Emission Reduction Credit (ERC) Banking Program - Use and Withdrawal

How can I use or withdrawal ERCs ?

ERCs may be used to the extent permissible by federal, state and local law. In general, facilities applying for a permit for a newly constructed or modified "major" air pollution source will use ERCs to offset their emission increases from an existing source that generated ERCs within a similar geographical area. ERCs may also be used for: 1) retirement for the purpose of a net air quality benefit for the state; 2) to demonstrate attainment in Ohio's State Implementation Plan (SIP); or 3) as part of an internal netting demonstration of a net emissions increase as long as the source using the ERCs is the same source that generated and banked ERCs.

Withdrawal of ERCs:

  1. Facilities holding ERCs or ERC Certificate(s) may withdraw the ERCs or ERC Certificates from the ERC Banking System at any time. The current owner may write a letter to the Ohio EPA ERC Banking Program coordinator requesting to withdrawal ERCs. In the letter, indicate the type of pollutant, quantity of ERCs and any applicable ERC Certificate ID.
  2. ERCs may be withdrawn only by the current owner or by the Director of Ohio EPA and may be withdrawn in whole or in part. In the case of a partial withdrawal, a revised amount of un-verified ERCs or revised ERC certificate (for verified ERCs) will be issued to the current owner reflecting the new amount of available ERCs.

What is the process for using verified ERCs?

In order to use ERCs contained in the banking system, you must be the current owner of the ERCs, as identified in the ERC Banking System and the ERCs must be verified before use for the purpose of offsetting emissions or internal netting. Un-verified ERCs may be used for the purpose of retirement or to demonstrate attainment in Ohio's SIP. When using ERCs, submit a complete ERC Use Notification Form (ERC Form -3) to Ohio EPA for review. If you are not the current owner of the ERCs, then you and the current owner must submit an ERC Transfer Notification (ERC Form - 2) to transfer ERC ownership.

If you want to use un-verified ERCs for the purpose of offsetting emissions or internal netting, Ohio EPA will still need to review the credibility of the emission reductions as part of the permitting process. If the un-verified ERCs are contained in the ERC Banking System, Ohio EPA will first withdraw them. Keep in mind that the verification process during the use phase (when permitting occurs) will likely take more time than it would for you to use ERCs that were verified in advance of the permitting process.

Ohio EPA cannot make any guarantee to the validity of un-verified ERCs identified in the ERC Banking System. All parties should understand the risk involved in transactions, and subsequent requests for use, of un-verified ERCs.   

Instructions for transferring ERCs before use:

If the ERCs needed for use are not currently in your possession, then you and the current owner must complete an ERC Transfer Notification (ERC Form -2) ERC Form -2 and ERC Form -3 may be submitted simultaneously to Ohio EPA. Please consult ERC Form - 2 and ERC Form - 3 Instructions for more details on completing both forms. It is important to remember that when participating in the ERC Banking Program pursuant to OAC Chapter 3745-111 only verified ERC(s) may be transferred.

ERC final verification process:

When ERCs are used for the purpose of offsetting emissions or internal netting, they will go through a final verification determination by Ohio EPA to verify the total amount of ERCs available for use pursuant of OAC Chapter 3745-31. This includes any previously verified ERCs deposited or transferred through the ERC banking system. Submitting an ERC Use Notification Form (ERC Form -3) prior to the permitting application process will help ensure ample time for Ohio EPA to verify ERCs and will give your facility assurance that enough ERCs are available for your project early on in the permitting process. If you need assistance with this form, please consult the ERC Form - 3 instructions or contact your District Office or Local Air Agency.  

What is the lifespan of an ERC in the Banking Program?

ERCs that enter the ERC banking system are not subject to a static expiration period. However, there are a few factors that could cause ERCs to be discounted over time. Below are a number of scenarios in which ERCs could be discounted in the ERC Banking Program.

Discounting ERCs:

Ohio EPA may reduce the amount of ERCs if there is:

  1. Any evidence of noncompliance with any permit conditions imposed to make ERCs permanent and federally enforceable
  2. A failure to achieve in practice the emission reductions on which the ERCs are based upon
  3. A misrepresentation made on an ERC generation notification form, including supporting data entered therein or attached to or any subsequent submittal of supporting data
  4. A need to achieve the National Ambient Air Quality Standards (NAAQS) for Ohio State Implementation Plan (SIP) requirements.   

