Arizona Emissions Bank
The Purpose of the Arizona Emissions Bank
The purpose of the Arizona Emissions Bank is to allow the creation and deposit of voluntary emission reductions that a business can use to satisfy the offset requirements for nonattainment areas. The bank allows a business that voluntarily reduces its emissions to sell those reductions to another business that needs offsets.
Voluntary reductions deposited in the bank are known as emission reduction credits or ERCs.
The Offset Requirement
The offset requirement may apply to any of six criteria pollutants:
• particulate matter (PM10 or PM2.5)
• sulfur dioxide (SO2)
• nitrogen dioxide
• and carbon monoxide
Ozone is not emitted directly, but rather results from the chemical reaction of two other pollutants in the atmosphere: oxides of nitrogen (NOx) and volatile organic compounds (VOCs). NOx and VOCs are known as “precursors” to ozone. Particulate matter is both emitted directly and forms in the atmosphere from the chemical reaction of precursors: SO2, NOx, VOCs, and ammonia.
EPA has established national ambient air quality standards (NAAQS) for the criteria pollutants. The NAAQS represent the maximum levels of the criteria pollutants in the outdoor atmosphere that are requisite to protect public health and welfare.
An area that fails to attain the NAAQS for a criteria pollutant (known as a nonattainment area) is subject to special permitting requirements for certain industrial sources of the pollutant or its precursors. The owner of a new source or source expansion that will cause an increase in emissions of the pollutant in a nonattainment area must offset the increase with voluntary decreases in emissions from other sources.
Using Emission Reduction Credits
In an area designated nonattainment for a criteria pollutant, a business that voluntarily reduces emissions of the pollutant or its precursors can deposit those reductions in the Arizona Emissions Bank as ERCs. That business can then sell the ERCs to a business that needs them to satisfy the offset requirement. Generally, to be used as offsets, the reductions must have occurred in the same nonattainment area where the source requiring the offsets will be located.
The highest demand for ERCs tends to be for ozone precursors (NOx and VOCs) in ozone nonattainment areas. Currently portions of the Phoenix metropolitan area and the City of Yuma are designated nonattainment for ozone. Significant new emissions of ozone precursors in those areas would therefore require offsets.
Arizona also includes nonattainment areas for PM10, PM2.5, SO2, and lead. | Learn more >
There are three ways to generate ERCs: by air quality permit, by complying with a rule designed to generate ERCs, or by obtaining approval of a plan to generate ERCs.
An industrial source with an air quality permit can generate ERCs in two ways: (1) by voluntarily shutting down operations and terminating its permit or (2) by reducing emissions by an amount greater than required under air quality rules and agreeing to permit conditions making those reductions enforceable.
Emission reductions can be creditable if they have been implemented in accordance with an offset-creation rule adopted by ADEQ or a county and approved by EPA. Currently, EPA has approved only one such rule: Maricopa County Air Quality Department’s Rule 242 for generating PM10 emission offsets of through voluntary road paving projects. | Learn more >
Maricopa County is working on obtaining EPA approval of offset-creation rules for ozone precursors. | Learn more >
By Emission Reduction Plan
Emission reductions can be creditable if ADEQ or a county approves an Emission Reduction Plan establishing a process for generating creditable reductions that is approved by EPA.
In addition to meeting the above requirements ERCs must be certified as meeting regulatory requirements for offsets by a certifying authority. The certifying authority may be ADEQ or a county that has secured delegation to perform certifications from ADEQ.
The rules for creating, certifying, and depositing ERCs in the Arizona Emissions Bank are in Title 18, Chapter 2, Article 12 of the Arizona Administrative Code. | Go to Article 12 online >
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