Emissions Banking and Trading (EBT) Overview/Update

Melissa RuanoAir Quality Division

Texas Commission on Environmental QualityAdvanced Air Permitting Seminar 2015

Presentation Overview

• Emission Reduction Credits (ERC)

• Discrete Emission Reduction Credits (DERC)

• Mass Emissions Cap and Trade (MECT) Program

• Highly Reactive Volatile Organic Compounds (HRVOC) Emissions Cap and Trade (HECT) Program

ERC ProgramERCs are:

• generated from a permanent reduction of a criteria pollutant, excluding lead, or a precursor of a criteria pollutant;

• certified in tons per year (tpy);

• generated and used only in nonattainment areas;

• expire after five years of emission reduction; and

• must be permanent, enforceable, real, quantifiable, and surplus at time of generation and use.

ERCs and Netting

• Reductions certified as an ERC may be used in netting by the generator per 30 TAC §101.306(a)(4) if:– the ERC has not been used, sold, reserved for use, or

otherwise relied upon; and

– the ERC is voided and no longer available for trading or other use.

Use of ERCs for NSR Offsets

Rule Changes

• An application to use ERCs must be submitted between the date the permit is administratively complete and 90 days prior to the start of operation.

• An application will not be accepted before the ERC is available in the compliance account for the site where it will be used.

• If approved, the date the application was submitted is the date of use.

• The user must submit the application to use ERCs prior to ERC expiration date.

• Once approved for use, the ERC is good for the life of the facility.

Use of ERCs for NSR Offsets

ERC Use Limitations

• Generally, an ERC must be used in the same nonattainment area in which it was generated for the pollutant for which it was generated.

• There is an exception if the user satisfies the conditions for inter-pollutant or inter-area use of ERCs:– requires project-specific photochemical modeling;

and

– requires TCEQ and EPA approval.

DERC Program

DERCs are:

• generated from a temporary reduction of a criteria pollutant, excluding lead, or a precursor of a criteria pollutant;

• certified in tons;

• generated in attainment or nonattainment areas;

• do not expire; and

• must be quantifiable, surplus, and real at time of generation.

Use of DERCs for Permit Exceedance

• User must demonstrate no adverse impact.

• Use is limited to one exceedance of no more than 12 months in any 24-month period.

• In ozone nonattainment areas, the exceedance must be ≤ 10 tons of NOX or ≤ 5 tons of VOCs.

• In attainment or unclassifiable areas, the exceedance must be no more than the PSD levels in 40 CFR §52.21(b)(23).

Use of DERCs for NSR Offsets

Rule Changes

• The user must submit an application to use DERCs:– at least 90 days before the start of operation; and

– at least 90 days prior to each year of operation not covered by a prior application.

• A DERC cannot be used unless it is available in the account for the site where it will be used.

DERC Use Limitations

• Generally, a DERC must be used in the same area in which it was generated for the pollutant for which it was generated.

• Limitations for the use of NOX and VOC DERCs generated in attainment areas, nonattainment areas, and covered attainment counties (as defined in 30 TAC §115.10) can be found under §101.372(f).

• There is also an exception if user satisfies inter-pollutant or inter-area use of DERCs.

Mobile and Area Source Credits

• The TCEQ is currently reviewing issues related to the generation and use of mobile and area source credits.

• Refer to §101.306 (Emission Credit Use) and §101.376 (Discrete Emission Credit Use) for the current use requirements.

MECT Program

• Establishes a mandatory cap for NOX emissions.

• Applies to sites in Houston-Galveston-Brazoria eight-hour ozone nonattainment area (HGB) that are a:

– major source of NOX with facilities subject to 30 TAC Chapter 117; or

– minor source of NOX with an uncontrolled design capacity to emit ≥ 10 tpy of NOX from facilities subject to Chapter 117.

MECT Program

• Provides allowances based on historic levels of activity.

• Once a site is in the Program, it always remains in until permanently shut down.

HECT Program

• Establishes a mandatory cap for HRVOC emissions.

• HRVOCs are defined as ethylene, propylene, 1,3–butadiene, and all isomers of butene.

• Applies to vents, flares, and cooling towers in Harris County.

• Sites that have the potential to emit ≤ 10 tpy of HRVOC from all affected facilities are exempt.

HECT Program

• Provides allowances based on uncontrolled HRVOC emissions and a ratio of each site’s actual HRVOC emissions versus other sites in their industry sector.

• Once a site is in the Program, it always remains in until permanently shut down.

Using Allowances for NSR Offsets

New Rule Requirements

• The facility being offset must be subject to the program (i.e., MECT for MECT facilities; HECT for HECT facilities).

• MECT allowances can be used for NOX offsets and HECT allowances for VOC offsets.

• A permanent allowance allocation must be used.

• The allowances used cannot be banked, traded, or used for any other purpose.

Using Allowances for NSR Offsets

• The user must submit an application at least 30 days before the start of operation.

• Allowances used for the 1:1 portion:– must be used simultaneously for MECT or HECT

compliance;

– all allowances set aside will be deducted at the end of each control period; and

– may devalue with future regulatory changes.

Using Allowances for NSR Offsets

• Allowances used for the 0.3 portion:– are permanently retained by TCEQ; and

– will not devalue.

Using Allowances for NSR Offsets

• Allowances used for offsets may be released if:– an alternative means of compliance for the offset

requirement is authorized in the NSR permit; or

– the affected facility is permanently shut down (1:1 portion only).

• If approved, the release will be effective in the control period following the date of the request.

• Allowances will not be released retroactively.

Contact Information

Emissions Banking and Trading Web Page

Melissa Ruano, Emissions Banking and Trading

Melissa.Ruano@tceq.texas.gov

Phone: 512-239-4496

Questions