Can EPA explain how the application process for new unit set-aside allowances works and will some owner/operators have to purchase allowances for first year operation?
If a State adopts the model rule new unit allocation provisions (for the NOx ozone season or annual programs), then the owners/operators will have to obtain allowances for the first year of operation. After the year in which the unit starts up, the unit may apply for allowances from the new unit reserve, requesting an amount equal to its tons of emissions in the previous year. If the State’s reserve is not oversubscribed, the unit will receive its requested allocation. If the reserve is oversubscribed, the State will need to prorate all of the allocation requests. See §§96.142(c) and 96.342(c). After the unit accumulates 5 years of quality assured data, the unit will receive an allocation based on its baseline heat input. See §§96.142(a) and (b) and §96.342(a) and (b). It should be noted that States can design a different allocation methodology; the one described here is the sample methodology in the CAIR model trading rules. Q: The mercury model rule uses a conversion factor equal to
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