Allocation of NOx Allowances from the New Unit Set-aside

Background

In July 2007, the Department promulgated ch. NR 432, Wis. Adm. Code, to administer the allocation of NOx allowances as required under the federal Clean Air Interstate Rule (CAIR). This federal rule reduces NOx emissions through a cap and trade program of NOx allowances applicable to sources capable of generating 25 megawatts or more of electricity. Under this program, each state has a set number of ozone season and annual NOx allowances (budgets) for allocation to generating units subject to CAIR. To comply with the CAIR rule, the owner or operator of an affected unit must hold a number of NOx allowances equal to the NOx emissions of the unit. If necessary for compliance, the owner of an affected unit may purchase additional NOx allowances through the CAIR cap and trade program.

NOx allowances are currently allocated to existing CAIR generating units for use in 2009 through 2014 as provided under ss. NR 432.03(5) and 432.05(5), Wis. Adm. Code. Starting in 2011, the Department is required to allocate allowances to existing units for compliance in 2015, with the process repeated each year thereafter for allocation of allowances for the next compliance year.

Under ch. NR 432, Wis. Adm. Code, each year beginning in 2009 the Department of Natural Resources is required to allocate NOx allowances to new generating units subject to the CAIR rule. A generating unit is considered "new" if it was constructed on or after January 1, 2001 and in operation for less than five calendar years at the time that the existing CAIR units were allocated their current year NOx allowances. The NOx allowances for new units are allocated from a reserved pool of allowances, known as the "new unit set-aside" which represents 7% of Wisconsin's total budget of NOx allowances.

As set forth under ss. NR 432.03(3) and 432.05(3), Wis. Adm. Code, the allocation of allowances to a new unit is not to exceed the unit's actual NOx emissions during the previous calendar year. If necessary, the allocation of allowances to each new unit is reduced proportionally in order to not exceed the total number of allowances in the new unit set-aside. Or conversely, after allocation to the new units, any remaining balance of NOx allowances in the new unit set-aside is further allocated to existing CAIR units, as provided under ss. NR 432.03(4) and NR 432.05(4), Wis. Adm. Code.

General process for allocating NOx allowances to new units

To receive an allocation of new unit set-aside NOx allowances, the CAIR designated representative of a new unit must submit a request to the Department by May 1st of the year in which the allowances will be used for compliance. The request must include the actual tons of NOx emitted during both the ozone season and the calendar year by the new unit in the previous year. The requests can be submitted to:

Based on the submitted requests, the Department will make available for public comment by June 15th each year a proposed distribution of NOx allowances from the new source set-aside. The Department will affect changes to the proposed allocations based on received comments applicable and appropriate to the new unit set-aside allocation methodology as provided under ss. NR 432.03(3) and 432.05(3), Wis. Adm. Code. Finalized allowance allocations will then be submitted to the US EPA by July 31st each year.

New Unit Set-aside Allocations

The following links provide information pertaining to the allocation of new unit set-aside allowances each year including: the public notice of proposed allocation, the tables showing the proposed and finalized allocations to new units and, as necessary, tables showing the allocation of any excess allowances in the new unit set-aside to existing CAIR sources.

2009 Allowances:

Last Reviewed: June 9, 2009
Next Review: June 9, 2010
Last Revised: Tuesday June 09 2009