Emissions Reduction Market System (ERMS) Account Officer Training 2012 Version.

Emissions ReductionMarket System (ERMS)Account Officer Training

2012 Version

Basics

Purpose of ERMS Contribute to attainment Minimize costs of further reduction by

using a “market based approach” providing flexibility and allowing sources to determine the best way to reduce emissions

Maintain the “status-quo” for current control programs

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Past: Command and Control Rules developed based on industry type

(e.g., printing, coating, chemical manufacturing)

All companies required to implement the same reduction percentage• Cost not considered per company• Sometimes had a threshold for implementation• Usually not “one size fits all”

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ERMS: Market Based Overall reduction mandated Allotments (emissions) given to the

companies based on a baseline Up to the companies to determine how/if

reductions are made• Make reductions and have allotments to sell• May be cheaper to buy allotments rather than

reduce5

Possible Approaches

Upgrade control measures on existing units where it can be done most economically and effectively

Enhance control measures when existing units are replaced

Switch production out of the trading season Purchase ATUs

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Affected Sources Stationary sources located in the Chicago

ozone nonattainment area• Cook, DuPage, Kane, Lake, McHenry and Will

counties• Aux Sable Township, Goose Lake Township in

Grundy county and Oswego Township in Kendall county

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Affected Sources - continued Required to obtain a Clean Air Act Permit

Program (CAAPP) permit OR Federally Enforceable State Operating Permit (FESOP)

VOM emissions of at least 10 tons per season(May 1 - September 30)

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Affected Sources - Exemptions Can accept a limit of 15 tons/season

• 10 tons/season is the threshold for identifying you as a participating source, but accepting a limit of 15 tons/season will keep you out of being a participating source in ERMS

Make a reduction of 18% from your baseline• Participating sources make a 12% reduction

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Types of ERMS Sources

Types of ERMS Sources Participating Source New Participating Source General Participant Special Participant

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Participating Source Operating prior to May 1, 1999 Located in the Chicago nonattainment area Potential to emit >=25 tons/year of VOM Required to obtain a Title V (CAAPP) or

FESOP (Federally Enforceable State Operating Permit) permit

VOM emissions >=10 tons/season

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New Participating Source Not operating prior to May 1, 1999 Located in the Chicago nonattainment area Potential to emit >=25 tons/year of VOM Required to obtain a Title V (CAAPP)

permit VOM emissions >=10 tons/season Do not get an annual allotment

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General Participant Not a Participating Source Not a New Participating Source Any person/entity that obtains a Transaction

Account• Can think of this as a “broker”

Can buy and sell ATUs Need to have a trained account officer

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Special Participant Any person/entity that registers with the

Agency Cannot sell ATUs Can buy ATUs

• Any purchased ATUs are immediately retired No account officer training needed

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Baselines, Allotments & Reconciliation

Allotment Trading Unit (ATU) The “currency” of the ERMS Equivalent of 200 pounds VOM emissions Each ATU is valid for the season of

issuance and the following season• Unless used for emission compensation

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Baseline Emissions Based on historical emission data

• Adjusted upward for over-compliance• Adjusted downward for non-compliance• Can substitute years

Allotment of ATUs will be set from the baseline emissions• generally reduced by 12%• Allotment amount included in your permit

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Exclusion from Further Reductions

Insignificant emission units Emission units complying with NESHAP or

MACT Fuel combustion units (e.g., boilers and

engines) Emission units where a LAER

demonstration was approved

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Baseline Years Average of the two highest years of 1994,

1995 or 1996• No justification needed

Can substitute any year from 1990-1993 or 1997 if that year is more representative• Requires justification• Substitute one whole year

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Emission Calculation Methodology

The methodology used to calculate baseline emissions will be included in your permit• Must be used to calculate emissions for the

season – no deviations• Changes to calculation methodologies require a

permit revision– Baseline and allotment will be recalculated based on

the new methodology

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Annual Allotment Each year the number of ATUs in your

permit will be deposited in your account automatically• Historically done in March/April• No notification• List will appear under the Allocation Reports

menu option of the web page

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Reconciliation Period The three months (October – December)

following seasonal allotment period Time to compile actual seasonal emission

data Submit seasonal component of annual

emission report

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Reconciliation Period - continued Conduct end of year trades

