the Cleveland law firm of Kaufman & Cumberland.

An amendment to the Clean Air Act of 1990 established the new approach to air pollution control. Companies with emissions below government-mandated limits can sell the difference--in the form of allowances--to other companies. Market forces determine the price.

“This represents a new world of pollution control--one that holds more promise than the traditional way,” said EPA spokesman Dave Ryan. “Now there is an economic incentive to do better than the law requires.”

Under the law, polluters are issued allotments based on their needs and the EPA’s goal of drastically reducing air pollution in two steps, with rules that tighten in 1995 and again in 2000.

Polluters are free to meet the lower emissions standards either by investing in cleaner technologies or by buying allotments from other companies whose emissions are so far below the standards that they have credits to sell.

The EPA’s intent is to reduce sulfur dioxide emissions by 10 million tons each year.

Webster’s group so far has bought one allowance, for one ton of emissions. It cost $350. His goal is to put 10% of the available permits in the hands of nonprofit groups.

He said the group will try to persuade power companies to donate permits and reap tax benefits for charitable gifts.

The program begins in 1995 for about 110 generating plants operated by about 50 investor-owned electric utilities. About 800 other sulfur dioxide emitters will be added in the year 2000.

The EPA sold 150,010 permits, or allowances, for $21.4 million during a March auction at the Chicago Board of Trade. Utilities bought most of them. Each allowance is for discharge of one ton of sulfur dioxide per year.

Webster’s group and others such as the Natural Resources Defense Council, World Charitable Trust and C/O Resources for the Future each bought one permit.

Prices for the permits ranged from $122 to $450. Webster’s group made 1,115 bids. Its only successful bid, at $350, also was its highest.

As the cost of the EPA pollution allowances rise, utilities may decide to work toward eliminating pollution instead of buying the permits, Webster said.

Pat Barnes, a teacher of biology and ecology at University School in the Cleveland suburb of Hunting Valley, said he joined the group’s board of directors because he was intrigued with its approach to fighting pollution. Those who buy the allowances are buying, well, nothing.

“But it could result in another ton of SO2 (sulfur dioxide) that doesn’t go into the atmosphere,” he said. “This is an idea that has demonstrated a lot of attraction for a lot of people.”

The concept doesn’t worry power companies, said Jim Evans, director of environmental activities for Washington-based Edison Electric Institute, a trade group for investor-owned electric utilities. Evans said a typical utility may hold tens of thousands--even hundreds of thousands--of the allowances.

“If some people buy one allowance, it’s maybe something nice to hang on the wall. It’s a token. Those people would do better spending their money on retiring old junker cars,” Evans said.

In March, Northeast Utilities gave 10,000 tons of sulfur dioxide allowances to the American Lung Assn. Northeast Utilities, based in Hartford, Conn., is New England’s largest electric utility holding company.

The lung association estimated the gift’s worth at $3 million, based on $300 per allowance.

Dr. Lee B. Reichman, the lung association’s president, called the donation a “bold, new step” toward control of acid rain.

Acid raid is formed when sulfur dioxide from the burning of fossil fuels, such as coal, reacts with hydrogen and oxygen in the atmosphere. It destroys plants and aquatic life.

Not all environmentalists are happy with the EPA program. The Adirondacks Council in Upstate New York has joined with the New York attorney general in suing the EPA.

The opponents fear utilities in the Midwest will use the permits to continue burning high-sulfur coal for as long as they can.