Emission Reduction Credit (ERC) Banking Program- General Information

Overview

The voluntary ERC Banking Program commenced in January 2009 with the promulgation of Ohio Administrative Code (OAC) Chapter 3745-111. The Division of Air Pollution Control's (DAPC) rules establish a voluntary statewide ERC Banking program that creates a consistent method for generating and transferring ERCs for future use in offsetting emissions in Ohio's nonattainment areas (PM 2.5 and eight-hour ozone). DAPC also developed an ERC Banking System, which tracks the generation, transfer and use of ERCs for nitrogen oxides (NOx), volatile organic compounds (VOC), sulfur dioxide (SO2), fine particulate (PM2.5), carbon monoxide (CO) and lead (Pb).

DAPC created the ERC Banking Program to assist large air pollution sources, or "major" facilities, in obtaining emission offsets for their New Source Review (NSR) requirements. The emission offset rules found in OAC Chapter 3745-31 require any newly constructed or modified "major" source to offset their emission increases with creditable emission reductions from an existing source located in a similar geographical area.

Frequently Asked Questions:

Why must facilities obtain ERCs for emission offsets?

Sources undergoing nonattainment NSR permitting requirements must offset the increase in emissions from the proposed new construction and provide a net air quality benefit. The purpose of offsetting these emissions is to allow an area to move toward attainment of the National Ambient Air Quality Standards (NAAQS) while still providing for economic growth.

What are the benefits of participating in the program?

There are a number of benefits when participating in the ERC Banking Program:

  • It assists with difficult future economic growth in Ohio's nonattainment areas.
  • It assists large air pollution sources, or "major" facilities, in obtaining emission offsets for their NSR requirements in nonattainment areas. Any newly constructed or modified "major" source is required to offset their emission increases of criteria pollutants with ERCs from an existing source located in a similar geographical area.
  • It is the easiest way to publicize your available ERCs to another party interested in acquiring your ERCs.
  • Submitting your ERC generation data soon after an emission unit permanently shuts down will ease the data gathering stage of submitting ERC generation at a future date, such as when permitting occurs.

What counties are affected?

Ohio currently has designated nonattainment areas for the eight-hour ozone standard and the PM 2.5 standard. The entire state is in attainment for sulfur dioxide, nitrogen dioxide, carbon monoxide and lead.

PM 2.5 (Map of the Final PM 2.5 Designations) [PDF]

The following are the specific nonattainment areas for those counties which the map identifies as "Partial County" nonattainment:

Adams County: Monroe and Sprigg townships
Ashtabula County: Ashtabula Township
Coshocton County: Franklin Township
Gallia County: Cheshire Township
Eight-hour Ozone Standard (Map of the Final Eight-hour Ozone Standard) [PDF]

Ohio has designated moderate and basic nonattainment areas for the eight-hour ozone standard. When obtaining ERCs for emission offsets in a moderate nonattainment area, you must obtain ERCs at a ratio of 1.15-to-1.0. For information on offset ratios, consult OAC Chapter 3745-31.

What if I am not in an affected county?

Because the air program and nonattainment designations continually change, Ohio EPA is not limiting participation in the ERC Banking Program to only those counties which are currently nonattainment. We are also not limiting participation to only those pollutants for which Ohio currently has nonattainment designations. Therefore, you may bank emissions from any of the criteria pollutants that are subject to the NAAQS (nitrogen oxides (NOx), volatile organic compounds (VOCs), sulfur dioxide (SO2), fine particulate (PM2.5), carbon monoxide (CO) and lead (Pb) generated in any county located in Ohio.

What is an Emission Reduction Credit?

An Emission Reduction Credit (ERC) represents a permanent, quantifiable, federally enforceable surplus reduction in air pollutant emission, measured in tons per year (1 TPY) that exceeds the amount of reduction required under state or federal law, regulation, attainment demonstrations or other enforceable mechanisms.

Emission reductions are considered permanent if they are assured for the life of the corresponding ERC through an enforceable mechanism such as a permit condition or a permanent shutdown. 

Emission reductions are considered quantifiable if the amount, rate and characteristics of the emission credit can be estimated through a reliable, reproducible method approved by Ohio EPA or U.S. EPA.

Emission reductions are considered surplus if they are included in the current emissions inventory and are not required by any local, state or federal law, regulation, emission limitation or compliance plan. Emission reductions necessary to meet new source review performance standards, LAER, RACT, BAT, BACT, permit or other emission limitations or emission reductions that have previously been used to avoid NSR through a netting demonstration are not considered surplus.

Some emission reductions may also be required to be made federally enforceable to become creditable. This would include reductions achieved from methods other than permanently shutting down an air contaminant source (e.g, synthetic minor restrictions). ERCs from permanently shutting down an air contaminant source will be made federally enforceable at the time of use by Ohio EPA. However, Ohio EPA will require certification from a responsible official/authorized individual of the permanence of the shutdown or curtailment in order to participate in the program.

