Indiana Administrative Code (Last Updated: December 20, 2016)

Title 326. AIR POLLUTION CONTROL DIVISION

Article 326IAC24. TRADING PROGRAMS: NITROGEN OXIDES (NOx) AND SULFUR DIOXIDE (SO2)

Rule 326IAC24-3. Clean Air Interstate Rule (CAIR) NOx Ozone Season Trading Program

Section 326IAC24-3-8. CAIR NOx ozone season allowance allocations

Latest version.

(a) The NO_x ozone season trading program budget allocated by the department under subsections (d) through (j) for each control period shall equal the total number of CAIR NO_x ozone season allowances apportioned to the CAIR NO_x ozone season units under section 1 of this rule for the control period, as determined by the procedures in this section. The total number of CAIR NO_x ozone season allowances that are available for each control period for allocation as CAIR NO_x ozone season allowances under this rule are fifty-five thousand seven hundred twenty-nine (55,729) tons in 2009 through 2014, and forty-nine thousand fifty (49,050) tons in 2015 and thereafter, apportioned as follows:

(1) For existing units (that is, units that have a baseline heat input, as determined under subsections (c) and (d)):

(A) forty-three thousand six hundred fifty-four (43,654) tons in 2009 through 2014 and thirty-eight thousand ninety-five (38,095) tons in 2015 and thereafter for CAIR NO_x ozone season units under section 1(a)(1) of this rule; and

(B) eight thousand five hundred sixty-four (8,564) tons in 2009 and eight thousand seven hundred twenty-seven (8,727) tons for large affected units under section 1(a)(2) of this rule for a control period during 2010 and thereafter.

(2) For new unit allocation set-asides:

(A) two thousand two hundred ninety-eight (2,298) tons in 2009 through 2014 and one thousand one hundred seventy-eight (1,178) tons in 2015 and thereafter for CAIR NO_x ozone season units under section 1(a)(1) of this rule; and

(B) ninety-eight (98) tons in 2009 and four hundred (400) tons in 2010 and thereafter for large affected units under section 1(a)(2) of this rule.

(3) For the energy efficiency and renewable energy allocation set-aside, one thousand one hundred fifteen (1,115) tons in 2009 and five hundred (500) tons in 2010 and thereafter.

(4) For a hardship set-aside for large affected units under section 1(a)(2) of this rule, one hundred fifty (150) tons in 2010 and thereafter.

(b) The department shall allocate CAIR NO_x ozone season allowances to CAIR NO_x ozone season units according to the following schedule:

(1) For CAIR NO_x ozone season units under section 1(a)(1) and large affected units under 1(a)(2) of this rule, an initial five (5) year allocation and then a six (6) year allocation that is recorded six (6) years in advance of the control period that the allowances may be used as follows:

(A) Within thirty (30) days of the effective date of this rule, the department shall submit to the U.S. EPA the CAIR NO_x ozone season allowance allocations, in a format prescribed by the U.S. EPA and in accordance with subsections (c), (d), and (e) for the control periods in 2010, 2011, 2012, 2013, and 2014.

(B) By October 31, 2008, and October 31 every six (6) years thereafter, the department shall submit to the U.S. EPA the CAIR NO_x ozone season allowance allocations, in a format prescribed by the U.S. EPA and in accordance with subsections (c), (d), and (e), for the control periods seven (7), eight (8), nine (9), ten (10), eleven (11), and twelve (12) years after the year of the allowance allocation.

(C) By July 31, 2009 and July 31 of each year thereafter, the department shall submit to the U.S. EPA the CAIR NO_x ozone season allowance allocations, in a format prescribed by the U.S. EPA and in accordance with subsections (f) through (h), for the control period in the year of the applicable deadline for submission under this rule.

(D) For the 2009 control period, the CAIR NO_x ozone season allowances are the 2009 ozone season allowances issued under 326 IAC 10-4-9 that have been recorded by U.S. EPA as of the effective date of this rule.

(2) The department shall make available for review to the public the CAIR NO_x allowance allocations under subdivision (1)(B) on July 31 of each year allocations are made and shall provide a thirty (30) day opportunity for submission of objections to the CAIR NO_x allowance allocations. Objections shall be limited to addressing whether the CAIR NO_x allowance allocations are in accordance with this section. Based on any such objections, the department shall consider any objections and input from affected sources and, if appropriate, adjust each determination to the extent necessary to ensure that it is in accordance with this section.

(c) The baseline heat input, in million British thermal units (MMBtu), used with respect to CAIR NO_x ozone season allowance allocations under subsection (d) for each CAIR NO_x ozone season unit shall be:

(1) For units commencing operation before January 1, 2001:

(A) For a CAIR NO_x ozone season allowance allocation under subsection (b)(1)(A), the average of the three (3) highest amounts of the unit's adjusted control period heat input for 1998 through 2005, with the adjusted control period heat input for each year calculated as follows:

(i) If the unit is coal-fired during the year, the unit's control period heat input for such year is multiplied by one hundred percent (100%).

(ii) If the unit is oil-fired during the year, the unit's control period heat input for such year is multiplied by sixty percent (60%).

