Environmental Markets / Emission Reduction Credits
Emission Reduction Credits (ERCs)
Emission Reduction Credits (ERCs) are generated and earned by a permitted emissions source when it reduces air emissions beyond what is required by permits and rules. ERCs can be used by their owners or sold to companies that need ERCs for their own air permits.
- ERCs are generally not related to GHG or CO2. They are issued for regional air pollutant reduction (NOx, VOC, PM, SOx, & CO);
- An ERC can be generated by facilities that permanently reduce their emissions through a facility shutdown, process change, or installing control technology. The Clean Air Act and regional regulations determine which reductions qualify for ERCs;
- ERCs are issued and traded in units of tons per year;
- There is no minimum or maximum limit on the number of reductions that may be eligible for ERC certificates, assuming standard criteria are met; and
- ERCs are only issued for reductions of actual emissions that are real, quantifiable, enforceable, permanent, and surplus.
Discrete Emission Reduction Credits (DERCs)
Discrete Emission Reduction Credits (DERCs) differ from ERC’s in that they are the reductions in emissions that occur over a specified period of time. These offsets are considered to be temporary reductions under permitted levels. DERCs only offset emissions for one year, unlike ERCs which allow a facility to emit into perpetuity. Companies that have a temporary increase in emissions tend to prefer DERCs as opposed to ERCs for offset purposes mainly due to cost.