Emission Reduction Credits (ERCs)

Emission Reduction Credits (ERCs) are necessary for the construction of new major emission sources, or sources undergoing expansion in regions that do not meet EPA standards for national ambient air quality (Non-attainment regions). ERCs are available for numerous environmental pollutants, such as nitrous oxide (NOx), volatile organic compounds (VOCs), particulate matter (PM), carbon monoxide (CO) and reactive organic gasses (ROGs), and are of particular concern to developers constructing heavy industrial facilities, new fossil-fuel power generation facilities, or refineries. ERCs must be acquired prior to the construction of a new facility, creating a competitive market.

ERCs are created in one of several ways.

• The shutdown of a facility with a valid permit enabling them to emit a set quantity of emissions annually produces a number of ERCs equivalent to the number of tons emitted in one year. For example, a power plant with a valid permit to emit 50 tons of NOx a year shuts down. If the operator surrenders his permit to the state, they may file to create ERCs equal to the number of tons outlined on the permit. By surrendering the permit and successfully filing documents, 50 ERCs are generated.
   
• ERCs may also be generated through the limitation of emissions in a non-attainment region through the limitation of the running capacity of the plant. After the plant operators have agreed to permanently curtail emissions and revised their operating permit to match the new emissions rate, ERCs equal to the emission reduction are generated.
   
• ERCs can also be generated through the permanent reduction of emissions through voluntary installation of emission-reducing technology. Alternatively, the plant could make the switch to a new fuel source that has a lower annual emission rate than the original fuel. For example, if a coal power plant was to make the switch to using natural gas as a primary fuel for energy production and were in possession of a permit to produce 100 tons of NOx emissions annually, the difference in NOx emissions from switching to a lower emitting fuel could be converted into ERCs. However, the owner/operator must modify the operating permit prior to applying for ERCs and make a permanent commitment to the new emission rate to certify the ERCs.

Glossary: ERC Terms

Mike Ferguson +1 360 852 3342