(iii) If the unit is not subject to item (i) or (ii), the unit's control period heat input for such year is multiplied by forty percent (40%).

(B) For a CAIR NO_x ozone season allowance allocation under subsection (b)(1)(B), the unit's average of the three (3) highest amounts of the unit's adjusted control period heat input for the eight (8) years before when the CAIR NO_x ozone season allocation is being calculated, with the adjusted control period heat input for each year calculated as follows:

(i) If the unit is coal-fired during the year, the unit's control period heat input for such year is multiplied by one hundred percent (100%).

(ii) If the unit is oil-fired during the year, the unit's control period heat input for such year is multiplied by sixty percent (60%).

(iii) If the unit is not subject to item (i) or (ii), the unit's control period heat input for such year is multiplied by forty percent (40%).

(2) For units commencing operation on or after January 1, 2001, and operating each calendar year during a period of three (3) or more consecutive calendar years, the average of the three (3) highest amounts of the unit's total converted control period heat input for the years before when the CAIR NO_x ozone season allocation is being calculated, not to exceed eight (8).

(3) A unit's control period heat input, and a unit's status as coal-fired or not coal-fired, for a calendar year under subdivision (1), and a unit's total tons of NO_x ozone season emissions during a control period in a calendar year under subsection (e)(3), shall be determined in accordance with 40 CFR 75*, to the extent the unit was otherwise subject to the requirements of 40 CFR 75* for the year, or shall be based on the best available data reported to the department for the unit, to the extent the unit was not otherwise subject to the requirements of 40 CFR 75* for the year.

(4) A unit's converted control period heat input for a calendar year under subdivision (2) equals one (1) of the following:

(A) The control period gross electrical output of the generator or generators served by the unit multiplied by eight thousand nine hundred (8,900) British thermal units per kilowatt hour (Btu/kWh) for coal-fired units or seven thousand six hundred (7,600) British thermal units per kilowatt hour (Btu/kWh) for a unit that is not coal-fired divided by one million (1,000,000) British thermal units per million British thermal units (Btu/MMBtu), provided that if a generator is served by two (2) or more units, then the gross electrical output of the generator shall be attributed to each unit in proportion to the unit's share of the total control period heat input of such units for the year.

(B) For a unit that has equipment used to produce electricity and useful thermal energy for industrial, commercial, heating, or cooling purposes through the sequential use of energy, the control period gross electrical output of the unit multiplied by eight thousand nine hundred (8,900) British thermal units per kilowatt hour (Btu/kWh) plus the useful energy, in British thermal units (Btu), produced during the control period divided by eight-tenths (0.8), and with the sum divided by one million (1,000,000) British thermal units per million British thermal units (Btu/MMBtu).

(d) The department shall allocate CAIR NO_x ozone season allowances to all CAIR NO_x ozone season units under section 1(a)(1) of this rule as follows:

(1) For the control period in 2009, the CAIR NO_x ozone season allowances are the 2009 ozone season allowances issued under 326 IAC 10-4-9 that have been recorded by U.S. EPA as of the effective date of this rule.

(2) For each control period in 2010 and thereafter, the department shall allocate to all CAIR NO_x ozone season units that have a baseline heat input, as determined under subsection (c), a total amount of CAIR NO_x ozone season allowances as listed in subsection (a)(1), except as provided in subsection (f).

(3) The department shall allocate CAIR NO_x ozone season allowances to each CAIR NO_x ozone season unit under this subsection, except large affected units, in an amount determined by multiplying the total amount of CAIR NO_x ozone season allowances allocated under this subsection by the ratio of the baseline heat input of such CAIR NO_x ozone season unit to the total amount of baseline heat input of all such CAIR NO_x ozone season units and rounding to the nearest whole allowance as appropriate.

(e) The department shall allocate CAIR NO_x ozone season allowances to each large affected unit under section 1(a)(2) of this rule as follows:

(2) For the control period in 2010 and thereafter, a fixed CAIR NO_x ozone season allowance allocation to the following large affected units:

Source	Unit	Allowances
(A) American Electric Power-Rockport	Auxiliary Boiler 1	2
	Auxiliary Boiler 2	2
(B) Portside Energy	Auxiliary Boiler 1	50
	Auxiliary Boiler 2	5
	Combustion Turbine	34

(3) For the control period in 2010 and thereafter, all large affected units that commenced operation before January 1, 2001, and not identified in subdivision (2), CAIR ozone season NO_x allowances will be allocated as follows:

(A) The target NO_x emission rate for purposes of allowance allocation for all large affected units that commenced operation before January 1, 2001, shall be as follows:

