Emission Reduction Credits

San Diego Air Pollution Control District (APCD) evaluates applications for Emission Reduction Credits (ERCs) and Mobile ERCs (MERCs) and all associated transactions according to it's rules.

ERCs are records of verified reductions in emissions that facilities can apply for and obtain when a facility is either shut down or equipment is modified in a way that reduces emissions below what would normally be required under District rules. When a facility undergoes such a change, they can submit an application for the issuance of a certificate in the quantity of emissions reduced. This certificate is then eligible to be sold/traded or may be used as part of a project that requires the surrender of ERCs.

The District reviews each application carefully according to applicable rules to ensure that all credits issued represent real reductions in emissions and also reviews each use of ERCs at the time the credits are surrendered. Before issuing new credits, each proposed approval undergoes a public comment period.

The District makes publically available the list of the Banking Registry which lists each currently valid emission reduction credit and mobile emission reduction credit (MERC).

ERC Registry (Most Recent Update: September 24, 2020)
MERC Registry (Most Recent Update: October 11, 2010)

The following are the typical reasons that a facility or other owner of emission reduction credits would submit an application:

  • New application for credits
  • Full or partial transfer of credits from one owner to another
  • Surrender of ERCs to fulfill requirements of District Rules

Application Forms

The following information should be submitted to the District with each application for ERCs, if applicable.

  1. General Application Form (all applications)
  2. For new ERCs, supplemental analysis explaining the project including list of equipment being shutdown/source of reductions, and quantities of pollutants being claimed for ERCs
  3. For ERC transfers, information supporting the past and present ownership (typically a bill of sale or contract) and the price paid per ton of ERC

District Rule 40 specifies the fees paid for ERC applications which are assessed on a time and material basis in addition to a base application fee. 

The correct fee must be submitted with your application in order for it to be accepted. For this type of equipment, fees are determined based on the time and materials required to conduct the review, so a fee estimate must be obtained from the District prior to submittal. Please note that application fees are estimated and the final fee may be more or less than this amount based on time and materials spent processing the application. The District maintains work records for this purpose.

Before submitting an application, contact the District to obtain an application fee estimate for application submittal. Please note that an additional fee may also apply depending on the method of payment. A breakdown of how the application fee(s) are determined can be seen here. Additional information can be found in District Rule 40.

How to Pay

These fees may be paid by check payable to "Air Pollution Control District" or by credit card (Visa, MasterCard, Discover, and American Express).

If you choose to email or fax your application and intend on paying with a credit card, ensure that you have obtained your fee estimate and have it in hand, and then after submitting the application, you must contact the District over the phone at (858) 586-2600 to provide payment information.

Please note that credit card payments are assessed a transaction fee of 2.19% that is charged by the credit card provider.

District Rules 26.0 through 26.10 and 27 through 27.1 contain the requirements for issuance of ERCs. District Rules 20.1, 20.3 and 20.4 contain the primary requirements for use of ERCs.

Each of these rules can be accessed here.

FAQs

When a company decreases emissions of a specific pollutant, they can apply for emission reduction credits under the District's banking program. Most often, these projects are shutdowns of parts or the entirety of a facility. Only actual reductions of emissions are eligible for credits, so projects such as replacements or shutdowns where emissions are likely to shift to different emission sources in the county may not be eligible for credits, or may be eligible for a reduced amount of credits.

ERCs are used when a permit application under review by the District triggers a "major modification" under District Rule 20.3, which is for projects resulting in a large increase of specified pollutants. A project resulting in a major modification requires the surrender of a number of ERCs at a specified ratio higher than the increase in emissions from the project, resulting in a net reduction of emissions within the air basin.

ERCs are issued to the entity responsible for the emission reduction and may later be sold or transferred to other parties through submittal of an application.

Since there are is no specific application form for ERCs, the applicant should include an attachment with an application for new credits explaining the details of the project. This should include a listing of any equipment/permit being shutdown or modified to generate reductions, a calculation of the emission reduction (using actual emissions), supporting data, and any additional information the applicant believes will assist the District in reviewing the project for ERC eligibility.

Class A ERCs are those that meet all the full requirements for issuance under District rules. Class B ERCs are issued when they cannot (at the time) be determined the be actual emission reductions. For example, reductions from a partial equipment shutdown where there is uncertainty if emissions might be transferred to a different emission unit might be issued as Class B with the intent that the facility can apply to reclassify them once data has been collected to show the reductions were actual.

The District reviews each application for ERCs according to applicable rules. These rules contain specific provisions for calculating the quantity of reductions and the types of projects that are eligible. The District prepares a report summarizing the findings as well as a draft ERC certificate which contains conditions to ensure that the reductions can be enforced by the District. This documentation is then made available for EPA and public review and comment before the credits are finalized and issued.

The District maintians an email list for ERC activities. Click here to sign up for this list to be notified when proposals are made available for public review. A list of open applications is also available here and comments may be provided at any time an ERC application is open.

Before obtaining ERCs, it is a good idea to discuss with the District whether there are any restrictions that may apply once the credits are issued. For example, if an operation is shut down and credits issued, the facility will be required to surrender those credits if they wish to restart that operation. If the credits have been sold, the company will need to obtain credits from another owner to offet the increase.

ERCs require the use of actual emission calculations to establish the quantity of credits. In some cases, it may be helpful for the owner of an operation being shut down to obtain certain process data or source test data prior to shutting down. If you are considering shutting down equipment, you may contact the District to obtain more information about what data would be necessary. NOTE: We highly recommend that any source testing be coordinated with the District beforehand, and conducted according to a test protocol approved before testing to ensure that the results will be valid for use in calculations.