45CSR28 Program Evaluation 2003

August 31, 2000 - December 17, 2003

45CSR28, Air Pollutant Emissions Banking and Trading contains provisions in Section 16 requiring the Director to conduct, or cause to be conducted, an evaluation of the emission trading program established under the provision of this rule. The evaluation shall be conducted every three (3) years, or more frequently if deemed necessary by the Director, to make all of the following emission trading program assessments:

• Whether the program is consistent with the maintenance of national ambient air quality standards and has resulted in emission reductions consistent with reasonable further progress toward attainment and maintenance of national ambient air quality standards. 45CSR§28-16.1.a.
• Whether requirements for monitoring, recordkeeping, reporting and enforcement have resulted in a sufficiently high level of compliance. 45CSR§28-16.1.b.
• Whether the program has caused any localized adverse effects to the public health, safety or welfare, or to the environment, including any disproportionate air quality impacts. This assessment shall include an analysis of the effects of emission trading on the emissions and impacts of toxic hazardous air pollutant emissions. 45CSR§28-16.1.c.
• Whether the program is achieving reductions across a spectrum of sources, including area and mobile sources. 45CSR§28-16.1.d.
• Whether provisions for conducting audits of emission reduction credit transactions have resulted in a sufficient number of audits being conducted across a spectrum of sources. 45CSR§28-16.1.e.

Evaluation

45CSR28 became effective on August 31, 2000. As of this date, no Emission Reduction Credits (ERCs) have been registered, traded, used or retired, hence none of the provisions listed above can be evaluated for the period of August 31, 2000 to December 17, 2003.

Summary of Actions Regarding 45CSR28 as of December 17, 2003

Current use of 45CSR28 has been extremely limited. Since the inception of the program on August 31, 2000, there have been no approved Emission Reduction Credit (ERC) generations. This program has not yet been submitted for State Implementation Plan (SIP) approval to USEPA Region III.

Background

Once 45CSR28, "Air Pollutant Emissions Banking and Trading", became effective on August 31, 2000, the Division of Air Quality developed the following forms and documents for implentation of the program:

• Using DAQ's Emission Trading Program - General Guidance
• Application to Use a New or ALternate Quantification Protocol
• Notice of ERC Generation
• Notice of ERC Trade/Transfer
• Notice of ERC Use or Retirements
• Example Legal Ad for Public Notice

Notices of Intent to Register Emission Reduction Credits

All sources generating emissions reductions via shutdown between January 1, 1991, and the August 31, 2000, effective date of 45CSR28 were required per Section 7.1.d. and 12.7. of the rule to notify the DAQ of their intent to register these credits within sixty (60) days of the rule effective date of October 30, 2000.

Thirteen (13) facilities representing multiple emission units submitted Notices of Intent to Register Emission Reduction Credits from sources shutdown between Jamuary 1, 1991, and August 30, 2000. Not all claims met the criteria required for proceeding with ERC Generation Registration under Rule 28. The pollutants reduced via these shutdowns were particulate matter, particulate matter less than 10 microns in diameter, sulfur dioxide, nitrogen oxides, carbon monoxide and volatile organic compounds. Additionally, some facilities included notice of reductions of compounds not listed in the Rule 28 open market trading program such as nitric acid, sulfuric acid and ammonia.

ERC Generation & New or Alternate Quantifications Protocols Under Review

After DAQ finalized its forms, only three companies have submitted applications for registering emission credits. All of these submittals have been for ERCs generated from shutdowns.

Of the three submittals for ERC Generation received to date, one company has withdrawn its application. The remaining two companies currently remain under review. Both of these reviews are pending USEPA Region III consideration of the quantification protocols used to determine the amount of pollutants reduced. According to 45CSR§28-8.2.b, both USEPA Region III and the State must approve new or alternate emission monitoring and quantification protocols used for the purpose of ERC trading. DAQ has approved the quantification protocols used by World Kitchen, Inc. and Union Carbide Corporation (Dow Chemical). DAQ has contacted US EPA Region III regarding the approval or disapproval of the quantification protocol used by these companies. As of this date, US EPA Region III's timeline to review and approve or disapprove the emission quantification protocols from these companies is unknown.

Therefore, as of December 17, 2003, neither of the two remaining submittals have been determined "complete" under the rule and subsequently posted to the registry.

Registry

The registry format is ready. Pending US EPA Region III approval of the quantification protocols, any complete registrations of emission credits can be posted in the registry.

Registry Posting and Summary Pending U.S. EPA Region III Approval of Quantification Protocols

Summary of DAQ's Emissions Banking and Trading Program To Date (Tons)