	Source	Target NO_x Emission Rate (lb NO_x/MMBtu)
	(i) BP Whiting Business (units 1SPS13, 1SPS14, 1SPS15, 1SPS16, 1SPS17, 3SPS31, 3SPS32, 3SPS33, 3SPS34, 3SPS36)	0.184
	(ii) C.C. Perry Steam (units 11, 13, 14)	0.17
	(iii) C.C. Perry Steam (unit 12)	0.368
	(iv) C.C. Perry Steam (units 15, 16)	0.240
	(v) Mittal Steel Indiana Harbor (units 211, 212, 213, 401, 402, 403, 404, 405, 501, 502, 503)	0.17
	(vi) New Energy (unit U400)	0.24
	(vii) Purdue University (units 1, 2)	0.24
	(viii) Purdue University (unit 3)	0.17
	(ix) Purdue University (unit 5)	0.24
	(x) U.S. Steel - Gary Works (units 701 B1, B2, B3)	0.09
	(xi) U.S. Steel - Gary Works (units 701 B5)	0.08
	(xii) U.S. Steel - Gary Works (units 701 B6)	0.05
	(xiii) U.S. Steel - Gary Works (units 720 B1, B2, B3)	0.06
	(xiv) Warrick (units 1, 2, 3)	0.28

(B) The maximum design heat input based NO_x rate allocation shall be the product of the design heat input (Design HI), in million British thermal units per hour (MMBtu/hr), multiplied by three thousand six hundred seventy-two (3,672) hours multiplied by the target NO_x emission rate in clause (A), in pounds per million British thermal units (lb/MMBtu), multiplied by fifty percent (50%), and divided by two thousand (2,000). The Design HI, in million British thermal units per hour (MMBtu/hr), shall be the value supplied to the U.S. EPA in the RT504 field of the quarterly electronic data report (EDR) as required in section 11 of this rule or equivalent quality assured and certified data.

(C) The actual heat input based NO_x rate allocation shall be the product of the actual control period heat input multiplied by the target NO_x emission rate in clause (A) divided by two thousand (2,000) where:

(i) the unit's actual control period heat input shall be determined using one hundred twenty percent (120%) of the highest actual control period heat input recorded in:

(AA) the years 2000 through 2005 for an allocation under subsection (b)(1)(A); and

(BB) the eight (8) years before the year the CAIR NO_x ozone season allocation is being calculated under subsection (b)(1)(B); and

(ii) actual control period heat input shall be based on the best available data for each control period reported in accordance with section 11 of this rule and 40 CFR Part 75* or for control periods prior to 2008 certified accurate by a responsible official in accordance with 326 IAC 2-7-4(f).

(D) The total ozone season CAIR NO_x allocation shall be the sum of the maximum design heat input based NO_x rate allocation and actual heat input based NO_x rate allocation.

(E) If the initial total number of NO_x allowances allocated to all large affected units for a control period under this subsection does not equal the amount under subsection (a)(1)(B), the department shall adjust the total number of NO_x allowances allocated to all large affected units for the control period under this subdivision so that the total number of NO_x allowances allocated equals the amount under subsection (a)(1)(B) minus the allocations under subdivision (2). This adjustment shall be made by:

(i) multiplying each unit's allocation by the amount under subsection (a)(1)(B) minus the amounts allocated in subdivision (2); and

(ii) dividing by the total number of NO_x allowances allocated under this subdivision, and rounding to the nearest whole NO_x allowance, as appropriate.

(f) For each control period in 2009 and thereafter, the department shall allocate CAIR NO_x ozone season allowances to CAIR NO_x ozone season units under section 1(a)(1) of this rule that commenced operation on or after January 1, 2001, and do not yet have a baseline heat input, as determined under subsection (c), in accordance with the following procedures:

(1) For CAIR NO_x ozone season units under section 1(a)(1) of this rule, the department shall establish a separate new unit set-aside for each control period equal to two thousand two hundred ninety-eight (2,298) tons for a control period during 2009 through 2014 and one thousand one hundred seventy-eight (1,178) tons for a control period during 2015 and thereafter.

(2) The CAIR designated representative of such a CAIR NO_x ozone season unit may submit to the department a request, in a format specified by the department, to be allocated CAIR NO_x ozone season allowances, starting with the later of the control period in 2009 or the first control period after the control period in which the CAIR NO_x ozone season unit commences commercial operation and until the first control period for which the unit is allocated CAIR NO_x ozone season allowances under subsection (d). A separate CAIR NO_x ozone season allowance allocation request for each control period for which CAIR NO_x ozone season allowances are sought must be submitted on or before February 1 of such control period and after the date on which the CAIR NO_x ozone season unit commences commercial operation.

(3) In a CAIR NO_x ozone season allowance allocation request under subdivision (2), the CAIR designated representative may request for a control period CAIR NO_x ozone season allowances in an amount not exceeding the CAIR NO_x ozone season unit's total tons of NO_x ozone season emissions during the calendar year immediately before such control period.

(4) The department shall review each CAIR NO_x ozone season allowance allocation request under subdivision (2) and shall allocate CAIR NO_x ozone season allowances for each control period pursuant to such request as follows:

(A) The department shall accept an allowance allocation request only if the request meets, or is adjusted by the department as necessary to meet, the requirements of subdivisions (2) and (3).

(B) On or after February 1 of the control period, the department shall determine the sum of the CAIR NO_x ozone season allowances requested, as adjusted under clause (A), in all allowance allocation requests accepted under clause (A) for the control period.

