BOARD MEETING DATE: March 7, 2003
AGENDA NO. 36
REPORT: 

Annual RECLAIM Audit Report for 2001 Compliance Year

SYNOPSIS: 

The annual report on the NOx and SOx RECLAIM program is prepared in accordance with Rule 2015 - Backstop Provisions. The report assesses emission reductions, average annual price and availability of RECLAIM Trading Credits, job impacts, compliance issues and other measures of performance for the eighth year of this program. This report also contains the program review as required under Rule 2020 - RECLAIM Reserve, regarding generation and use of emission reductions and participation in the RECLAIM AQIP and Mitigation Fee Program.

COMMITTEE: 

Stationary Source, February 28, 2003

RECOMMENDED ACTION:

Approve the attached report.

Barry R. Wallerstein, D. Env.
Executive Officer

Background

The AQMD Governing Board adopted the RECLAIM program on October 15, 1993, to provide a more flexible compliance program for RECLAIM facilities representing the largest emitters of NOx and SOx. RECLAIM was designed to meet all state and federal requirements for clean air programs and a variety of performance criteria to ensure protection of public health, air quality improvement, effective enforcement, implementation costs, and minimal job impacts.

RECLAIM represents a significant departure from traditional command-and-control regulations. Therefore, the RECLAIM rules provide for annual program audits to verify that the program objectives are being met. Rule 2015 – Backstop Provisions, requires AQMD to conduct an annual program audit to assess various aspects of the program to verify that the program objectives are being met. AQMD staff completed the audit of RECLAIM Compliance Year 2001. The audit results show that California’s energy crisis, which began during Compliance Year 2000, continued to impact the RECLAIM program in Compliance Year 2001. The operation of power producing facilities in response to energy demands in California caused aggregate emissions in the RECLAIM program for Compliance Year 2001 to exceed allocations by 28 tons (less than one-quarter of one percent).

The increased demands for NOx RECLAIM Trading Credits (RTC) from power producing facilities in Compliance Year 2000 drove up NOx RTC prices in the RECLAIM market significantly. The Board acted expeditiously to amend the RECLAIM rules in May 2001 to stabilize RTC prices. The rule amendments included bifurcating power producing facilities from the rest of the RECLAIM facilities, requiring power producing facilities and facilities with annual emissions greater than 50 tons to submit compliance plans, and setting up a RECLAIM Reserve to provide emission reductions to ease RTC demand. As a result, NOx RTC prices started to decline and continued to decline through 2002. The average price for Compliance Year 2001 NOx RTCs traded during Calendar Year 2002 was $3,866 per ton. The attached report presents the annual audit for Compliance Year 2001. Pursuant to Rule 2015, this report will also be included in the AQMD’s annual performance report to the California Legislature.

Audit Findings

The audit of the Compliance Year 2001 RECLAIM program indicates that:

  • Aggregate SOx emissions from RECLAIM facilities continue to be below allocations. However, emissions from power producing facilities, due to the continuing impact of California’s energy crisis in Compliance Year 2001, caused aggregate NOx emissions to exceed allocations by less than one-quarter of one percent. NOx Emissions from non-power producing facilities were well below their initial allocations.

  • The RECLAIM universe consisted of 335 facilities at the end of the 2000 compliance year. There was a net decrease of five facilities in the RECLAIM universe during the 2001 compliance year. Thus, there were 330 facilities in the RECLAIM Universe at the end of the 2001 compliance year.

  • The RTC trading market continues to be active. More than $650 million in RTCs have been traded since the adoption of RECLAIM, of which more than $48 million occurred in Calendar Year 2002. The annual average prices for NOx and SOx RTCs traded during Calendar Year 2002 were all below the backstop price of $15,000 per ton. Average prices for RTCs traded during Calendar Years 2000, 2001, and 2002 are summarized below:

    Calendar Year 2000

    Calendar Year 2001

    Calendar Year 2002

    • $45,609 per ton for Compliance Year 2000 NOx RTCs

    • $13,809 per ton for Compliance Year 2003 NOx RTCs
    • $4,915 per ton for Compliance Year 2010 NOx RTCs

    • $ 52,537 per ton for Compliance Year 2001 NOx RTCs

    • $17,064 per ton for Compliance Year 2003 NOx RTCs
    • $9,510 per ton for Compliance Year 2010 NOx RTCs

    • $5,110 per ton for Compliance Year 2002 NOx RTCs

    • $8,952 per ton for Compliance Year 2003 NOx RTCs
    • $8,839 per ton for Compliance Year 2010 NOx RTCs

    • $2,426 per ton for Compliance Year 2000 SOx RTCs

    • $2,951 per ton for Compliance Year 2003 SOx RTCs
    • $2,951 per ton for Compliance Year 2010 SOx RTCs

    • $5,669 per ton for Compliance Year 2001 SOx RTCs

    • $3,503 per ton for Compliance Year 2003 SOx RTCs
    • $3,503 per ton for Compliance Year 2010 SOx RTCs

    • $8,986 per ton for Compliance Year 2002 SOx RTCs

    • $7,849 per ton for Compliance Year 2003 SOx RTCs
    • $7,166 per ton for Compliance Year 2010 SOx RTCs

     

  • Ninety-six percent of RECLAIM facilities complied with their allocations during the 2001 compliance year. Fifteen facilities exceeded their allocations during this compliance year. Failure to obtain sufficient RTCs to reconcile with emissions was the leading cause of exceedance.

  • RECLAIM had minimal impact on employment during the 2001 compliance year, as in previous years. Six facilities attributed RECLAIM with generating jobs, although two of these facilities were unable to determine the number of jobs created due to RECLAIM. The remaining four facilities attributed RECLAIM with creating a total of four jobs. Ten facilities attributed 142 jobs lost to RECLAIM. Twelve RECLAIM facilities shut down or went out of business in 2001. None of the operators of these facilities indicated that RECLAIM contributed to their decisions to cease operations.

Attachment

Annual RECLAIM Audit Report for the 2001 Compliance Year

///


 


This page updated: July 07, 2015
URL: ftp://lb1/hb/2003/March/030336a.html