ILLINOIS POLLUTION CONTROL BOARD

July

1,

1982

IN THE MATTER OF:

)

EMISSION REDUCTION BANKING,

)

R82—15

CHAPTER

2:

AIR POLLUTION

ORDER OF THE BOARD (by

I.

Goodman):

On May 13,

1982 the Board adopted Interim “Alternative

Control Strategy”

(ACS) regulations

(R81-20) which provide

both a framework and an incentive for owners and operators of

Illinois emission sources to develop cost—efficient alterna-

tives to air pollution control requirements.

Those regulations

address a variety of parameters for emission reduction trading;

however, they do not directly address the creation and “saving”

of emission reductions for use in the future,

Several other

states have addressed this question by creating a “bank” for

the storage and tracking

of “saved”

increments of emission

reduction.

The question of whether Illinois should adopt

“banking”

regulations was raised several times

in the course

of the rulemaking in R81—20, but neither specific proposals

nor testimony were offered,

Nonetheless, there is

a growing

interest in the “banking” of emission reductions.

Thus,

to

consider whether “banking” regulations are necessary and,

if

so, what issues should be addressed, inquiry hearings on this

subject are hereby authorized.

The record created in these

inquiry hearings is likely to provide the basis for a future

regulatory proposal,

if any,

on this subject.

In taking this step the Board notes that USEPA’s recent

“Emission Trading Policy Statement”

(47 FR 15075) points out

that “banking”

systems increase certainty

as to the scope and

use of emission reduction credits, and thus encourage develop-

ment of and investment in emission reduction alternatives.

Several other arguments support the creation of a statewide

“banking” system.

A statewide approach will insure uniformity

in the treatment of emission reduction “credits.”

This will

reduce the number of regulatory approaches applicable to ACS,

as well as insure statewide equity.

Statewide regulations will

also eliminate the possibility that “banking” systems developed

by other entities

(e.g.

municipalities or private associations)

will conflict with other air pollution control programs.

Lastly,

the availability of a “banking” system should produce

improvements in the state’s air quality by encouraging owners

and operators to utilize cleaner, alternative strategies as

soon as they become available, rather than wait until

a use for

the emission increment is discovered.

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Without limiting the scope of the inquiry hearings,

the

Board solicits public comment and testimony on the following

issues:

1.

The

appropriateness of statewide “banking” regulations;

2.

The designation of the entity responsible for administering

“bank” functions;

3.

The identification of qualified emission reductions;

4.

The establishment of “ownership”

rights,

e.g. private

parties, the state, municipalities;

5.

The establishment of

a “registry” for tracking ownership,

use and transfer of emission reductions;

6.

The establishment of

a “clearing house”

for providing

information to the public on the “banked” emission reductions;

7.

The definition

of

the

relationship between emission sources

for

enforcement

purposes;

and

8.

The

specification

of

how

“banked”

emission

reductions

will

be treated if

additional

reductions

are

required

to

attain

or maintain air quality requirements.

A bibliography of relevant literature on emission reduction

trading and banking may he obtained by writing to the Board at

309 W. Washington St.,

Suite 300,

Chicago,

IL

60606.

IT IS SO ORDERED.

I, Christan L. Moffett,

Clerk of the Illinois Pollution

Control Board, hereby certify that the above Order was adopted

on the

‘~‘~

day of

~

,

1982 by a vote of

$~‘.

c~.

Christan

L.

Mo~~~’cle~k

Illinois

Pollution Control Board

47-362