(C) If the amount of CAIR NO_x ozone season allowances in the new unit set-aside for the control period is greater than or equal to the sum under clause (B), then the department shall allocate the amount of CAIR NO_x ozone season allowances requested, as adjusted under clause (A), to each CAIR NO_x ozone season unit covered by an allowance allocation request accepted under clause (A).

(D) If the amount of CAIR NO_x ozone season allowances in the new unit set-aside for the control period is less than the sum under clause (B), then the department shall allocate to each CAIR NO_x ozone season unit covered by an allowance allocation request accepted under clause (A) the amount of the CAIR NO_x ozone season allowances requested, as adjusted under clause (A), multiplied by the amount of CAIR NO_x ozone season allowances in the new unit set-aside for the control period, divided by the sum determined under clause (B), and rounded to the nearest whole allowance as appropriate.

(E) The department shall notify each CAIR designated representative that submitted an allowance allocation request of the amount of CAIR NO_x ozone season allowances, if any, allocated for the control period to the CAIR NO_x ozone season unit covered by the request and submit to U.S. EPA according to section (b)(3).

(g) For each control period in 2009 and thereafter, the department shall allocate CAIR NO_x ozone season allowances to large affected units under section 1(a)(2) of this rule that commenced operation on or after January 1, 2001, in accordance with the following procedures:

(1) For large affected units under section 1(a)(2) of this rule, the department shall establish a separate new unit set-aside for each control period equal to ninety-eight (98) tons in 2009 and four hundred (400) tons in 2010 and thereafter.

(2) The CAIR designated representative of such a CAIR NO_x ozone season unit may submit to the department a request, in a format specified by the department, to be allocated CAIR NO_x ozone season allowances, starting with the later of the control period in 2009 or the first control period after the control period in which the CAIR NO_x ozone season unit commences commercial operation and until the first control period for which the unit is allocated CAIR NO_x ozone season allowances under subsection (e). A separate CAIR NO_x ozone season allowance allocation request for each control period for which CAIR NO_x allowances are sought must be submitted on or before February 1 of such control period and after the date on which the CAIR NO_x ozone season unit commences commercial operation.

(3) In a CAIR NO_x ozone season allowance allocation request under subdivision (2), the CAIR designated representative may request for a control period CAIR NO_x ozone season allowances in an amount not exceeding the following for determining the total ozone season CAIR NO_x allocation:

(A) The target NO_x emission rate for allowance allocation purposes for units that commence operation on or after January 1, 2001, shall be determined as the lesser of seventeen-hundredths (0.17) lb/MMBtu or the federally enforceable limit on NO_x emissions found in any applicable permit or rule for the emissions unit, except that a combined heat and power unit with an overall rated energy efficiency of sixty percent (60%) or higher may request allowances based on seventeen-hundredths (0.17) lb/MMBtu notwithstanding the allowable emission rate.

(B) The maximum design heat input based NO_x rate allocation shall be the product of the design heat input (Design HI), in million British thermal units per hour (MMBtu/hr), multiplied by three thousand six hundred seventy-two (3,672) hours multiplied by the target NO_x emission rate in clause (A), pound per million British thermal units per hour (lb/MMBtu), multiplied by fifty percent (50%), and divided by two thousand (2,000). The Design HI, in million British thermal units per hour (MMBtu/hr), shall be the value supplied to the U.S. EPA in the RT504 field of the quarterly electronic data report (EDR) as required in section 11 of this rule or equivalent quality assured and certified data.

(i) the unit's actual control period heat input shall be determined using one hundred twenty percent (120%) of the highest actual control period heat input recorded in the calendar years, since the startup of the unit, immediately preceding the allocation year, not to exceed eight (8) years; and

(ii) actual control period heat input shall be based on the best available data for each control period reported in accordance with section 11 of this rule and 40 CFR Part 75*.

(D) The total ozone season CAIR NO_x allocation that may be requested shall be the sum of the maximum design heat input based NO_x rate allocation and actual heat input based NO_x rate allocation.

(A) The department shall accept an allowance allocation request only if the request meets, or is adjusted by the department as necessary to meet, the requirements of subdivisions (2) and (3).

(D) If the new unit set-aside for the control period for which NO_x allowances are requested has an amount of NO_x allowances less than the number requested, as adjusted under clause (A), but the energy efficiency and renewable energy allocation set-aside or hardship set-aside for large affected units is under-subscribed, the department shall allocate the amount of the NO_x allowances requested with the difference allocated from the energy efficiency and renewable energy allocation or hardship set-aside.

(E) If the new unit set-aside for the control period for which NO_x allowances are requested has an amount of NO_x allowances less than the number requested, as adjusted under clause (A), and the energy efficiency and renewable energy allocation set-aside or hardship set-aside for large affected units is over-subscribed, the department shall allocate the allocation set-aside on a pro rata basis, multiplied by the amount of CAIR NO_x ozone season allowances in the new unit set-aside for the control period, divided by the sum determined under clause (B), and rounded to the nearest whole allowance as appropriate.

