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Federal Equivalence Demonstration for POC, NOx, and PM2.5
Learn about the Federal Equivalence Demonstration and read the annual reports.
The Air District’s New Source Review Rule requires that certain new projects in the Bay Area secure emission offsets for any increases they might cause in emissions of ozone-precursor organic compounds (POCs), nitrogen oxides (NOx), and particulate matter with a diameter of 2.5 microns or less (PM2.5). Emission offsets are reductions in emissions in one place that can be used to compensate for increased emissions elsewhere, through an established banking and trading program.
POC and NOx offsets are required for both major and non-major facilities. PM2.5 offsets are only required for emission increases at major facilities, which are defined as facilities that have the potential to emit 100 or more tons per year of a given pollutant. Non-major facilities have potential emissions of less than 100 tons per year.
Emission offsets may be provided through onsite emission reductions or the purchase of banked emission reduction credits, or ERCs.
Federal guidelines require ERCs to be real, permanent, quantifiable, enforceable, and surplus. In order to be considered “surplus” – above and beyond reductions required by regulations or standards - ERCs must be adjusted for the following:
- An Air District rule required for federal attainment
- An Air District rule that has been approved into the State Implementation Plan (SIP)
- New Source Performance Standard (NSPS)
- Maximum Achievable Control Technology (MACT) Standard
The US Environmental Protection Agency officially recognizes that ERCs meet federal guidelines at the time they are banked under the Air District’s Emissions Banking Rule. However, EPA also requires banked credits to be adjusted again at the time they are used (which could be many years after they are initially banked) to account for any rule changes that have occurred since the ERCs were originally banked. Rather than make this second adjustment, the Air District has opted to demonstrate that our banking program is equivalent to EPA’s requirement, because we require offsets at much lower thresholds than the federal program. This “Offset Program Equivalence” is described in the New Source Review Rule, Section 2-2-412.
EPA’s additional surplus adjustment requirement at time of use only applies to emission offsets for a new major facility or a major modification at a major facility (that would cause increases of over 40 tons per year of NOx or POC, or 10 tons per year of PM2.5). The Air District makes an annual demonstration that the quantity of offsets provided under our banking program, less surplus adjustments for federal purposes, exceeds the quantity of offsets required under federal laws. This equivalence demonstration is possible because the Air District also requires offsets for emission increases at non-major facilities and for non-major modifications at major facilities.
View the Annual ERC Equivalence Reports:
Last Updated: 2/28/2024