BOARD MEETING DATE: March 4, 2005
AGENDA NO. 33
Annual RECLAIM Audit Report for 2003 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 tenth 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 Emission Mitigation Fee Program.
COMMITTEE:
Stationary Source, February 25, 2005
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 2003. The audit results showed that both aggregate emissions and prices of RECLAIM Trading Credits (RTCs) have returned to a level seen before the California 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 2003. SOx emissions continued to be less than SOx allocations for Compliance Year 2003.
Audit Findings
The audit of the Compliance Year 2003 RECLAIM program indicates that:
- Aggregate NOx and SOx emissions from RECLAIM facilities were below allocations.
- The RECLAIM universe consisted of 332 facilities at the end of the 2002 compliance year. There was a net decrease of eight facilities in the RECLAIM universe during the 2003 compliance year. Thus, there were 324 facilities in the RECLAIM universe at the end of the 2003 compliance year.
- Thirteen (13) RECLAIM facilities shut down or were reported to be out of business during the 2003 compliance year. These facilities shut down mainly due to economic reasons. Only one of these facilities attributed the closing, in part, to RECLAIM.
- RECLAIM had minimal impact on employment during the 2003 compliance year, as in previous years. An overall net increase of 486 jobs was reported by RECLAIM facilities. One facility attributed 10 jobs lost to RECLAIM. Three others reported a total of 6 jobs gained due to RECLAIM.
- 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 RTC trading market remained active. More than $722 million in RTCs have been traded since the adoption of RECLAIM, of which $21.2 million occurred in Calendar Year 2004. The annual average NOx and SOx RTCs prices were all below the backstop prices of $15,000 per ton. Annual average prices during 2002, 2003, and 2004 are summarized as follows:
2002
2003
2004
- $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
- $3,795 per ton
for 2003 NOx
RTCs- $6,377 per ton
for 2004 NOx
RTCs- $7,750 per ton
for 2010 NOx
RTCs- $5,664 per ton
for 2003 SOx
RTCs- $9,595 per ton
for 2004 SOx
RTCs- $10,059 per ton
for 2010 SOx
RTCs
- $1,359 per ton
for 2003 NOx
RTCs- $2,633 per ton
for 2004 NOx
RTCs- $4,792 per ton
for 2010 NOx
RTCs- $1,026 per ton
for 2003 SOx
RTCs- $3,052 per ton
for 2004 SOx
RTCs- No SOx RTC beyond Compliance Year 2004 was transferred with price
- The majority of RECLAIM facilities complied with their Allocations during the 2003 compliance year. At the time of preparation of this report, ten facilities exceeded their Allocations during this compliance year. Failure to obtain sufficient RTCs to reconcile with emissions was the leading cause of exceedance.
- All excess emissions from power producing facilities participating in the Emission Mitigation Fee Program, the AQMD Executive Order (#01-03) issued in January 2001, and the Governor Executive Order have been fully mitigated with RTCs purchased from RECLAIM facilities.
Attachment (24,553 KB)
Annual RECLAIM Audit Report for 2003 Compliance Year
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