• Can trade throughout the whole year Only trades agreed to by December 31st can

be counted towards the seasonal emissions for that year• We don’t close the books at midnight

December 31st, but wait a few days for paper trades to come in

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Seasonal Emission Reports

Seasonal Emission Reports Applies to

• Participating sources• New Participating sources• 18% reduction sources• 15 ton/season limit sources

Due date• October 31 for < 10 emission units• November 30 for >= 10 emission units

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Seasonal Reports – Content Actual VOM emissions from May 1 –

September 30 Adjustments due to variance, consent order,

emergency condition and so forth Number of ATUs that equate to the

seasonal emissions HAP emissions for the season

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Seasonal Report – HAPs HAPS = Hazardous Air Pollutants Report VOM HAPs if

• Major for HAPs– >= 10 tons/year for any individual HAP

– >= 25 tons/year for all HAPs combined

• Subject to NESHAP/MACT– Report only those units subject to NESHAP/MACT

• Report to TRI28

Seasonal Reports – Checking Signature All emission units are reported Emission calculations performed correctly

• We find many math errors• Calculation methodology needs to be the same

as in the permit• Production rate is used as a reasonableness

check29

Compensation and Excursions

Emission Compensation This is the IEPA retiring (subtracting) the

amount of ATUs, reported on your seasonal report, from your transaction account

Timing• Sometime in mid-January of each year when all

previous year transactions have been entered and seasonal report has been accepted

• Never before January 1

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Excursion Occurs when your account does not hold

enough ATUs to cover your seasonal emissions

If an excursion occurs, you are not in violation

The ERMS rule gives a mechanism for resolving an excursion

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Excursion Penalty First excursion

• Owe 1.2 times the amount of excursion Second (or more) excursion in a row

• Owe 1.5 times the amount of excursion When multiplying by 1.2 or 1.5, if there is a

fractional ATU, the value is always rounded up to the next higher ATU

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Excursion Resolution Will send an excursion compensation notice Only two choices for resolution

• Purchase from ACMA (default)• Take from next year’s allotment

– Notify us within 15 days

Choice is yours• If choosing ACMA, you will be sent a bill

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Annual “Flow” of ERMS April: Allotment May – September: Emissions October – December : Reconciliation

• Submit seasonal report• Trade as necessary (throughout the year)

January: Compensation and Excursion

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Other Facets of ERMS

ACMA Alternative Compliance Market Account Reserve of ATUs managed by IEPA Receives ATUs equivalent to 1% of each

year’s allotment (about 1000 ATUs) ACMA available during reconciliation period Cost is lesser of 1.5 times the average market

price or $10,000/ton

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Shutdowns All operations at a source shut down and

the permit is withdrawn (or is revoked or terminated)

80% of allotted ATUs go to source and 20% to ACMA unless…

Source makes arrangement to trade whole allotment to a general participant before shutting down

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Emission Reduction Generators ATUs created for creditable reductions at

permitted sources that are not participating sources

Source needs to become a general participant or have a partner in ERMS who gets the ATUs

Reductions must be real, actual and surplus (can’t be shifted elsewhere in the area)

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Inter-Sector Receive ATUs for making reductions in

area source or mobile source categories• Cars – Cash for clunkers• Switch from gas to electric lawnmowers• Reformulate coatings purchased by the public

(only Intersector to date)• Etc.

