Emission Reduction Credits

When a company decreases emissions of a specific pollutant, they can apply for emission reduction credits under the District's banking program. Most often, these projects are shutdowns of parts or the entirety of a facility. Only actual reductions of emissions are eligible for credits, so projects such as replacements or shutdowns where emissions are likely to shift to different emission sources in the county may not be eligible for credits, or may be eligible for a reduced amount of credits.

ERCs are used when a permit application under review by the District triggers a "major modification" under District Rule 20.3, which is for projects resulting in a large increase of specified pollutants. A project resulting in a major modification requires the surrender of a number of ERCs at a specified ratio higher than the increase in emissions from the project, resulting in a net reduction of emissions within the air basin.

ERCs are issued to the entity responsible for the emission reduction and may later be sold or transferred to other parties through submittal of an application.

Since there are is no specific application form for ERCs, the applicant should include an attachment with an application for new credits explaining the details of the project. This should include a listing of any equipment/permit being shutdown or modified to generate reductions, a calculation of the emission reduction (using actual emissions), supporting data, and any additional information the applicant believes will assist the District in reviewing the project for ERC eligibility.

Class A ERCs are those that meet all the full requirements for issuance under District rules. Class B ERCs are issued when they cannot (at the time) be determined the be actual emission reductions. For example, reductions from a partial equipment shutdown where there is uncertainty if emissions might be transferred to a different emission unit might be issued as Class B with the intent that the facility can apply to reclassify them once data has been collected to show the reductions were actual.

The District reviews each application for ERCs according to applicable rules. These rules contain specific provisions for calculating the quantity of reductions and the types of projects that are eligible. The District prepares a report summarizing the findings as well as a draft ERC certificate which contains conditions to ensure that the reductions can be enforced by the District. This documentation is then made available for EPA and public review and comment before the credits are finalized and issued.

The District maintains an email list for ERC activities. Click here to sign up for this list to be notified when proposals are made available for public review. A list of open applications is also available here and comments may be provided at any time an ERC application is open.

Before obtaining ERCs, it is a good idea to discuss with the District whether there are any restrictions that may apply once the credits are issued. For example, if an operation is shut down and credits issued, the facility will be required to surrender those credits if they wish to restart that operation. If the credits have been sold, the company will need to obtain credits from another owner to offset the increase.

ERCs require the use of actual emission calculations to establish the quantity of credits. In some cases, it may be helpful for the owner of an operation being shut down to obtain certain process data or source test data prior to shutting down. If you are considering shutting down equipment, you may contact the District to obtain more information about what data would be necessary. NOTE: We highly recommend that any source testing be coordinated with the District beforehand, and conducted according to a test protocol approved before testing to ensure that the results will be valid for use in calculations.