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SCAQMD Proposed Rule 4001: Maintenance of AQMP Emission Reduction Targets at Commercial Marine Ports

Friday, January 24, 2014

South Coast Air Quality Management District (SCAQMD) proposed Rule 4001 for the purpose of achieving and maintaining PM2.5 emission reductions provided in the Final 2012 Air Quality Management Plan (AQMP). This new proposed rule applies to port-related sources, including ocean going vessels, locomotives, cargo handling equipment, heavy duty trucks, and commercial harbor craft, operating at the Ports of Los Angeles and Long Beach. Under proposed Rule 4001, the Ports are required to report emissions of NOx, SOx, and PM2.5 on an annual basis, beginning in 2014 and continuing through 2020. NOx and SOx emissions will be converted to PM2.5 equivalent emissions based on each pollutant's potential to generate PM2.5. For each reporting year, the PM2.5 equivalent emissions will be compared to 2008 baseline emissions. If the reduction target of 75% is met, then there will be no additional requirements. However, if the reduction target is not met, then the Ports will be required to submit an Emission Reduction Plan proposing control strategies to be implemented within 18 months. Written comments on the proposed rule are due by January 31, 2014.

More information can be found on the SCAQMD website here.

SCAQMD's New Reporting Tool for Annual Emission Reporting

Friday, January 24, 2014

The South Coast Air Quality Management District (SCAQMD) monitors air emissions from permitted facilities using its Annual Emission Reporting (AER) program. Under this program, subject facilities are required to submit annual emission reports for calendar year 2013 by March 4, 2014. These reports are submitted using the district's AER web tool (reporting tool).

SCAQMD has recently developed a new reporting tool for the AER program, which allows reporters to report their emission at a device or equipment level. Reporters are required to use the new reporting tool for calendar year 2014 emission reporting. However, reporters do have the option to use the new reporting tool for calendar year 2013 reporting in lieu of the existing reporting tool. The new reporting tool can be found here.

In order to use the new reporting tool, the users and their agents must go through a one-time registration within the tool and configure their facilities and emission sources. SCAQMD is hosting a workshop for the new AER reporting tool at their main office on January 30. For more information on this event and for additional information about the new and existing reporting tools, click here.

2014 Cap-and-Trade Updates: Linkage with Quebec, 2014 Auction Reserve Prices, and 2014 GHG Allowance Allocation Distributions Updates

Friday, December 20, 2013

In early December 2013, CARB released three documents pertaining to the continued implementation of the Cap-and-Trade program.

First, CARB has issued a statement that the Cap-and-Trade programs administered by Quebec and California will become officially linked effective January 1, 2014. Throughout 2013, both Quebec and CARB have taken steps to prepare their respective programs for linkage. The linkage would allow compliance instruments to be transferred between the two jurisdictions. Any California entity with direct corporate association(s) registered in Quebec's program will be required to share the applicable purchase and holding limits between the entities in the jurisdictions. CARB and Quebec are not yet ready to hold a joint auction but this capability is expected to be established so that a joint auction can be held later in 2014. Further information regarding the linkage may be found in the Linkage Readiness Report provided by CARB in November 2013.

Second, on December 2, 2013, CARB released the 2014 Annual Auction Reserve Price Notice. This document contains the 2014 Auction Reserve Price as well as the number of current (2014) and advance (2017) allowances that will be available for sale at the quarterly auctions in 2014. The Auction Reserve Price is the minimum price (in dollars per metric ton) at which any GHG allowance can be sold at a given auction. The 2013 Auction Reserve Price was $10.71. The Cap-and-Trade regulation states that the Auction Reserve Price will be "increased annually by 5 percent plus the rate of inflation as measured by the most recently available twelve months of the Consumer Price Index for All Urban Consumers." The 2014 Auction Reserve Price is set at $11.34. For reference, 2013 and 2016 vintage allowances sold at the most recent auction (November 2013) for $11.48/allowance and $11.10/allowance, respectively.