Request reviewed by the Agency40

Quick Facts

Quick Facts About 140 participating sources About 5 new participating sources About 90 sources with 15 ton/season

exemption About 75 general participants About 7 special participants

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More Quick Facts About 104,000 ATUs allotted each season

• 100,000 from baseline• 2700 from Emission Reduction Generators• 1000 to ACMA

Around 40,000 ATUs retired each year Around 59,000 ATUs expire each year

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Buyers/Sellers Around 20 sources need to buy ATUs each

year Remaining sources (around 120) are

possible sellers A few (1-3) sources go into excursion each

year• Mainly due to inaction on their part to buy

ATUs44

ATU Prices ($/ATU) 2011 = 2010 = $20.10 2009 = $19.32 2008 = $18.22 2007 = $14.86 2006 = $17.01

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Transaction Account and Account Officers

Transaction Account Database where ATUs are kept

• Has a unique identification number for the entity

• All allocations, trades, retirements and expirations occur in the database

• Trade is not accepted until it is enacted in the database

Think of it as your bank account47

Account Officer A person who has been approved by the

Agency who is responsible for one or more transaction accounts

Transaction account• Must have at least one account officer• Can have multiple account officers

An account officer may be associated with more than one transaction account

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Account Officers Remember…

• An account officer can freely trade ATUs in and out of the transaction account as long as he is associated with the account

• If an account officer leaves a company, it is best to notify the Agency of that fact and that you wish to have him removed from the account

– Account officer can still represent other accounts49

Expedited Approval ofAccount Officer

Used when an account officer unexpectedly leaves that position• Requested by the company• With expedited approval, the account officer

can perform trades without training• Must take the account officer training within

one year of request

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Trades

Types of Trades Trade

• One-time only transaction Transfer agreement

• Multi-year transactions (specify years)• Will be performed once per year (can specify

date)• Can be open-ended

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Trades Agency does not get involved

• Up to the two parties to agree on price and any other issues

Must be submitted and approved by IEPA to be official

Confirmation of the trade will be sent to both parties

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Trade Options Trade oldest first

• default Specify number and expiration date

• e.g., 50 ATUs expiring in 2013 Specify by ATU id

• Not really necessary with option of specifying by expiration date

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Submitting Trades Mail FAX

• Must follow up with hard copy submittal Via ERMS web page

• Can’t do transfer agreements• Will execute over night

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ERMS Forms

Transaction Account 113-ERMS Use this form to

• Establish a new account for– Participating source

– New participating source

– General participant

• Update information for an account

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Special Participant 114-ERMS Use this form to

• Establish a new account for– Special participant

• Update account information for a special participant

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Account Officer 111-ERMS Use this form to

• Establish a new account officer • Update account officer information• Allows an account officer to remove himself

from an account• Request training/expedited approval

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Account Officer Designation 112-ERMS Use this form to

• Link an account officer to a transaction account• Remove an account officer from a transaction

account

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Transaction Request 116-ERMS Use this form to

• Submit a trade request to the Agency• Must be signed by both parties• Can come in two parts (buyer and seller) but we

prefer them to be together

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Transfer Request 118-ERMS Use this form to

• Submit a transfer request to the Agency• Must be signed by both parties• Can come in two parts (buyer and seller) but we

prefer them to be together

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Cancel Transfer Agreement 122-ERMS Use this form to

• Stop the processing of a transfer agreement• Must be signed by both parties• Can come in two parts (buyer and seller) but we

prefer them to be together

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Emergency Conditions 110-ERMS Use this form to

• Submit an initial emergency conditions report• Submit the final emergency conditions report

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Regular Access to ACMA 119-ERMS Use this form to

• Request a purchase of ATUs from ACMA

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Special Access to ACMA 120-ERMS Use this form to

• Request a purchase of ATUs from ACMA Unlikely to occur Happens only if there are not enough ATUs

in ACMA

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Request Buy/Sell Notice 121-ERMS Use this form to

• Have the Agency create a buy or sell posting for you

This information can also be entered through the web page

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Balance Correction Request 115-ERMS Use this form to

• Request the Agency to look at any ATU balance issues you may have

Or you can just e-mail

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Seasonal Report Forms

Emission Summary 100-ERMS Required Use this form to

• Summarize emissions from other seasonal report forms

• Certify the report

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Actual Seasonal Emissions 100A-ERMS Required Use this form to

• Report the seasonal emissions for each VOM emission unit at the source

Include all emissions• Adjustments will be made on other forms

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Units Constructed Prior to 1/1/1998

