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Permitting/ Engineering

Emission Reduction Credits

Emission Reduction Credits (ERCs) can be banked for later use as emission offsets if actual (not potential) emissions are reduced from stationary sources. ERCs resulting from the modification or shutdown of existing stationary sources are evaluated under Rule 215. If emission reductions meet the criteria to be certified as ERCs, the  District issues a certificate to the applicant/owner showing the owner’s name, the location where the emission reductions were generated, and the amount of ERCs for each criteria pollutant.

Once banked, ERCs are held by the owners and can be traded on the open market. The District maintains a registry of all ERC certificates that have been issued and all transactions that have taken place, but does not set the price of credits or arrange transactions between buyers and sellers of ERCs.

ERC Application and Certification Process

The process for obtaining ERCs begins when an applicant submits a complete application for ERCs, in accordance with Rule 215, and pays the ERC registry fee shown in the Rule 301 fee schedule.

Then staff:
-Reviews the application for completeness.
-Performs an evaluation to determine the quantity of actual emission reductions and determine compliance with all applicable rules and regulations.
-Makes a preliminary written decision as to whether the emission reductions should be certified as emission reduction credits.
-Issues a 30-day preliminary public notice, including submission to EPA and ARB for comments on the application and evaluation.
-Issues a notice of a final decision whether to approve the application.

If the application is approved, staff issues an ERC certificate to the applicant.

ERC Transactions

The District maintains a registry of ERCs for transactions which have occurred in Monterey, San Benito, or Santa Cruz counties.  The registry includes the amount of pollutants in each transaction in units of tons per year. In addition, the California Air Resources Board publishes an annual summary of ERC transactions in the state, showing the amount and price of credits for each transaction statewide.

ERC Transfers

Transfers of ERCs are arranged directly between transferors (sellers) and transferees (buyers). The quantity of ERCs shown on a certificate can be transferred in full or in part.

ERCs may be transferred by the registered holder, upon submittal of an application for ERC transfer by the registered holder to the District, and payment of all outstanding obligations to the District. ERCs may be transferred in whole or in part. Transfer of the banked reductions shall not be effective until the District informs the holder that notification of the transfer has been received and recorded in the ERC Registry. If reductions are transferred in part, the Banking Certificate must be surrendered to the District and a new ERC Banking Certificate issued to reflect the partial transfer. Sources operating in violation of any District rule or regulation shall not be eligible to transfer ERCs or receive transferred ERCs.