# Presentation: 181031

## NOx Budget Trading Programaka “NOx SIP Call”

- EPRI CEMS User Group Meeting
- May 4, 2004
- Mary Shellabarger, EPA

## Background of NOx SIP Call

- Issued in 1998:  required 22 States & DC to submit State Implementation Plans (SIPs) providing NOx emission reductions to mitigate ozone transport in eastern U.S** **
- Assigns a total NOx emissions “budget” for each identified State
- Permits States to choose what NOx measures to adopt to meet the State-wide emission budget

## Background, cont.

- EPA encouraged the use of an emissions trading program to achieve reductions from large electric generating units and industrial boilers
- Requires compliance with Part 75 monitoring
- Requires measurement and reporting of all emissions
- Sets goals and control requirements in terms of allowable emissions
- Reduce and cap total emissions
- Sources must hold allowances equal to emissions

## Participants

- “Core” units affected by the NOx Budget Trading Program include
- fossil fuel fired electric generators >25 MW
- industrial boilers and turbines >250 mmBtu/hr
- Some Northeast states include sources between 15 and 25 MW
- NY added source category:  cement kilns
- All states include opt-in provisions

## Timing

- Phase I: 19 states & DC submitted SIPs with trading programs (Phase I)
- 9 northeastern states
- CT, MA, RI, NY, NJ, PA, MD, DE, DC
- required to:  monitor in 2002, comply in 2003
- 11 additional states (or portions)
- VA, WV, NC, SC, KY, TN, AL, IL, IN, MI, OH
- required to:  monitor in 2003, comply in 2004

## 2003 Compliance

- 8 states & DC participating
- Budget: 165K allowances 140K basic allocations
- 25K compliance supplement pool
- Emissions: 140K tons
- (compare to 185K in 2002 for same group)
- Bank:  25K allowances

## 2004 Implementation

- 19 states and DC participating
- Budget: 665K allowances
- 500K basic allocations
- 140K compliance supplement pool
- 25K bank from 2003
- Emissions: ?
- Bank: ?

## About 2004 Emissions

- Shortened compliance season for “new” 11 states
- ozone season emissions _reported_: 5/1 to 9/30
- emissions _counted_ towards compliance:       5/_31_ to 9/30
- Regular compliance season for northeast states
- emissions _reported_ and _counted_: 5/1 - 9/30

## Reporting 2004 Emissions

- _All sources report_ hourly and cumulative (both ozone season and annual) data _for the entire ozone season_ as indicated in the EDR instructions
- ETS will calculate and present in the feedback an EPA Accepted value for NOx mass based upon the State-specific compliance period
- EPA strongly encourages sources with shortened compliance period to verify total NOx mass by using MDC hourly with the date filter set for   May 31 - September 30

## 2004 Dates

- May 1:  all monitors installed and certified
- May 1 or 31:  1st day of compliance period
- July 1-30: reporting period for 2Q EDR
- Sept. 30:  last day of compliance period
- Oct 1-30: reporting period for 3Q EDR
- Nov. 30:  compliance reports due
- Nov. 30:  allowance transfer deadline

## New Unit Allocations

- Reminder for new units that receive an allocation from a new unit set-aside
- Check your state’s allocation rule for the end-of-ozone season “take-back” procedure
- Make sure that it’s understood by allowance managers _before_ allowance transfer deadline

## New Units, cont.

- Allocation adjusted “to account for actual utilization”
- allocation based on lowest permitted emissions rate times maximum design heat input
- units only allowed to keep allowances equivalent to lowest permitted emissions rate times _actual_ utilization
- excess allowances deducted as part of compliance

## Compliance 2004

- Ozone season ends Sept. 30
- EDRs due Oct. 30
- Allowance transfer deadline Nov. 30
- eligible allowances:  2003, 2004
- no flow control
- Compliance certification due Nov. 30

## Compliance Certification

- Electronic submission through CBS or paper submission
- ID each affected unit
- compliance certification statement
- signature of AAR
- Optional:
- common stack apportionment
- identification of allowance serial numbers

## Compliance process at EPA

- Before the allowance transfer deadline, EPA will compare preliminary emissions data with allowance account holdings
- EPA makes courtesy calls to alert AAR of potential problem
- Allowance transfers received and processed
- Emissions data received and quality assured
- Allowances are deducted to account for emissions
- (and for new units, to account for actual utilization)

## Allowance Deduction Process 

- One unit at a time, in numerical order
- Fulfill obligations of first unit before moving on to next unit
- AAR-specified allowances first
- other allowances by FIFO (first in, first out)
- current year allowances
- banked allowances
- If a unit doesn’t have enough allowances, go to overdraft account

## Excess Emissions

- When there are not enough allowances to cover emissions in the unit account or overdraft account
- Allowances are deducted from following year’s allocation at 3:1 rate
- 3 allowances for each ton of excess
- Other enforcement action possible

## Future Reference: Flow Control

- No flow control for 2004 compliance, possible for 2005 compliance
- Compare number of banked allowances to regional budget
-  If total number of banked allowances exceeds 10 % of regional budget, PFC is calculated for following year

## Remember in 2004:

- Monitors should have been installed and certified by May 1
- When does your compliance season start?
- May 1 or May 31
- Allowance transfer deadline Nov. 30:
- Will you have a new unit take back?
- Flexibility of overdraft accounts
- Use the CAMD Business System!