• Board Adopts Plan to Reduce Emission Credit Prices
• Tighter Limits Set for Large Spray Booths
• Proposals Sought for Diesel Engine Replacement Funds
• Jan. 31 Town Hall Meeting in Carson

AQMD asked its Governing Board to direct staff to begin developing specific RECLAIM rule amendment proposals to carry out recommendations described below. A preliminary proposal will be outlined to the Board for public comment at its March meeting and a final proposal will be presented to the Board for action later this spring.

AQMD's Governing Board gave preliminary approval to five initiatives today to modify RECLAIM, the region's emissions trading market, to help stabilize RECLAIM credit prices and reduce the cost of compliance for industry while still achieving air quality reductions. The action is expected to remove the influence of power plants' demand on the RECLAIM program while assuring adequate power supply.

AQMD staff presented the initiatives to the Board in a 60-page white paper. They are:

1. Adopt new or modified AQMD rules that:
1. Separate major power plants from the rest of RECLAIM companies through 2003 and require them to install air pollution control equipment on an expedited schedule;
2. Create a pilot RECLAIM Air Quality Investment Program through 2003 where certain companies could obtain additional NOx credits by paying $7.50 per pound of credits into the program. AQMD would use the funds to obtain equivalent emissions reductions;
2. Pre-fund the RECLAIM Air Quality Investment Program with a loan;
3. Continue to seek abatement orders for companies that have exceeded their RECLAIM allocations, imposing appropriate penalties and requiring expedited installation of pollution control equipment;
4. Initiate outside peer review of changes to the RECLAIM market structure; and
5. Convene a RECLAIM Rule Development Working Group.

A sixth recommendation, to seek expedited state and federal approval of AQMD programs to generate RECLAIM credits through reductions of mobile and area source emissions, was deferred to the March Board meeting.

For various reasons, the price of NOx RECLAIM credits remained relatively low at around $4,000 per ton or less until last year. Last year, due to the extremely high demand for electricity, power plants increased their production and emissions and bought most of the available NOx RECLAIM credits. As a result of the increased demand and reduced supply, the price of year 2000 NOx credits increased more than tenfold to more than $45,000 per ton.

Starting last fall, a working group composed of dozens of representatives of RECLAIM facilities, credit brokers, environmental groups and state and federal environmental agencies met to develop proposals to stabilize NOx credit prices. The recommendations in today's white paper contain the most feasible options from those proposals.

RECLAIM, the Regional Clean Air Incentives Market, was adopted by AQMD's Board in October 1993. It currently includes about 360 facilities in the Los Angeles Basin, including all of the major power plants and oil refineries.

The program is designed to reduce nitrogen oxide emissions from 105 tons per day to 27 tons per day by 2003, at a lower cost than traditional pollution control programs. The program also targets reductions for sulfur oxides.

Nitrogen oxides combine with hydrocarbons to form ozone, one of the region's worst pollutants. Both nitrogen and sulfur oxides also form particulates, which have been linked to increased death rates.

The region's largest spray booth operations will have to further reduce their smog-forming emissions under a measure adopted by AQMD's Board today.

Rule 1132 -- Further Control of VOC Emissions from High-Emitting Spray Booth Facilities will require 79 Southland plants to reduce their volatile organic compound emissions from spray booths by 65% for a total reduction of 3.7 tons per day.

Covered facilities include aerospace, metal and plastics, fiberglass-reinforced plastics and wood products plants that emit more than 20 tons per year of volatile organic compounds (VOCs), which combine with nitrogen oxides to form ozone smog.

Facilities will have to achieve the reductions:

• By July 1, 2003 if they currently emit more than 50 tons per year of VOCs;
• By July 1, 2004 if they currently emit 50 tons per year or less of VOCs;
• Within 2 ½ years for new or expanded facilities that become subject to the rule.

Alternative compliance options and certain exemptions are provided to lower compliance costs. The rule will cost affected businesses an estimated $13.1 million annually from 2003 to 2015.

AQMD is seeking proposals for a total of up to $26.5 million in projects to replace diesel engines with alternative fuel and lower-emission models as part of the state's Carl Moyer Memorial Air Quality Standards Attainment Program.

The program pays for the cost difference between a new diesel engine and a lower-emissions model. AQMD staff has proposed funding in the following amounts for these categories:

• $16 to $24 million for on-road vehicles, including tractor-trailers, trash trucks, school and transit buses;
• $3 to $6 million for off-road vehicles and equipment, including construction equipment, marine vessels and port equipment and auxiliary power units; and
• $1 to $2 million for fueling stations.

A bidder's conference is scheduled for Feb. 8 from 1 p.m. to 4 p.m. in AQMD's auditorium in Diamond Bar. Applications for funding are due by 5 p.m. on April 20, 2001. For more information and a complete application, see the Board item or call (909) 396-2231.

• Set a public hearing for Feb. 16 to receive in put on the executive officer's goals for the 2001-02 budget;
• Set a public hearing for March 16 for Proposed Rule 1612.1 -- Mobile Source Credit Generation Pilot Program to generate nitrogen oxide emission reduction credits from voluntary replacement of diesel-fueled vehicles. The credits could be used in the RECLAIM program;
• Submitted applications to request $8 million from the California Air Resources Board and $16.6 million from the California Energy Commission for the school bus replacement program;
• Approved contracts to analyze exhaust of compressed natural gas-powered transit buses including screening for potential toxicity of the exhaust; and
• Received the 2000 annual report on the AB2588 Air Toxics "Hot Spots" program.

The Board approved all other items on the agenda, except:

• Item 3, a contract to develop a dual inductive/conductive electric vehicle charger;
• Item 9, a contract for janitorial services at AQMD headquarters; and
• Item 26, Amend Rule 1610 -- Old Vehicle Scrapping, which was continued to the April 20 meeting;

AQMD's next town hall meeting will be at 6:30 p.m. on Wednesday, Jan. 31 at the Carson Community Center at 801 E. Carson St. For more information, call (909) 396-3218.

AQMD Home Page
This page updated: August 11, 2004
URL: http://www.aqmd.gov/news1/Governing_Board/Bs_1_19_01.htm