Best explained as the grandparent of all emissions trading programs, Emission Reduction Credits (ERCs) represent real, permanent, surplus, and enforceable emissions decreases voluntarily created. Such emissions reductions are created in tons per year (tpy) and represent decreases associated with the United States “criteria pollutants” in “nonattainment areas.”

The federal government, through the US Environmental Protection Agency (EPA), has established national ambient air quality standards (“NAAQS”) for a list of specific pollutants (“criteria pollutants”), including: 

• Carbon Monoxide (CO)
• Ground-level Ozone (created by volatile organic compounds (VOC)
• Oxides of nitrogen (NOx) in the presence of sunlight)
• Lead
• Nitrogen Oxides
• Particulate Matter
• Sulfur Dioxide

Areas of the US that do not meet a NAAQS for a pollutant(s) are designated “nonattainment areas.”  Nonattainment Areas have more stringent air permitting requirements than those areas in conformity with the NAAQS. Suppose a new plant, operation, and/or modification is above a certain potential to emit. In that case, such a facility is referred to as a “major source,” thus triggering a more onerous air permit process.  The permit process includes the very cleanest equipment, emission reductions equipment and techniques, and the acquisition and use of ERCs for the remaining potential emissions.

Purchased one time (in tons per year), ERCs are a permanent emissions decrease.  The idea of the program is that the source going through the permitting process balances their additional emissions in the area with an existing facility’s permanent emissions decrease from within the area.  Federally enforceable operating permits for both ERC buyer and seller ensure that the emissions decreases are balanced (“offset”) in perpetuity.

ClimeCo staff have unmatchable experience with ERCs, with staff ERC experience dating back to 1988.  If you are an ERC buyer or seller, ClimeCo can educate and assist you.