Can ERCs for one pollutant be used as offsets for other pollutants?

Eight-hour Ozone Nonattainment: 

For the eight-hour ozone nonattainment areas, use of only the same air pollutant ERCs will be acceptable for the purpose of offsetting emissions (e.g., hydrocarbon increases may not be offset by sulfur dioxide reductions). No ERCs may be allowed for replacing one volatile organic compound (VOC) with another of lesser reactivity, except for those compounds listed in Table 1 of the U.S. EPA’s “Recommended Policy on Control of VOCs.”

    Emission Offset Ratios

    • In areas that are not classified as marginal, moderate, serious, severe or extreme areas, the offset ratio shall be greater than 1-to-1
    • In marginal areas, the minimum required offset ratio is 1.1-to-1.
    • In moderate areas, the minimum required offset ratio is 1.15-to-1.
    • In serious areas, the minimum required offset ratio is 1.2-to-1.
    • In severe areas, the minimum required offset ratio is 1.3-to-1.
    • In extreme areas, the minimum required offset ratio is 1.5-to-1.
    • Offsets may be obtained from areas that have a higher nonattainment classification (provided the higher offset ratio is utilized) than the nonattainment area in which the major stationary source is to be located.

Fine Particulate (PM 2.5) Nonattainment:

Inter-pollutant trading to offset emissions under the PM 2.5 nonattainment New Source Review (NSR) program on a statewide basis is allowed. The permissible inter-pollutant offset trading requirements allows reductions in direct PM 2.5 to offset precursor emissions increases and reductions in precursor emissions to offset direct PM 2.5 emissions increases. To facilitate these trading provisions, U.S. EPA has provided acceptable trading ratios that specify the amount of each pollutant which may be traded for any other.

    Emission Offset Ratios and Inter-pollutant Trading

    • For direct PM 2.5 to direct PM 2.5, the trading ratio is 1-to-1.
    • For sulfur dioxide (SO2) precursor to SO2 precursor, the trading ratio is 1-to-1.
    • For nitrogen oxides (NOx) to direct PM2.5 or primary PM2.5 to NOx, the trading ratio is 200-to-1 (NOx tons for PM2.5 tons) or 1-to-200 (PM2.5 tons for NOx tons) for areas in the eastern United States. (Ohio is considered an eastern state.)
    • For SO2 to direct PM2.5 or primary PM2.5 to SO2, a nationwide trading ratio of 40-to-1 (SO2 tons for PM2.5 tons) or 1-to-40 (PM2.5 tons for SO2) for trades between these pollutants. 

Can reductions generated in one county be used in another county?

In general, emission offsets from a nonattainment county with a lower classification may not be used in a nonattainment with a higher classification (e.g., a VOC ERC generated in a basic ozone nonattainment area can not be used in a moderate ozone nonattainment area). In addition, it is prohibited to use emission reductions in an attainment area for any nonattainment area.

Eight-hour Ozone Nonattainment Areas:

Within nonattainment eight-hour ozone areas, VOC ERCs and NOx ERCs may be obtained from within the same nonattainment area as the new major stationary source, major modification or in an adjacent nonattainment area if the new major source can demonstrate to the director's satisfaction that the net combined impact of the emissions from the offsetting sources and emissions from the new major stationary source or major modification will have a positive net air quality benefit on the nonattainment ozone air quality in the area.

PM 2.5 Nonattainment Areas:

Within PM 2.5 nonattainment counties and partial counties, PM 2.5 ERCs or PM 2.5 precursor ERCs (e.g. SO2 or NOx) generated in one county can be used in another county if the counties are located within the same nonattainment area where the reduction was generated. If you want to use ERCs generated in one county in another county that is within an adjacent nonattainment area, then the director may require atmospheric dispersion modeling to ensue that emission offsets provide a net air quality benefit.

What ERCs are currently available?

ERCs are grouped into verification status. You can view available verified ERCs and un-verified ERCs separately. Under the ERC Banking Program, only verified ERCs may be transferred or used for the purpose of emission offsets. Un-verified ERCs must be verified before transfer or use under the ERC Banking Program. The ERC Banking system tracks the generation, transfer and use of verified ERCs and the generation of un-verified ERCs. All available ERCs are posted on the Ohio EPA website.


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