NJDEP has adopted new regulations and amended existing ones to establish an open-market emissions trading program. Under this program, companies with sources of volatile organic compounds ("VOCs") or nitrogen oxides ("NOx") could buy or sell credits for discrete emissions reductions ("DERs") and thereby bring their air emissions into compliance or generate additional revenue. These new regulations are the first of a two-stage process for implementing the emissions trading program. The second stage will focus on refining the current program and developing new options for the generation and use of DERs.
As previously reported in the June 1996 Environmental Update, under the emissions trading program, a source of VOCs or NOx voluntarily could reduce its emissions of these substances and sell the credits for such reductions to another facility. The purchasing facility could then use the DERs to establish its compliance with VOC or NOx emissions limitations without resorting to installation of additional pollution control devices or modification of its production processes in order to reduce its emissions.
A DER represents one-twentieth of a ton of emissions reductions. In general, DERs are measured based upon the source's voluntary reduction of its actual emissions below its baseline emission rate, which is based upon the source's allowable emission rate. Prior to sale and use, an independent professional engineer or certified public accountant must verify the authenticity of the DERs and the generator must record the DERs with the NJDEP-established registry.
A purchaser may use 90% of the DERs it acquires provided it gives notice to the registry, uses the DERs in New Jersey or in the same air quality control region in which they were generated if generated outside of New Jersey, and uses DERs generated during the ozone season. The remaining 10% of the DERs acquired are "retired" for the benefit of the environment. The regulations prohibit the use of VOC DERs to satisfy NOx limitations and, similarly, prohibit the use of NOx DERs to satisfy VOC limitations.
The emissions trading program provides businesses with an additional means of complying with VOC and NOx emissions limitations and a potential new source of income for those facilities that voluntarily reduce their emissions. In addition, the program potentially benefits the environment by establishing a means to reduce VOC and NOx emissions.