(F) The department shall notify each CAIR designated representative that submitted an allowance allocation request of the amount of CAIR NO_x ozone season allowances, if any, allocated for the control period to the CAIR NO_x ozone season unit covered by the request.

(5) Large affected units commencing operation after January 1, 2001, and allocated allowances under this subsection shall be eligible to receive allowances from the new unit set-aside until allocated allowances in accordance with the provisions of subsection (e). The inventory of sources in subsection (e) shall be updated prior to the allowance allocations in calendar year 2008 (for compliance years 2015-2020), in calendar year 2014 (for compliance years 2021-2026) and every six (6) years thereafter.

(h) If, after completion of the procedures under subsections (f), (g), and (i) for a control period, any unallocated CAIR NO_x ozone season allowances remain in a new unit set-aside for the control period, the department shall allocate to each CAIR NO_x ozone season unit that was allocated CAIR NO_x ozone season allowances under subsection (d) an amount of CAIR NO_x ozone season allowances equal to the following:

(1) For CAIR NO_x units under section 1(a)(1), the total amount of such remaining unallocated CAIR NO_x ozone season allowances, multiplied by the unit's allocation under subsection (d), divided by forty-three thousand six hundred fifty-four (43,654) for a control period during 2009 through 2014, and thirty-eight thousand ninety-five (38,095) for a control period during 2015 and thereafter.

(2) For large affected units, the total amount of such remaining unallocated CAIR NO_x ozone season allowances, multiplied by the unit's allocation under subsection (d), divided by eight thousand five hundred sixty-four (8,564) in 2009 and eight thousand seven hundred twenty-seven (8,727) in 2010 and thereafter.

(i) For projects that reduce NO_x emissions through the implementation of energy efficiency or renewable energy measures, or both, implemented during a control period beginning May 1, 2009, the department shall allocate NO_x allowances in accordance with the following procedures:

(1) The energy efficiency and renewable energy allocation set-aside shall be allocated NO_x allowances equal to one thousand one hundred fifteen (1,115) tons in 2009 and five hundred (500) tons in 2010 and thereafter.

(2) Any person may submit to the department a request, in writing, or in a format specified by the department, for NO_x allowances as follows:

(A) Sponsors of energy efficiency or renewable energy projects in section 2(40)(A) through 2(40)(H) of this rule may request the reservation of NO_x allowances, for one (1) control period in which the project is implemented. Project sponsors may reapply each year, not to exceed five (5) control periods for energy efficiency projects in sections 2(40)(A), 2(40)(B), 2(40)(E), and 2(40)(F) of this rule and for an unlimited number of years for projects in sections 2(40)(C), 2(40)(D), and 2(40)(H) of this rule. Requests for allowances may be made for projects implemented two (2) years before the effective date of this rule. Projects must equal at least one (1) ton of NO_x emissions and multiple projects may be aggregated into one (1) allowance allocation request to equal one (1) or more tons of NO_x emissions.

(B) The NO_x allowance allocation request must be submitted by May 1 of the calendar year for which the NO_x allowance allocation is requested.

(C) The NO_x allowance allocation request for an integrated gasification combined cycle project under section 2(40)(G) of this rule must be submitted by May 1 of the calendar year for which the NO_x allowance allocation is requested and after the date on which the department issues a permit to construct the CAIR NO_x unit. For integrated gasification combined cycle projects, project sponsors may request the reservation of NO_x allowances, based on the number of kilowatt hours of electricity generated based on an eighty-five percent (85%) capacity factor and expected heat rate of the unit. Project sponsors may reapply each year, not to exceed five (5) control periods. Requests for allowances may be made only for integrated gasification combined cycle projects which first start commercial operations in 2009 and beyond.

(3) In a NO_x allowance allocation request made under this subsection, the CAIR designated representative may request for a control period, NO_x allowances not to exceed the following:

(A) Projects in section 2(40)(A) of this rule that claim allowances based upon reductions in the consumption of electricity and that are sponsored by end-users or nonutility third parties receive allowances based upon the number of kilowatt hours of electricity saved during a control period and the following formula:

Allowances = (kWS × 0.0015)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWS	=	The number of kilowatt hours of electricity saved during an ozone control period by the project.

(B) Projects in section 2(40)(A) of this rule that claim allowances based upon reductions in the consumption of electricity and that are sponsored by electric generating units shall be awarded allowances according to the following formula:

Allowances = (kWS × 0.00075/2,000)

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWS	=	The number of kilowatt hours of electricity saved during an ozone control period by the project.

(C) Projects in section 2(40)(A) of this rule that claim allowances based upon reductions in the consumption of energy other than electricity and that are not CAIR NO_x ozone season units shall be awarded allowances according to the following formula:

Allowances = (((Et1/Pt1) - (Et2/Pt2)) × Pt2 × NPt2 × (NPt1/NPt2))/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	Et1	=	Energy consumed per ozone control period before project implementation.
	Pt1	=	Units of product produced per ozone control period before project implementation.
	Et2	=	Energy consumed in the most recent ozone control period.
	Pt2	=	Units of product produced in the most recent ozone control period.
	NPt1	=	NO_x produced during the consumption of energy, measured in pounds per million British thermal units before project implementation.
	NPt2	=	NO_x produced during the consumption of energy, measured in pounds per million British thermal units in the most recent ozone control period.

