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ALTERNATIVES TO BART -TRADING-

ALTERNATIVES TO BART -TRADING-. Lily Wong USEPA – Region 9 September 1, 2005. Alternatives to BART - Trading. Presentation Objective Background Proposed Rule - 309 and 308 Approvability of 309/308 Trading Programs. Alternatives to BART - Trading. Objective:

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ALTERNATIVES TO BART -TRADING-

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  1. ALTERNATIVES TO BART-TRADING- Lily Wong USEPA – Region 9 September 1, 2005

  2. Alternatives to BART - Trading • Presentation Objective • Background • Proposed Rule - 309 and 308 • Approvability of 309/308 Trading Programs

  3. Alternatives to BART - Trading Objective: Provide overview of EPA requirements for alternatives to source-by-source BART, focusing on the trading program requirements

  4. Alternative to BART - Trading BACKGROUND • Where this discussion fits in process • Primary elements of WRAP S02 program • Structure & relationship of 308 & 309

  5. Source-by-source BART vs. Trading / Alternative ID BART eligible sources Determine sources subject to BART source-by-source BART [308(e)(1)] trading or alternative to BART [308(e)(2)] Analyze & Decide Decide 309 or 308 BART determination Demonstrate trading/alternative achieves greater reasonable progress

  6. This Presentation 309 Trading Program Requirements [40 CFR 51.309(d)(4)] 308(e)(2) Trading Program Requirements [40 CFR 51.308(e)(2)(vi)] or

  7. Primary Elements of 309SO2 Backstop Trading Program • Regional SO2 milestones (emissions cap) • If milestones not met voluntarily, triggers implementation of trading program • “Pre-trigger” and “post-trigger” phases • Backstop trading program is fully adopted

  8. 309 Proposed Rules • Reinstates essential elements of Annex • SO2 pre-trigger phase requirements • Process for implementing SO2 trading program • Minimum requirements for the SO2 trading program • Include some provisions unique to Western Backstop SO2 Trading Program

  9. 308 Proposed Rules • Applies to all states • States can choose trading/alternative measure to BART [40 CFR 51.308(e)(2)] • If alternative is cap & trade program, rule identifies essential elements of the cap and trade program which must be met [40 CFR 51.308(e)(2)(vi)]

  10. 309 Program: Cross-references 308(e)(2)(vi) 309 Western Backstop SO2 Trading Program • Because backstop is cap & trade program, 309 rule at 40 CFR 51.309(d)(4)(v) requires compliance with 40 CFR 51.308(e)(2)(vi)

  11. 309 TRADING PROGRAM

  12. 40 CFR 51.309(d)(4) • Milestone Milestones consistent with GCVTC goals • Documentation of emission calculation methods Document base year calculation methods and any changes in methodology

  13. 40 CFR 51.309(d)(4) • Pre-trigger Monitoring, Recordkeeping, Reporting • MRR sufficient to determine if milestone achieved • Incl. 10 yr record retention • Criteria & Procedures • Annual comparison of emissions to milestone conducted within specified timeframes • Conduct program assessments in 2013 and 2018

  14. 40 CFR 51.309(d)(4) • Market Trading Program • Timeline to activate program if milestone exceeded • Source compliance as soon as practicable • Program must be sufficient to achieve milestones • Be consistent with 40 CFR 51.308(e)(2)(vi)

  15. 40 CFR 51.309(d)(4) • Provisions for 2018 Milestone • Until 2nd planning period SIP is approved, emissions are prohibited from exceeding 2018 milestone • 2nd planning period SIP shall not be less stringent than 2018 milestone, unless milestone replaced by different program that meets BART & reasonable progress, and is EPA approved • Framework (incl. financial penalties for excess emissions) to ensure 2018 milestone will be met

  16. 40 CFR 51.309(d)(4) • Provisions for stationary source NOx and PM - Plans must contain necessary long term strategies and BART requirements for stationary sources of NOx and PM

  17. 308 TRADING PROGRAM

  18. 40 CFR 51.308(e)(2)(vi) If states choose cap and trade program in lieu of BART: Program must meet criteria in 40 CFR 51.308(e)(2)(vi) – essential elements of cap and trade programs

  19. 40 CFR 51.308(e)(2)(vi) • Applicability • Define sources subject to program • Address emission shifts from sources within program to sources outside program • Allowances - Total tonnage value of allowances allocated do not exceed emissions cap

  20. 40 CFR 51.308(e)(2)(vi) • Monitoring • Consistent & accurate emissions measurements (“a ton is a ton”) • Those selling allowances: Boilers, combustion turbines, cement kilns: Part 75 Others source types: Part 75 equivalent (same precision, reliability, accessibility, timeliness)

  21. 40 CFR 51.308(e)(2)(vi) • Recordkeeping • Ensure enforceability • Those selling allowances: Meet Part 75 • Reporting • Timely reporting with sufficient frequency to ensure enforceability, provide for audits • Sources selling allowances: comply with Part 75 or submit to TSA if EPA is not TSA

  22. 40 CFR 51.308(e)(2)(vi) • Tracking System • Publicly available, secure, centralized • Tracking in consistent manner • Authorized Account Representative - Designate one individual authorized to represent source • Allowance Transfer - Uniform procedures for timely transfer & recording of allowances

  23. 40 CFR 51.308(e)(2)(vi) • Compliance - Prohibit source from emitting more emissions than source’s allowance holdings • Penalty • Mandatory allowance deduction for excess emissions • Allowance deduction shall be at least 3 to 1

  24. 40 CFR 51.308(e)(2)(vi) • Banking - If banking is allowed, specify any restrictions • Program Assessment - Periodic program assessment to determine if program is accomplishing goals, and determine if program modifications are needed

  25. APPROVABILITY OF TRADING PROGRAM AS ALTERNATIVE TO BART

  26. Approvability of Trading Programas Alternative to BART • Address specific 308 or 309 trading provisions • Demonstrate trading program achieves greater reasonable progress than source-by-source BART • Trading program must include all necessary provisions to ensure emission reduction targets will be achieved

  27. Approvability of Trading Programas Alternative to BART • Trading program must be enforceable • Clearly written; explicit language to implement intent • If trading program is regional, participating states must have essentially the same program to ensure program is practicably enforceable

  28. Alternative to BART - Trading • Questions? • Contact: • Lily Wong, EPA Region 9 (415) 947-4114 wong.lily@epa.gov • Laurel Dygowski, EPA Region 8 (303) 312-6144 dygowski.laurel@epa.gov

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