Purposes for Using Emission Credits
An emission credit may be used for any purpose allowed under:
- Federal law
- Federal regulations
- State law, or
- Rules adopted by the Air Pollution Control Board
Emission credits can only be used to offset emissions of the same criteria pollutant banked within the registry.
The Indiana Department of Environmental Management (IDEM) expects that this Emission Credit Registry will primarily be used by sources located in nonattainment areas to locate emission offsets for new construction. It may also be used by sources to verify emission reductions in anticipation of future increases (i.e., for internal netting).
Emission credits may be used for the following purposes:
- As NSR offsets required by Section 173 of the federal Clean Air Act for a major new source in a federally designated nonattainment area.
- As NSR offsets required by Section 173 of the federal Clean Air Act for a major modification to an existing major source in a federally designated nonattainment area.
- As part of an internal netting demonstration of a net emissions increase such that the source using the emission credits is the same source that created and banked the credits.
Deadline for Using Credits
Emission credits must be used in accordance with state and federal laws that limit the effective life of the credits. The banking of emission offsets is allowed in 326 IAC 2-3-4, and paragraph (d) of this rule states that a "decrease in emissions may be credited for offset purposes only if it occurs between the date five (5) years before construction commences on a proposed physical or operational change and the date the increase in actual emissions from that change occurs. In other words, emission reductions may be banked for five (5) years, plus time for construction."
Transferring Credits
An emission credit may be transferred by the holder of the credit in whole or in part by any means of conveyance permitted under state and federal laws. The role of IDEM in the transfer will be limited to providing information on the documentation and registration of emission credits and to providing technical assistance regarding possible future use of the credits being transferred. The new owner of the emission credits must apply for a permit modification under rules adopted by the board. The new owner may not use the emission credits until IDEM issues the appropriate permit or source modification.
Reduction of Available Credits
IDEM has identified the following issues that may effectively reduce the actual quantity of emission credits available:
- Evidence of noncompliance with permit conditions imposed to make the emission reductions permanent and enforceable.
- Failure to achieve in practice the emission reductions on which the emission credits are based.
- Misrepresentations made in:
- the application submitted;
- any other application on which the emission credit is based; or
- data that support an application referred to in clause (A) or (B).
- The State of Indiana or the United States Environmental Protection Agency (U.S. EPA) issues new regulations further limiting the emissions of a regulated pollutant. (E.g., If any state or federal statute, rule, or regulation decreases an allowable emission rate or otherwise requires a reduction in any criteria pollutant, registered emission credits may need to be reduced to reflect the new, more stringent allowable emission limit or required reduction.)
- Emission reductions were not surplus at the time the credits were to be used.
- Emission reductions were not used within five (5) years, plus time for construction
Inter-pollutant Trading
U.S. EPA policy does not allow for inter-pollutant trading; therefore, emission credits for a pollutant may only be used for offsets of that same pollutant.
Note: Volatile Organic Compound (VOC) Reactivity is used to verify that a credited VOC is not used to offset a VOC with a higher reactivity per 326 IAC 2-3-3(b)(7). In most cases this will not be an issue, but IDEM may need to review this information prior to approving the use of the VOC credits. U.S. EPA guidance refers to the SAPRC-99 Chemical Mechanism and VOC Reactivity Scales published by Dr. William P. L. Carter of the University of California at Riverside for maximum incremental reactivity (MIR) values of VOCs.
Trading Across Political Boundaries (Such As Counties)
Under the current state and federal laws, emission reductions generally are used for emission offsets within the non-attainment area where the reductions were generated. As long as the two counties are in the same Nonattainment area, the emission credits may be traded for that pollutant.
Using (Withdrawing) Credits
Sources must submit an application to use credits listed in the Emission Credit Registry. Registry data cannot be updated until the appropriate permits have been modified through the normal permit review process. The credit withdrawal becomes permanent when the source using the emission credits receives its air permit. In most cases, the source will need to obtain a source modification to make physical changes to a process or emissions unit or to add additional emissions units. If the source does not have such a permit, it will need to submit the appropriate application. Find information about the application process and contact IDEM for assistance.
Permit Review Process
Upon receipt of a complete Emission Credit Registry application and issuance of the appropriate source modification, IDEM will:
- Review each Emission Credit Registry application and verify the amount of withdrawn emission credits (ECs) and the date the ECs were withdrawn from the permitted sources list of registered ECs.
- Update the Emission Credit Registry to reflect each verified withdrawal of an emission credit.
- Notify the permitted source in writing of IDEM 's action.
- Post the updated information about potentially available credits on the Emission Credit Registry website.
Approval Time
If all of the appropriate permitting approvals have been issued* and the application is complete, you can expect to receive a confirmation letter from IDEM regarding the registration or update to your amount of registered credits in 60 days. The information should be posted to the website shortly after issuance of the letter, usually within one week.
* Note: Time periods for the approval of permit modifications (or source modifications) are established in 326 IAC 2, and may take up to 120 or 270 days, depending on the level of review required.
Sources may submit concurrent applications. For example, a source may wish to submit emissions reductions for inclusion in the Emission Credit Registry and at the same time apply to have a portion of those emission credits withdrawn from the Emission Credit Registry for internal use. Likewise, a source may have already agreed to sell a portion of the emission credits they are generating so the source using those credits may wish to submit the application to use the emission credits at the same time the generating source applies to have them added to the Emission Credit Registry. If a situation like this occurs, IDEM recommends that the application to use the emission credits reference the pending application to submit the emission reductions. Since the emission credits are not truly available until the modification creating the permanence of the emission reductions is issued, the permit action that results in withdrawal of the credits may need to be placed on hold until the first permit is issued.
Submission of Confidential Records
All information submitted to IDEM will be made available to the public unless it is submitted under a claim of confidentiality. To prevent the public disclosure of confidential business information or trade secrets, be certain that you mark the information and include a confidentiality claim with your submittal.
For more information on confidentiality for certain types of business information, please review IDEM's Nonrule Policy regarding Emission Data, Air-031 (available on the IDEM Nonrule Policies page).