2007 APR Table of Contents

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Annual Performance Review Report - 2007

3  Area-wide Emission Status

3.1  Source Types

There are several different types of sources involved in the ERMS program as described below:

• Participating sources are those that have baseline or actual emissions of at least 10 tons during the season, are required to have a CAAPP permit, were operating prior to May 1, 1999 and are located in the Chicago ozone NAA.  These make up the vast majority of sources in the ERMS program.  They are required to hold ATUs for all of their VOM emissions during the season.

• New participating sources have actual seasonal emissions of at least 10 tons, are required to have a CAAPP permit, but were not operating prior to May 1, 1999.  They must hold ATUs for all of their VOM emissions during the season, but are not given baselines.  They must acquire their ATUs through trades or long-term transfer agreements.

• Exempt sources are those which would otherwise need to be participating sources, but have restricted their emissions in one of two ways.  They may have used their CAAPP permit to limit seasonal VOM emissions to under 15 tons/season or they may have already reduced their seasonal emissions by at least 18 percent of their baseline.

• General participants are entities other than participating sources or new participating sources who have obtained a transaction account and are allowed to trade ATUs.  Examples may included brokers or companies there were participating sorces but who shut down their operations and still want to retain control of their ATUs.  For the purposes of this report, there are two different types of general participants.  There are those who used to be participating sources and therefore continue to receive an allotment.  The second group are those who were not previously classified as participating sources and who never received allotments.

• Special participants are entities that register with the Illinois EPA to purchase and retire ATUs, but not sell ATUs.  Any ATUs given or sold to a special participant are automatically retired.

3.2  Total Aggregate VOM Emissions

Table 3-1 below summarizes the seasonal VOM emissions from each of the source categories.

Table 3-1:  Source Emission Breakdown

As a subset of participating sources and new participating sources, some emissions may be covered by variances, consent orders or CAAPP compliance schedules.  Others may come from contingent units, which are those units for which a construction permit was issued prior to 1998, but for which three years of data is not yet available to determine a baseline.  A third subcategory is units that had an emergency condition approved by the Illinois EPA as described in the Section 205.750.  Emissions from the affected units are not included in the total for which ATUs are required in all of these situations.  Thus, they are subtracted out before reconciliation.

Other units may be part of a major modification to the source.  Such a situation requires the source to provide 1.15 times (1.3 times for existing major modifications prior to the redesignation) the emissions from the applicable units, in order to account for new source review requirements.  Table 3-2 shows the emissions from these types of units.

Table 3-2:  Special Unit Emission Breakdown

Overall, there was a total of 11,087.3 tons of seasonal VOM emissions in the baselines of all sources.  These sources had an allotment of 100,363 ATUs (10,036.3 tons).  This represents an area-wide 9.5 percent reduction from the baseline VOM total to the allotment total before actual emissions are taken into account.

3.3  Breakdown of ATU Use

ATUs are retired by the Illinois EPA to account for VOM emissions from participating and new participating sources during the season.  ATUs have a two year life (except for some special circumstances) and can be retained if they are not used or traded during the year in which they are allotted.  An ATU that is not used during this two year period automatically expires.  ATUs may also be donated or sold to a special participant for air quality benefit (immediate retiring) should a source so choose.

New and participating sources used 41,143 ATUs for compliance purposes which does not include ATUs from excursions (257 ATUs).  Sources are retaining 95,191 ATUs, or approximately 94.8 percent of the 2007 allotment, for the 2008 season.

3.4  Expired ATUs

At the end of the 2007 season, 49,665 ATUs expired from non-ERG sources.  This represents 49.5 percent of the number of ATUs allotted in 2007.  Table 3-3 identifies the source of these  expirations.  General participants have been further split in this table to show those that have received ATUs from ERGs separate from those that did not.  For more information on ERGs, see Section 5.

Table 3-3:  Expired ATUs

3.5  ATU Vintage Summary

While some companies allowed year-2006 ATUs to expire without using them, other companies were retiring year-2006 ATUs for compliance purposes.  Of the 41,143 ATUs retired for compliance purposes after the 2007 season, 34,053 were originally issued in 2006.

Since ATUs with different expiration dates could be traded, the average price by ATU vintage was analyzed.  There were 1158 ATUs traded in the 2007 season that were issued in 2006 (and thus would have expired after the 2007 season).  These trades averaged $15.00/ATU.  Trades involving the 369 ATUs that were issued for the 2007 season (which would have expired after the 2008 season) averaged $15.03/ATU.  The difference in prices is minor.  As in previous years, there does not seem to be any market difference in the cost of ATUs by vintage.

3.6  Findings

The initial design target for the ERMS program was a 12 percent reduction from the baseline, made up of 9 percent for ROP, 1 percent for ACMA and 2 percent contingency.  The resulting allotment for 2007 was 9.5 percent below the baseline, which satisfies the needed reduction for achieving ROP, given the net effect of exemptions, opt-outs and contingency measures.

ATUs equivalent to a total of 49.5 percent of those allotted to participating sources expired in 2007 without being used.