FROM: James D. Herberg, General Manager
Originator: Lan C. Wiborg, Director of Environmental Services
SUBJECT:
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EMISSION REDUCTION CREDITS BROKER SOLICITATION
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
Approve the solicitation for an Emission Reduction Credits (ERCs) brokerage firm to identify and secure a buyer(s) for the sale of surplus Reactive Organic Gases (ROG) ERCs at the best available value and to handle all market evaluations of ERCs, negotiations, and financial transactions with all appropriate parties.
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BACKGROUND
Orange County Sanitation District (OC San) holds a portfolio of Air Quality ERCs including, but not limited to, Reactive Organic Gases (ROGs). ERCs are treated as an interchangeable commodity. To acquire an air quality permit for new projects that result in an increase in emissions, the owner of the project is required to offset the difference in emissions with ERCs. Following a comprehensive review of future Capital Improvement Program (CIP) needs, it has been determined that OC San has a surplus of ROG credits. If OC San takes a conservative approach and retains twice the number of ROG credits that could be needed for future projects, the remaining amount of credits available for sale is 360 lbs./day (pollutant emissions are determined on a pound per day basis).
Based on preliminary market assessment and trends in air quality regulations, staff believes that the value of ROG credits will remain stable for the foreseeable future. In fact, the fair market value of ROG credits has not changed since 2020. For this reason, OC San requests to secure a brokerage firm to sell the surplus credits at fair market value.
RELEVANT STANDARDS
* Ensure that investment proposals and decisions are based on clearly defined standards
* Comply with environmental permit requirements
* 24/7/365 treatment plant reliability
PROBLEM
OC San has a surplus of ROG credits which is unlikely to increase o...
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