(D) Projects in section 2(40)(A) of this rule that claim allowances based upon reductions in the consumption of energy other than electricity and that are CAIR NO_x ozone season units shall be awarded allowances according to the following formula:

Allowances = (((Et1/Pt1) - (Et2/Pt2)) × Pt2 × NPt2 × (NPt1/NPt2) × 0.5)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	Et1	=	Energy consumed per ozone control period before project implementation.
	Pt1	=	Units of product produced per ozone control period before project implementation.
	Et2	=	Energy consumed in the most recent ozone control period.
	Pt2	=	Units of product produced in the most recent ozone control period.
	NPt1	=	NO_x produced during the production process, measured in pounds per million British thermal units before project implementation.
	NPt2	=	NO_x produced during the production process, measured in pounds per million British thermal units in the most recent ozone control period.

Product produced, as used in the formulas in this clause and clause (C), may include manufactured items; raw, intermediate, or final materials; or other products measured in discrete units and produced as a result of the consumption of energy in a specific process or piece of equipment. Claims for allowances must include documentation of NO_x emissions per British thermal unit both before and after implementation of the project for the energy-consuming process for which energy savings are claimed.

(E) Projects in section 2(40)(B) of this rule that claim allowances based upon highly efficient electricity generation using systems such as combined cycle, microturbines, and fuel cell systems for the predominant use of a single end user, that meet the thresholds specified in section 2(40)(B) of this rule, that are not CAIR NO_x ozone season units under section 1 of this rule or large affected units as defined in section 2 of this rule, and that are sponsored by end-users or nonutility third parties, receive allowances based upon the net amount of electricity generated during a control period and the following formula:

Allowances = (kWG × (0.0015 - NO_x ))/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWG	=	The number of net kilowatt hours of electricity generated during an ozone control period by the project.
	NO_x	=	The amount of NO_x produced during the generation of electricity, measured in pounds per kilowatt hour.

(F) Projects in section 2(40)(B) of this rule that claim allowances based upon highly efficient combined heat and power systems for the predominant use of a single end user, that meet the thresholds specified in section 2(40)(B) of this rule, that are not CAIR NO_x ozone season units under section 1 of this rule or large affected units as defined in section 2 of this rule, and that are sponsored by end-users or nonutility third parties, receive allowances based upon the net amount of energy generated and used during an ozone control period and the following formula:

Allowances = (NO_x conventional - NO_x CHP)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	NO_x conventional	=	[(0.15 × 3,412 × kWG / 0.34) + (0.17 × HeatOut / 0.8)] / 1,000,000
	NO_x CHP	=	(BtuIn × NO_xRate)/1,000,000
	Where:		kWG = The number of net kilowatt hours of electricity generated during an ozone control period by the project.
			HeatOut = The number of British thermal units (Btu) of heat or steam effectively used for space, water, or industrial process heat during an ozone control period by the project.
			NO_xRate = NO_x emitted during normal system operation by the project, measured in pounds per million Btu of fuel input.
			BtuIn = The number of British thermal units (Btu) of fuel used to produce electricity, heat, or steam during an ozone control period by the project.

(G) Projects in section 2(40)(B) and 2(40)(G) of this rule receive allowances based upon the number of kilowatt hours of electricity each project generates during an ozone control period. Highly efficient electricity generation projects using systems such as combined cycle, microturbines, and fuel cell systems for the predominant use of a single end user, that meet a rated energy efficiency threshold of sixty percent (60%) for combined cycle systems and forty percent (40%) for microturbines and fuel cells; or integrated gasification combined cycle, and that are sponsored by NO_x allowance account holders that own or operate units that produce electricity and are subject to the emission limitations of this rule receive allowances based upon the net amount of electricity generated during an ozone control period and the following formula:

Allowances = (kWG × (0.0015 - NO_x) × 0.5)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWG	=	The number of net kilowatt hours of electricity generated during an ozone control period by the project.
	NO_x	=	The amount of NO_x produced during the generation of electricity, measured in pounds per kilowatt hour.

(H) Projects in section 2(40)(C) and 2(40)(D) of this rule receive allowances based upon the number of kilowatt hours of electricity each project generates during an ozone control period and according to the following formula:

Allowances = (kWG × 0.0015)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWG	=	The number of kilowatt hours of electricity generated during an ozone control period by the project.

(I) Projects in section 2(40)(E) through 2(40)(G) of this rule receive allowances based upon the difference in emitted NO_x per megawatt hour of operation for units before and after replacement or improvement and according to the following formula:

Allowances = ((Et1 - Et2) × h) × 0.5)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	Et1	=	The emission rate in pounds per megawatt hour of NO_x of the unit before improvement or replacement.
	Et2	=	The emission rate in pounds per megawatt hour of NO_x of the unit after improvement or replacement.
	h	=	The number of megawatt hours of operation during the ozone control period.

