Transcript NOx RTC supplies are plentiful and prices much cheaper

NOx RECLAIM Market
“Where is it headed and what
should we be doing?”
Tom Ishii
[email protected]
Project Manager
Gas Engineering Dept.
October 26, 2005
1
NOx RTC supplies are plentiful
and buying credits are a lot
cheaper than installing controls?
2
Perhaps…Rule/program
changes will reduce the chance
of continued credit surpluses
(if facilities do not install timely controls)
3
SCAQMD RECLAIM Amendments
Adopted January 2005
• Reduction or Shave in holdings/allocations
across the board starting from 2007 of
11.7% and increasing to 22.5% by 2011.
– Notice of new holdings sent out
– Exemptions for certain facilities at BACT
• Electric Generation facilities allowed to
freely trade 2007 and beyond RTCs
• Future credit supply periodically adjusted
4
Large credit surpluses and its impact
on emissions controls led to the Shave
25,000
20,491
20,000
Tons of NOx
17,197
Non-Power
Sector
13,703
15,000
12,484
12,345
9,942
10,445
Total
9,258
10,000
Power
Sector
6,788
4,852
5,000
2,039
684
0
Holdings
Emissions
Year 2000
Holdings
Emissions
Year 2003
5
BARCT Equivalency Parameters:
Determines Supply of Credits
• BARCT emission factors updated to reflect
lowest achievable control device
• Economic activity levels reflect gains in
energy efficiency
• Emissions inventory by equipment type
adjusted to reflect latest information
• Updated every three years
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Exemptions from Shave
(Qualifications are very strict)
• All permitted equipment at BACT
• No reduction of 2007+ Initial allocations
• Certain total cost thresholds met for BACT
controls/equipment
• District application required
• Exempted quantity of credits will be taken
out of holdings from remaining facilities
7
NOx Demand vs. Supply
Source: SCAQMD
(Includes Adopted Shave)
30,000
24,678
25,000
20,775
20,491
20,000
Total
Allocation
15,754
17,332
15,000
15,721
12,598
12,598
12,598
10,686
10,000
10,943
9,942
11,023
9,621
10,012
10,349
9,675
Annual
Emissions
9,675
5,000
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
99
0
19
98
TONS
20,982
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Where are credit prices headed?
Higher for sure, compared to 2003 & 2004,
and since the Shave, prices for RTCs have
already risen across the board
9
Monthly NOx Price by Expiration Date
Source: SCAQMD
NOx RTC Monthly Average Price ($/ton)
$14,000
RTCs expired by June '05
RTCs expired by Dec '05
RTCs for Comp. Year '07
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$Aug
Sep
Oct
Nov
Dec
Jan
Feb Mar
Apr
May
Jun
Jul
Aug
Trading Month (August 2004 to August 2005)
10
Key Market Drivers
• Power Sector credit demand
– New power plants
• Refinery Sector additions of control
equipment
• Facility closings
• Economic activity, including weather impacts
• New rules based on stricter health risk targets
11
Since the Shave
• Trading volume has picked up for
continuous streams resulting in higher prices
for 2007+ credits
– Today, it is already tough to buy a stream for
less than $7.00 per lb per year
• As the market tightens and the “time” frame
lengthens to 2020, securing “all years after
2010” will challenging, and you may need to
acquire or pay for more “out” years
12
Average NOx Price by Calendar Year
Source: SCAQMD
$16,000
2000
NOx Price ($/Ton)
$14,000
2001
$12,000
$10,000
$8,000
2002
$6,000
2004
$4,000
2005*
2003
$2,000
$0
2000
2002
2004
2006
2008
2010
2012
2014
RTC for Com pliance Year
20 00
2001
2002
2003
20 04
2005
* 2005 includes data up to 9/21/2005.
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You can relax …
• If your credit holdings before the shave
were 30% or greater than your current or
projected usage
14
Otherwise, you have 2 years at most to
analyze, plan and implement your
longer-term RECLAIM strategy
• Assuming you see value in achieving least cost (or lowering)
compliance.
15
Next Steps
• Calculate your facility’s credit supply and
demand balance for the years 2007-2011+
• Begin implementing your compliance strategy
– Acquire off-cycle credits
– Plan contingencies for permit delays
• Monitor credit price movements (quarterly at
a minimum)
– www.aqmd.gov/reclaim/rtc_main/html
– Communicate with emission brokers
16
Remember this?
$70,000
$60,000
2001
Price ($/Ton)
$50,000
$40,000
$30,000
2000
$20,000
$10,000
1999
$0
1994
1996
1998
2000
2002
2004
2006
2008
2010
RTC Compliance Year
1994
1995
1996
1997
1998
1999
2000
2001
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