This 2014 Annual Auction Reserve Price Notice also identifies prices for the Allowance Price Containment Reserve and 2014 Auction dates. The 2014 quarterly auctions are scheduled to take place on February 19th, May 16th, August 18th, and November 19th. An Auction Notice will be published 60 days prior to each auction and will provide details regarding the auction format, eligibility, and how many allowances of each vintage will be auctioned at the corresponding quarterly auction. The 2014 Annual Auction Reserve Price Notice may be found here.

Finally, CARB has released a document summarizing the free allocation of 2014 vintage allowances to different industrial sectors. The document shows how many allowances will be freely allocated to each sector and which facilities are included in that sector. Overall, in 2014, CARB expects to distribute about 54.4 million 2014 vintage allowances to 156 facilities. The document regarding the distribution of freely allocated 2014 allowances may be found here.

Cap-and-Trade November 2013 Auction Results Released

Monday, November 25, 2013

On November 22, 2013, the California Air Resources Board (CARB) released the results of its fifth auction for greenhouse gas (GHG) allowances which was held on November 19, 2013. The results detail the number of allowances sold, the settlement price, and other market statistics in the auctions for the 2013 and 2016 vintage allowances. All 16,614,526 metric tons of 2013 allowances that were available for sale were sold. The settlement price was $11.48 per metric ton which is a decrease from the August 2013 Auction's price of $12.22 per metric ton. All 9,560,000 metric tons of 2016 allowances that were available for sale were also sold. Like in the August 2013 Auction, the settlement price was $11.10 per metric ton. Similar to the prior auction, the 2013 and 2016 allowances were sold above the reserve price of $10.71 per metric ton.  The next quarterly auction is scheduled for February 19, 2014.

AB 32 Cap-and-Trade Auctions Generate $1 Billion in Revenue

Friday, October 25, 2013

On October 25, 2013, the California Air Resources Board (CARB) held a public hearing to adopt numerous amendments to its AB 32 Cap-and-Trade program, which currently regulates 350+ sources covering 85% of California's total GHG emissions. Cap-and-Trade is a market incentive regulatory program that applies a declining aggregate cap on GHG emissions, and allows regulated facilities to comply through the use of tradable instruments, including carbon allowances and project offsets. Regulated facilities buy carbon allowances directly from the state through quarterly auctions that are hosted by CARB. Over the past year, CARB has generated in excess of $1 billion of revenues from its quarterly carbon auctions with settlement prices as high as $14 per metric ton. Current market prices for California carbon allowances are approximately $12 per metric ton. To address several ongoing concerns, the recent regulatory amendments for Cap-and-Trade include the following key provisions:

  • Resource Shuffling - Additional guidance for the definition of resource shuffling, including identified "safe harbors" or activities that covered entities may engage in that ARB does not consider resource shuffling;
  • Combined Heat and Power (CHP) - A limited exemption for qualifying small CHP and district heating facilities that would apply for the first compliance period;
  • Leakage Determinations - Proposed new and modified leakage risk determinations, plus proposals to increase the industrial assistance factor to 100% throughout the second compliance period for those sectors defined medium- and low-leakage risk;
  • Cost Containment - Provisions to ensure that carbon allowance prices will not exceed highest tier of the Allowance Price Containment Reserve, which is approximately $50 per metric ton; and
  • Waste-to-Energy Facilities - ARB developed regulatory amendments to exempt facilities combusting municipal solid wastes for the first compliance period.   

In addition to the above amendments, CARB recently released a discussion draft of its 2013 AB 32 Scoping Plan, which is the 5-year update to the agency's original 2008 Scoping Plan. The proposed 2013 AB 32 Scoping Plan is a forward looking document through 2050, which outlines additional statewide greenhouse gas policies for all major California economic sectors and the general objective of reducing statewide GHG emissions below 1990 levels by 80%. The 2013 Scoping Plan provides for numerous greenhouse gas initiatives, including, Zero Emission Vehicles, Low Carbon Fuels, sustainable transportation, local planning, water conservation, forestry and others. In addition, it appears that CARB intends to continue Cap-and-Trade beyond calendar year 2020, which is not provided under existing regulations. CARB is expected to consider approval of the 2013 AB 32 Scoping Plan in Spring 2014.  