(J) Projects in section 2(40)(A) of this rule that claim allowances based upon reductions in the consumption of electricity and that are large affected units shall be awarded allowances according to the following formula:

Allowances = (kWS × NO_x × 0.5)/2,000)

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	kWS	=	The number of kilowatt hours of electricity saved during an ozone control period by the project.
	NO_x	=	The amount of NO_x produced during the generation of electricity, measured in pounds per kilowatt hour.

(K) Projects in section 2(40)(A) of this rule based upon energy efficiency other than electricity savings shall be awarded allowances according to the following formula:

Allowances = (NO_x Rate × HeatOut / 0.8)/1,000,000/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	NO_x Rate	=	0.17 lb/MMBtu or the actual NO_x emission rate, whichever is greater.
	HeatOut	=	The number of British thermal units (Btu) of heat or steam effectively used for space, water, or industrial process heat during an ozone control period by the project.

(L) Projects in section 2(40)(H) of this rule using renewable energy to displace coal, natural gas, or oil combustion and reduce NO_x emissions shall be awarded allowances according to the following formula:

Allowances = ((0.17 × Fuel-Input)/1,000,000)/2,000

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	Fuel-Input	=	The amount of heat input, in Btu, from the renewable energy.

(M) Projects in section 2(40)(B) of this rule that claim allowances based upon highly efficient combined heat and power systems for the predominant use of a single end user, that meet the thresholds specified in section 2(40)(B) of this rule, that are large affected units as defined in section 2 of this rule, receive allowances based upon the net amount of energy generated and used during an ozone control period and the following formula:

Allowances = ((NO_x conventional - NO_x CHP)/2,000) × 0.5

Where:	Allowances	=	The number of allowances awarded to a project sponsor.
	NO_x conventional	=	[(0.15 × 3,412 × kWG / 0.34) + (0.17 × HeatOut / 0.8)] / 1,000,000
	NO_x CHP	=	(BtuIn × NO_xRate)/1,000,000
	Where:		kWG = The number of net kilowatt hours of electricity generated during an ozone control period by the project.
			HeatOut = The number of British thermal units (Btu) of heat or steam effectively used for space, water, or industrial process heat during an ozone control period by the project.
			NO_xRate = NO_x emitted during normal system operation by the project, measured in pounds per million Btu of fuel input.
			BtuIn = The number of British thermal units (Btu) of fuel used to produce electricity, heat, or steam during an ozone control period by the project.

(4) The department shall review, and reserve CAIR NO_x allowances pursuant to, each allowance allocation request by July 31 each year as follows:

(A) Upon receipt of the NO_x allowance allocation request, the department shall make any necessary adjustments to the request to ensure that the number of allowances specified in the request is consistent with the requirements of subdivision (3).

(B) If the energy efficiency and renewable energy allocation set-aside for the control period for which NO_x allowances are requested has an amount of NO_x allowances greater than or equal to the number requested, as adjusted under clause (A), the department shall reserve the amount of the NO_x allowances requested, as adjusted under clause (A), to the energy efficiency and renewable energy projects.

(C) If the energy efficiency and renewable energy allocation set-aside for the ozone control period for which NO_x allowances are requested has an amount of NO_x allowances less than the number requested, as adjusted under clause (A), but the new unit set-aside or hardship set-aside for large affected units is under-subscribed, the department shall reserve the amount of the NO_x allowances requested with the difference reserved from the new unit or hardship set-aside.

(D) If the energy efficiency and renewable energy allocation set-aside for the ozone control period for which NO_x allowances are requested has an amount of NO_x allowances less than the number requested, as adjusted under clause (A), and the new unit set-aside and hardship set-aside for large affected units are over-subscribed, the department shall reserve the allocation set-aside on a pro rata basis, except that allowances requested for projects under section 2(40)(A), 2(40)(C), 2(40)(D), and 2(40)(H) of this rule shall be reserved first, reserved for projects under section 2(40)(B) and 2(40)(G) of this rule second, reserved for projects under section 2(40)(E) of this rule third, and reserved for projects under section 2(40)(F) of this rule fourth.

(E) Any unreserved allowances shall be distributed as follows:

(i) Fifty percent (50%) of the unreserved allowances shall be retained by the state to fund a grant program for energy efficiency and renewable energy projects. The grant program projects do not need to meet the one (1) tons of NO_x emissions for singular or aggregated projects under subdivision (2). The unreserved NO_x allowances shall be deposited in a general allowance account established in accordance with this rule by the Indiana office of energy and defense development in accordance with the allowance allocation requirements of this rule, subject to the following:

(AA) The Indiana office of energy and defense development shall deposit revenue from the sale of unreserved NO_x allowances in a dedicated general NO_x account established by this rule used exclusively to provide matching grant funds for energy efficiency and renewable energy projects, including, but not limited to, the purchase and installation of alternative energy systems and programs to support energy efficiency projects.

(BB) The Indiana office of energy and defense development shall hold the unreserved NO_x allowances in a general NO_x account until such time that project(s) are approved for grant funding, at which time NO_x allowances shall be sold to provide cash dollars for the grant funding.

