Only read on if you are innovative and want to make money. Businesses can significantly profit from three little unknown letters – ERC (Emission Reduction Credits).

For nearly 30 years the US has been engaged in a national program to reduce air pollution from manufacturing plants, trucks and motor vehicles, off-road machinery and equipment and other sources of pollution. New York, Connecticut, and other northeastern states have been at the forefront of this initiative for many years.

As most people know, a major thrust of the reduction efforts is dependent upon limitations on emissions imposed by legally enforceable permits. These permits are the tools for incorporating all of the limits to which a facility may be subject over the five-year life of the permit. Once issued, the permit is enforceable by EPA and the State.

With this as background an important benefit has come out of a 25 year old provision of the federal Clean Air Act that can actually make many businesses some money. In simple terms, some businesses can create pollution credits that can be sold, traded, or held for future use. Until the mid-1990’s this little known and poorly understood provision in law had led to almost no market for these air pollution credits. Since about 1995 the business in buying and selling these credits has boomed and the value of credits has skyrocketed.

Credits can be created in good business conditions or in bad business conditions by a variety of ways. For a suffering business, an owner or manager can shut operations or shut down entire facilities and seek creation of credits from the actual reductions realized by the curtailment of operations. Others may realize reductions by installing pollution control equipment or modifying processes to reduce emissions. A number of innovative approaches may also realize reductions that can be credited such as retiring older high emission vehicles in favor of low emission vehicles; replacing gas or oil fired boilers with electric equipment; adding pollution controls; converting from ozone forming solvents, inks, and coatings to exempt coatings and solvents, and other innovations too numerous to itemize.

These air pollution credits are known in the air pollution field as Emission Reduction Credits (ERC’s). They are used in the permitting of new facilities and the expansion of existing facilities and are required for offsetting the new emissions from these projects. Without ERC’s, it is difficult to impossible to construct a new plant or make a major addition to an existing plant so the premium for ERC’s is beginning to increase significantly. ERC’s are most valuable in and around the most restrictive air quality areas such as the New York City-New Jersey-Southwest Connecticut corridor. ERC’s are available for those specific pollutants for which the region has a significant air quality problem. In the northeast the major air quality problem is associated with near surface ozone forming compounds (oxides of nitrogen-NOX and volatile organic compounds-VOCs).

Each State has a specific set of regulations governing how ERC’s are created, registered and used. These regulations are based on a set of federal regulations that provide commonality from state to state. New York and Connecticut have a general agreement for allowing the use of ERC’s created in the neighboring state for projects in their respective jurisdictions. These state-to-state agreements are developed in the form of a memorandum of understanding that cites the agreement in writing and provides the basis for EPA endorsement as well. Therefore, the party creating the ERC’s and the partying using the ERC’s are able to have a high level of confidence that the States won’t deny a legitimate transaction. The States, on the other hand, require that ERC’s be well documentable and that they be certified and registered through a QEPS process that determines how the credits are quantified and asks the questions: are they enforceable; are they permanent; and are they surplus reductions beyond the permitted minimums. Once the State determines that a reduction is QEPS it can certify the credit and place it on a registry as an ERC’s.

In the air quality regions in the New York City Metro area and southwestern Connecticut NOX and VOC ERC’s may sell in excess of $10,000 per ton. Large projects such as power plants may need hundreds of tons of ERC’s to offset their proposed emissions in the region. Since this area is now seeing a large increase in proposed power generating facilities and a rebirth in manufacturing, business and infrastructure development, the potential demand for ERC’s is very high and the overall availability is very scarce.

Here are just a very few examples of actions that could create credits:

• Did you curtail or shutdown any manufacturing operations in the 1990s? Are you planning curtailments in the future?
  
• Do you have boilers or steam generating equipment firing natural gas, oil, or coal that could be upgraded or replaced?
  
• Do you have drying ovens, kilns, tunnel dryers, or other large heating equipment?
  
• Are you a printer that has changed over to exempt inks and fountain solutions? Are you a coater or painter using water-based or exempt coatings?
  
• Are you a dryer cleaner that has gone to 4th generation dry cleaning equipment in recent years?
  
• Are you a corporate office, building manager, or large shopping center with ride-sharing, car-pooling, busing or other trip/mileage reduction programs?
  
  

Ask yourself those important questions. You may qualify and significantly profit from reducing your business’s air emissions.