BOARD MEETING DATE: March 5, 2004
AGENDA NO. 36
Annual RECLAIM Audit Report for 2002 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 (RTCs), job impacts, compliance issues, and other measures of performance for the ninth 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, January 23, 2004, Reviewed
RECOMMENDED ACTION:
Approve the attached report.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
The 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 2002. The audit results showed that both aggregate emissions and prices of RECLAIM Trading Credits (RTCs) have returned to a level seen before the California’s energy crisis in 2000 and 2001. The aggregate NOx emissions were again achieving programmatic compliance and were 20 percent less than the aggregate NOx allocations for Compliance Year 2002. SOx emissions continued to be less than SOx allocations for Compliance Year 2002.
Audit Findings
The audit of the Compliance Year 2001 RECLAIM program indicates that:
- Aggregate NOx and SOx emissions from RECLAIM facilities were below allocations.
- The RECLAIM universe consisted of 330 facilities at of the end of the 2001 compliance year. There was a net increase of two facilities in the RECLAIM universe during the 2002 compliance year. Thus, there were 332 facilities in the RECLAIM Universe at the end of the 2002 compliance year.
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The RTC trading market remained active. More than $682 million in RTCs have been traded since the adoption of RECLAIM, of which $32 million occurred in Calendar Year 2003. The annual average NOx and SOx RTCs prices were all below the backstop prices of $15,000 per ton. Annual average prices during 2001, 2002, and 2003 are summarized below:
2001
2002
2003
- $ 52,537 per ton for
2001 NOx RTCs- $17,064 per ton for
2003 NOx RTCs- $9,510 per ton for
2010 NOx RTCs- $5,669 per ton for
2001 SOx RTCs- $3,503 per ton for
2003 SOx RTCs- $3,503 per ton for
2010 SOx RTCs
- $5,110 per ton for
2002 NOx RTCs- $8,952 per ton for
2003 NOx RTCs- $8,839 per ton for
2010 NOx RTCs- $8,986 per ton for
2002 SOx RTCs- $7,849 per ton for
2003 SOx RTCs- $7,166 per ton for
2010 SOx RTCs
- $1,272 per ton for
2002 NOx RTCs- $3,795 per ton for
2003 NOx RTCs- $7,750 per ton for
2010 NOx RTCs- $6,404 per ton for
2002 SOx RTCs- $5,664 per ton for
2003 SOx RTCs- $10,053 per ton for
2010 SOx RTCs
- The rule amendments in May 2001 are having a definite impact in reducing NOx RTC prices. Actual NOx RTC prices traded have been on a steady decline. The price for Compliance Year 2002 NOx RTCs dropped under $1000 per ton during the reconciliation periods following the end of each of the two compliance cycles.
- The majority of RECLAIM facilities complied with their Allocations during the 2002 compliance year. At the time of preparation of this report, nine facilities exceeded their Allocations during this compliance year. Failure to obtain sufficient RTCs to reconcile with emissions was the leading cause of exceedance.
- All deducted future allocations from power producing facilities participating in the Emission Mitigation Fee Program and the AQMD Executive Order (#01-03) issued in January 2001 have been fully restored.
- RECLAIM had minimal impact on employment during the 2002 compliance year, as in previous years. Five facilities attributed 112 jobs lost to RECLAIM. Four RECLAIM facilities shut down or went out of business during the 2002 compliance year. None of the operators of these facilities indicated that RECLAIM contributed to their decisions to cease operations.
Annual RECLAIM Audit Report for 2002 Compliance Year
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