What is a Verified ERC?

A verified ERC is an emission reduction that Ohio EPA has verified to be permanent, surplus, quantifiable and will become federally enforceable as described above. Verified ERCs may be transferred to another party and/or used for the purpose of emission offsets under the ERC banking program. We encourage companies to submit verified ERCs whenever feasibly possible because it reduces the uncertainty inherent in un-verified ERCs. It also increases the likelihood of another party wanting to buy or use your ERCs in the future. 

What is an Un-verified ERC?

An un-verified ERC is an emission reduction that an owner or operator of an existing source has identified as a creditable emission reduction that may be surplus, quantifiable and permanent but the emission reduction has not been verified or deemed creditable by Ohio EPA. Un-verified ERCs may not be transferred under the ERC Banking Program rules or used for the purpose of an emission offset under NSR rules until they are verified by Ohio EPA. It is important to note that Ohio EPA cannot make any guarantee to the validity of un-verified ERCs identified in the ERC Banking System.

Who may participate in the bank?

Participation in this program is voluntary. As a participant of the ERC Banking Program, any stationary source may submit a request to bank emissions reductions achieved at their facility as ERCs for any regulated pollutant. After banking ERCs with Ohio EPA, any person or facility that is a current owner of ERCs may transfer verified ERCs to another party tracked through the ERC Banking System. Because this is a voluntary program, the ERC Banking rules do not preclude obtaining emission reductions for use as emission offsets from sources outside of the ERC Banking Program. However, any un-verified ERCs obtained outside the ERC Bank must be verified prior to use for the purpose of emission offsets as part of Ohio EPA's normal NSR process.

Go to the ERC Use and Withdrawal Page for more details on using ERCs.

What fees are associated with the ERC Bank?

There are no fees associated with participating in the ERC Banking Program. Please note, you must submit the required forms when participating in generating, transferring or using ERCs under this program.

What information will the ERC Bank contain?

The ERC Bank will contain the following information for each deposited ERC:

  • Whether the ERCs are un-verified or verified ERCs
  • The applicable criteria pollutant
  • The quantity of ERCs
  • The description of the source
  • The contact name and information for the current owner of ERCs available for transfer or use
  • The county in which the ERCs were generated
  • The ERC generation date and expiration date 

What happens after I submit ERC generation information to Ohio EPA?

Once Ohio EPA's review is complete, a summary of the submitted generation information will be posted on this website under the ERC Banking System. Generated ERCs will be distinguishable as verified ERCs and un-verified ERCs. We suggest parties contact the current owners of the ERCs posted on the website directly. You do not have to consult with Ohio EPA until you are requesting transfer or use of ERCs contained in the ERC Banking System.

What is the lifespan of an ERC in the Banking Program?

ERCs that enter the ERC banking system are not subject to a static expiration period. However, there are a few factors that could cause ERCs to be discounted over time. Below are a number of scenarios in which ERCs could be discounted in the ERC Banking Program.

Ohio EPA may reduce the amount of ERCs if there is:

  1. Any evidence of noncompliance with any permit conditions imposed to make ERCs permanent and federally enforceable
  2. A failure to achieve in practice the emission reductions on which the ERCs are based upon
  3. A misrepresentation made on an ERC generation notification form including supporting data entered therein or attached to or any subsequent submittal of supporting data
  4. A need to achieve the NAAQS for Ohio State Implementation Plan (SIP) requirements

I received a shutdown notification in the mail. What do I do with this form?

If you received a shutdown notification letter in the mail, then Ohio EPA has identified your facility as experiencing a permanent shutdown of one or more air contaminant sources. We are interested in assuring you are aware of the opportunity to bank emission reduction credits so they are available for transfer or use in Ohio's nonattainment areas.

Enclosed with your letter is a shutdown notification response form. We are requesting you complete this form and return it to Ohio EPA within the date indicated on the letter. Returning this form to Ohio EPA is voluntary. However, we want to ensure that emission reductions aren't lost and are made available for economic growth in nonattainment areas. Therefore, if we do not receive a response from you, then your ERCs may be subject to forfeiture to Ohio EPA pursuant to OAC rule 3745-111-03(E)(2). In order to retain ERCs generated from your permanent shutdown please mail, fax or email the enclosed form to Ohio EPA's ERC Banking coordinator by the date indicated on your letter.

Ohio EPA's procedure for forfeited ERCs

Ohio EPA maintains it is imperative to utilize emission reductions from a permanently shutdown facility that is no longer available for ERC quantification or future use in Ohio's nonattainment areas. The ERC Banking Program can distribute ERCs forfeited to Ohio EPA free of charge to a major facility in need of using ERCs for the purpose of emission offsets. The use of these ERCs may not be distributed to a facility unless the ERCs are used to comply with Ohio's NSR nonattainment rules. Ohio EPA must make every effort to contact the owner, operator, or legal representative responsible for assets of the facility generating ERCs before ERCs are forfeited to the Ohio EPA for emission offset use. 

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