Emissions Reduction
Market 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
3
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”
4
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
reduce
5
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
6
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
7
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)
8
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
9
Types of ERMS Sources
Types of ERMS Sources
 Participating
Source
 New Participating Source
 General Participant
 Special Participant
11
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
12
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
13
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
14
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
15
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
17
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
18
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
19
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
20
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
21
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
22
Reconciliation Period
three months (October – December)
following seasonal allotment period
 Time to compile actual seasonal emission
data
 Submit seasonal component of annual
emission report
 The
23
Reconciliation Period - continued
 Conduct
end of year trades
• Can trade throughout the whole year
trades agreed to by December 31st can
be counted towards the seasonal emissions
for that year
 Only
• We don’t close the books at midnight
December 31st, but wait a few days for paper
trades to come in
24
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
26
Seasonal Reports – Content
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
 Actual
27
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 TRI
28
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
check
29
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
31
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
32
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
33
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
34
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
35
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 $10,000/ton
37
Shutdowns
 All
operations at a source shut down and the
permit is withdrawn (or is revoked or
terminated)
 80% of allotted ATUs go to source and 20%
to ACMA unless…
 Source makes arrangement to trade whole
allotment to a general participant before
shutting down
38
Emission Reduction Generators
 ATUs
created for creditable reductions at
permitted sources that are not participating
sources
 Source needs to become a general
participant or have a partner in ERMS who
gets the ATUs
 Reductions must be real, actual and surplus
(can’t be shifted elsewhere in the area)
39
Inter-Sector
 Receive
ATUs for making reductions in
area source or mobile source categories
• Cars – Cash for clunkers
• Switch from gas to electric lawnmowers
• Reformulate coatings purchased by the public
(only Intersector to date)
• Etc.
 Request
reviewed by the Agency
40
Quick Facts
Quick Facts
 About
140 participating sources
 About 5 new participating sources
 About 90 sources with 15 ton/season
exemption
 About 75 general participants
 About 7 special participants
42
More Quick Facts
 About
104,000 ATUs allotted each season
• 100,000 from baseline
• 2700 from Emission Reduction Generators
• 1000 to ACMA
 Around
40,000 ATUs retired each year
 Around 59,000 ATUs expire each year
43
Buyers/Sellers
 Around
20 sources need to buy ATUs each
year
 Remaining sources (around 120) are
possible sellers
 A few (1-3) sources go into excursion each
year
• Mainly due to inaction on their part to buy
ATUs
44
ATU Prices ($/ATU)
 2011
=
 2010 = $20.10
 2009 = $19.32
 2008 = $18.22
 2007 = $14.86
 2006 = $17.01
45
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 account
47
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
48
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 accounts
49
Expedited Approval of
Account 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
50
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
52
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
53
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
54
Submitting Trades
 Mail
 FAX
• Must follow up with hard copy submittal
 Via
ERMS web page
• Can’t do transfer agreements
• Will execute over night
55
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
57
Special Participant
 114-ERMS
 Use
this form to
• Establish a new account for
– Special participant
• Update account information for a special
participant
58
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
59
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
60
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
61
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
62
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
63
Emergency Conditions
 110-ERMS
 Use
this form to
• Submit an initial emergency conditions report
• Submit the final emergency conditions report
64
Regular Access to ACMA
 119-ERMS
 Use
this form to
• Request a purchase of ATUs from ACMA
65
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
66
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
67
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
68
Seasonal Report Forms
Emission Summary
 100-ERMS
 Required
 Use
this form to
• Summarize emissions from other seasonal
report forms
• Certify the report
70
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
71
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
72
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
73
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
74
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
75
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
76
ERMS Web Page
Web Page
www.epa.state.il.us/air/erms
78
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 or
Windows 7
79
Contents
 Various
reports
 Allocation reports
 Historical Annual Performance Review
Reports
 News and Items of Interest
 Overview
 FAQ
80
Contents – continued
 Agency
contact information
 Average ATU prices
 ERMS Forms
 Online Transaction Requests
81
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
82
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
83
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
84
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
85
View Current Account Balance
 Enter
the account number you wish to view
 Balance will be reported by ATU expiration
date
86
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
87
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
88
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
89
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
90
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
91
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
92
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
94
Bureau of Air
Air Quality Planning Section
 Contact
•
•
•
•
information
Buzz Asselmeier
buzz.asselmeier@illinois.gov
phone: (217) 524-4343
Web: www.epa.state.il.us/air/erms
95
Training Completed
 Send
an e-mail to
buzz.asselmeier@illinois.gov
 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 you
96