(CC) Revenue from the sale of unreserved NO_x allowances held by the state of Indiana through the Indiana office of energy and defense development shall not revert to the state general fund, and shall only be used to provide matching grant funds for the installation of energy efficiency and renewable energy projects as defined in this subsection.

(DD) Effective November 1, 2009, and annually thereafter, the Indiana office of energy and defense development shall provide a report to the commissioner and the air pollution control board regarding the allowance transaction activity and the distribution and the balance of the matching grant funds for energy efficiency and renewable energy projects during that period. At a minimum, the report shall contain the following:

(aa) The number of NO_x allowances currently held in general NO_x account(s) by the Indiana office of energy and defense development.

(bb) A summary of transactions in the market, including the date(s) of transactions, the number of allowances transacted, and the distribution of proceeds from transactions (including brokerage fees).

(cc) The distribution of grant funding by recipient.

(dd) A full description of type of project(s) funded.

(ee) A summary of the benefits of each project.

(EE) If at any time after November 1, 2009, the total number of unreserved ozone season NO_x allowances held by the Indiana office of energy and defense development is greater than five hundred (500) tons, fifty percent (50%) of the total amount of NO_x allowances shall be returned to the department for redistribution to existing large affected units on a pro rata basis.

(ii) Fifty percent (50%) of the unreserved allowances shall be returned to existing large affected units on a pro rata basis.

(5) After the completion of the control period for which CAIR ozone season NO_x allowances had been reserved, the project sponsor shall submit the results of the actual savings or generation by October 31 of that year. Allowances shall be awarded only after verification of project implementation and certification of energy, emission, or electricity savings, as appropriate. The department shall consult the Indiana office of energy and defense development concerning verification and certification.

(6) The department shall allocate the appropriate amount of CAIR NO_x allowances based on the review of the submittal of actual savings or generation results under subdivision (5) and notify the CAIR NO_x designated representative that submitted the request and the U.S. EPA of the number of NO_x allowances allocated for the control period by March 31 of each year. Any person to whom the department allocates NO_x allowances shall establish a general account under section 9(b) of this rule.

(j) The department shall make available CAIR NO_x ozone season allowances from the hardship set-aside for large affected units under section 1(a)(2) of this rule. The amount of CAIR NO_x ozone season allowances in the set-aside shall equal one hundred fifty (150) tons in 2010 and thereafter. The department shall allocate CAIR NO_x ozone season allowances as follows:

(1) The CAIR NO_x designated representative shall submit a request by May 1 of the year for which CAIR NO_x ozone season allowances are needed that includes the following:

(A) A demonstration that compliance with this rule absent hardship allowances could pose an unacceptable risk either to the source's own operation or its associated industry.

(B) A demonstration that the cost of compliance with the requirements in this rule will not be cost-effective without an allocation of hardship allowances. The owner or operator can show that it meets this cost factor if the unit's average cost of seasonal compliance with requirements in this rule will exceed two thousand four hundred dollars ($2,400) per ton of NO_x reduced. Such a showing can be based on cost methodology assessments or engineering studies which are reliably indicative of NO_x compliance costs for these entities, including data produced through the use of the U.S. EPA Air Pollution Control Cost Manual.

(2) If the hardship set-aside for the control period for which NO_x ozone season allowances are requested has an amount of NO_x allowances less than the number requested, but the energy efficiency and renewable energy allocation set-aside or new unit set-aside for large affected units is under-subscribed, the department shall allocate the amount of the NO_x ozone season allowances requested with the difference allocated from the energy efficiency and renewable energy allocation or new unit set-aside.

(3) If the hardship set-aside for the control period for which NO_x ozone season allowances are requested has an amount of NO_x allowances less than the number requested and the energy efficiency and renewable energy set-aside or new unit set-aside for large affected units is over-subscribed, the department shall allocate NO_x allowances from the hardship set-aside on a pro rata basis.

(4) Any unallocated allowances shall be distributed to existing large affected units on a pro rata basis.

(5) Any transfer of allowances under this subsection shall be submitted to U.S. EPA by July 31 of each year.

*These documents are incorporated by reference. Copies may be obtained from the Government Printing Office, 732 North Capitol Street NW, Washington, D.C. 20401 or are available for review and copying at the Indiana Department of Environmental Management, Office of Air Quality, Indiana Government Center-North, Tenth Floor, 100 North Senate Avenue, Indianapolis, Indiana 46204. (Air Pollution Control Division; 326 IAC 24-3-8; filed Jan 26, 2007, 10:25 a.m.: 20070221-IR-326050117FRA; filed May 12, 2009, 11:16 a.m.: 20090610-IR-326080005FRA)

                    
                        var val = document.getElementById('citecontent').innerHTML;
                        art.dialog.defaults.title = window.location.href;
                        art.dialog.data('cite', val);
                        art.dialog.data('homeDemoPath', '/Scripts/plus/artDialog/');
                        art.dialog.open('/Scripts/plus/artDialog/citeiframe.html');