100B-ERMS Shouldn’t really be occurring now Use this form to

• Report the seasonal emissions for emission units that had a construction permit prior to 1/1/1998 that don’t have three years of emission data

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Major Modifications 100C-ERMS Use this form to

• Report the seasonal emissions for emission units that had a construction permit prior to 1/1/1998 that don’t have three years of emission data

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Emergencies 100D-ERMS Use this form to

• Report the emissions for emission units that had an emergency

We will check to make sure you have submitted an initial and final emergency conditions report

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Variance, Consent Order, Compliance Schedule

100E-ERMS Use this form to

• Report the emissions for emission units that are subject to

– A variance

– A consent order

– A CAAPP compliance schedule

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HAP Emissions 100F-ERMS Required for participating and new

participating sources Use this form to

• Report the HAP emissions for the source Report only VOM HAPs

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ERMS Web Page

Web Page

www.epa.state.il.us/air/erms

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Web Page Mainly HTML Online Transaction Requests

• Requires download of Jinitiator– A java product from the Oracle Corporation

– Safe to load on your computer

• Doesn’t work with Windows Vista orWindows 7

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Contents Various reports Allocation reports Historical Annual Performance Review

Reports News and Items of Interest Overview FAQ

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Contents – continued Agency contact information Average ATU prices ERMS Forms Online Transaction Requests

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Reports Various reports available Click on appropriate report Some reports require selection criteria to be

entered• Some can be entered in either/or

– Starting/end account number and/or

– Starting/ending date

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Average ATU Prices Lists

• Last month and last four week average prices• Previous and current ACMA average price

ACMA average price calculated at the end of October, November, December and January

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Online Transaction Requests Options

• Log In View buy/sell postings

• Don’t need to be logged in View current account balance

• Don’t need to be logged in• Can view any account

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View Buy/Sell Postings The screen allows you to select criteria to

filter your selection Usually there are very few buy/sell postings

so it is better to leave the selection criteria as is and run the query. Doing so will select all active buy/sell postings

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View Current Account Balance Enter the account number you wish to view Balance will be reported by ATU expiration

date

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Log In Enter your account officer id and PIN Will have additional options once logged in

• Create/update buy/sell posting• Create/update seller transactions• Confirm buyer transactions• Change PIN

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Create/Update Buy/Sell Posting Do not use to make a trade

• Used for the purpose of identifying people who want to buy or sell

• Not used by the Agency in performing trades Enter information as appropriate Can always come back and change an

active posting

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Create/Update Seller Transaction Used to perform an on-line trade Must be initiated by the seller

• Confirmed by buyer in a later step Can be done in two parts (on-line and paper)

but that is not the preferred method Enter information as appropriate Will get opportunity to review before saving

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Seller Transaction Can update the information on the

transaction up until it is accepted by the buyer

Make sure information is correct and save Notify the buyer that the transaction is

available

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Confirm Buyer Transactions Once selected, a list of transactions

available to approve will be displayed• The transactions you see are based on your

account officer id when the seller created the transaction

Click on the Transaction ID field to view the transaction

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Buyer Transactions Review the information to ensure it is

correct• It is both party’s responsibility to ensure the

information is what they agreed to If transaction is ok, accept it Otherwise inform the seller the information

is not correct• Buyer cannot change the information presented

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On-line Transaction Once accepted by the seller…

• Cannot be revoked or updated by the seller• Cannot be revoked by the buyer

Transaction will be performed overnight• Can notify Agency if it is needed to be

processed sooner• No confirmation letter sent (can get data from

Reports option)93

PIN Best to change the PIN you are given Never expires Up to 8 characters/numbers Case sensitive No requirement in length, number of

numbers, case, etc. Contact the Agency if you forget your PIN

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Bureau of Air Air Quality Planning Section

Contact information• Buzz Asselmeier• [email protected] • phone: (217) 524-4343• Web: www.epa.state.il.us/air/erms

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Training Completed Send an e-mail to

[email protected] Include

• Your name and phone number• The fact that you have read through the training

slides (you can always e-mail me for any questions you may have)

I will sent a certificate back to you96