SCAQMD Rule Updates

Wednesday, September 25, 2013

Rule 1146 and Rule 1146.1

The South Coast Air Quality Management District (SCAQMD) had a public workshop in late August proposing rule amendments to Rules 1146 and 1146.1. Rule 1146 and 1146.1 apply to boilers, steam generators, and process heaters of equal to greater than 5 million Btu per hour, and greater than 2 million Btu per hour and less than 5 million Btu per hour, respectively. The amendments to these rules are proposed to mainly address concerns raised by the United States Environmental Protection Agency (EPA) for a SIP approvability. The proposed amendments clarify that source test results showing emissions in excess of those rule limits would constitute a violation of these rules (as opposed to the existing rule languages implying that non-compliant source test is not considered a violation if corrected within 72 hours from the time of discovery). A summary of other proposed changes for clarification purpose is included below:

  • Exclude RECLAIM facilities (NOx emissions only) from 1146 and 1146.1 requirements.
  • Revised the definition of boiler or steam generator to not include any open heated tank, adsorption chiller unit, or waste heater recover boiler that is used to recover sensible heat from the exhaust of a combustion turbine or from the exhaust of any combustion equipment.
  • Equipment that use the low fuel usage option are required to perform periodic tune-ups.
  • Derating of equipment is not allowed at or below 2 million BTU/hr to be excluded from the applicable Rule, implying that the equipment would need to be retired, retrofitted to a low NOx burner(s), and/or low fuel option.

Written comments on these amendments were due on Friday, September 13, 2013. Currently, the district is reviewing the comments for consideration. If the SCAQMD receives no major comments, we expect the district to adopt these changes in the near future.

More information can be found at the following links:

Rule 1146 (Proposed)

Rule 1146.1 (Proposed)

Rule 1168 - Adhesive and Sealant Applications

As part of the 2012 Air Quality Management Plan (AQMP) to bring our Basin into attainment with federal health-based standards including, but not limited to unhealthful fine particulate (PM2.5) by 2014, the SCAQMD is looking for areas to reduce/limit emission.

The SCAQMD sent out a survey in an effort to evaluate volatile organic compounds (VOC) from adhesive and sealant applications. The current Rule 1168 (as amended in 2005), already establishes limits for, but not limited to indoor carpet, PVC glue, ceramic, wood adhesives, etc. Several working group meetings have already occurred with the latest one being on September 19, 2013. In conjunction with the survey and working group meetings, the district is trying to get a better understanding of the adhesives industry. The data gathered from these areas may eventually lead to more stringent VOC limits or refinements in adhesive categories.

It is not too late to submit your survey for SCAQMD's consideration as the deadline was extended to September 30th, 2013. Please feel free to contact Trinity Consultants at (949) 567-9880 if you need assistance in the survey. If we have prepared your annual emissions in the past, we can take a look at the regulatory impacts and provide additional suggestions to you before you pass it on to the district.

Please click here for information on the latest meeting.

Rule 1304.1 - Electrical Generating Facility Fee Use of Offset Exemption

Previously, the SCAQMD provided new source review (NSR) offsets to Electrical Generating Facilities (EGFs) which utilized the electric utility steam boiler replacement provision under Rule 1304(a)(2) at no cost. The proposed amended rule is establishing an annual offset fee to be paid by each pollution for each year of offsets. This rule generally affects all electricity generating facilities and directly affects peaker plants. The calculation is based on hours and megawatts generated, which means that EGFs will need to pay for offsets moving forward. Note that this fee only applies to permits issued on or after March 1, 2013. EGFs will now follow a different NSR offset compared to other permitted stationary combustion equipment. The fee proceeds will be invested in air pollution improvement strategies consistent with the 2012 AQMP.

The new spreadsheet broken down by pollution can be seen below. Please see the following links for more information:

Rule 1304.1