1. Leadership from a Round Table

2.  How and Why we are bringing our community leadership to bear on this issue.  A pro-active solution to emissions reduction for our state.  It is a result-oriented incentivized emission reduction program.  The purpose of generating and implementing this policy is to build a stable platform from which other modules can also be structured and expanded.

3.  “A week is a long time in politics” and a year is a short time in government… Harold Wilson, 1964.  “Politics is the art of the possible” Bismark, 1867.  “We do things not because they are easy but because they are hard” JFK, 1962.  “I T IS ONLY THROUGH THE RELENTLESS PURSUIT OF E XCELLENCE THAT WORTHY GOALS ARE MET IN ANY MEASURABLE ENDEAVOR.” L EGGETT, 2008.

4.  Louisiana Chemical Association  LMOGA  LEAN  Entergy & AEP  Pulp & Paper Industry  Environmental Consultants  DEQ  Exxon  Dow Chemical

5.  The Emission Reduction Tax Credit Program (ERTCP) is a tax incentive proposed by the Louisiana Department of Environmental Quality for the verifiable permanent reduction of emissions to the environment of Louisiana.  Initial seed money will be potentially generated by 185 fees and will target NOx and VOC reductions in the five parish nonattainment area.  After demonstrating emission reductions in this area, the program will be expanded to encompass the rest of the state and funding will shift to a tax credit program.

6.  Potential 185 fees can be used as seed money to initiate the program. Section 185 of the Clean Air Act requires States to impose fees (185 fees) on major stationary sources of VOC and NOx in severe and extreme ozone nonattainment areas that fail to attain the ozone national ambient air quality standard (NAAQS or standard) by their attainment date. Preliminary estimates for 185 fees are in the range of $10,000,000.

7.  The financial incentive will include a direct tax credit commensurate to the verifiable permanent reduction in emissions.  This program will require legislative approval. As such, DEQ will need to develop enabling legislation for this program  A target of $25,000,000 in tax incentives will be established following the implementation of the seed money from the 185 fees.

8.  When applying for a tax credit relative to the ERTCP, a permittee must demonstrate a facility-wide emission reduction for a specific pollutant.  This reduction must be attributable to a specific emission reduction project, procedure, or control equipment.  The baseline emission determination will be based on the previous rolling five-year average.  Emissions monitoring and verification relative to the emission reduction project, procedure, or control equipment must be in accordance with approved methodologies.  Approved methodologies may include but are not limited to CEMS, State/Industry Factors, Source Category Emissions Model, Material Balance, Single Source Tests, Parametric Source Tests, and AP-42 Factors with an A, B, or C Rating.  Emission reductions will be verified by the use of annual emissions inventory data via ERIC and use of certification statements by applicants.

9.  The program will provide a financial incentive which will include a direct tax credit commensurate to the verifiable permanent reduction in NOx and VOC emissions in the five parish non-attainment area.  The department will leverage the success from this initial phase to implement financial incentives for emission reductions of all criteria air pollutants in the rest of the state.  The program will focus on facilities that have air permits and report emissions inventory.

10.  Five parishes are not in attainment with the current 8-hour ozone National Ambient Air Quality Standard (NAAQS), those being Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge Parishes.  On March 12, 2008, EPA announced that it is lowering the 8- hour NAAQS for ozone from 80 parts per billion (ppb) to 75 ppb. Up to 26 parishes currently fail to meet this standard, including the metropolitan areas of New Orleans, Lafayette, Lake Charles, and Shreveport.  Louisiana currently has 512 facilities that require Part 70 (Title V) permits. 77 of the 512 facilities are currently located in the BRNA. However, up to 238 more facilities (a full 46% of the universe) will be located in parishes designated as nonattainment under the lowered ozone NAAQS.

11.  Additional reductions in NO X and VOC emissions will be needed for the many areas of the state, especially in the parishes of Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge Parishes, to achieve compliance with the new 75 ppb National Ambient Air Quality Standard (NAAQS) for ozone.  Currently, up to 26 parishes fail to meet this standard (based upon 2005-2007 data). If only a handful of parishes could avoid nonattainment designation due to voluntary reductions, the positive economic benefits (or perhaps more appropriately the lack of negative impacts) could be substantial.

12.  512 - Total Title V facilities  77 - In the existing Baton Rouge Nonattainment Area (NA)  97 - In parishes likely to remain in the attainment  54 - In Calcasieu NA if above standard  23 - In Shreveport NA  8 - In Lafayette NA  153 - In Expanded BR/NO NA

13.  Most of these projects will involve the installation of capital equipment. The program is not intended to subsidize the entire project, but to provide a monetary incentive for these facilities to reduce emissions.  For every dollar of tax incentive, it is anticipated that the company will invest four additional dollars in the Baton Rouge nonattainment area.

14.  For reduction projects that include capital investment, direct and indirect effects on the economy can be expected. The direct effect of spending by a particular firm or business establishment on such economic variables as income and employment can be measured by its revenue and payroll.  A ripple affect can be expected by spending of the employees who earn income, which in turn indirectly affects firms that buy from and sell to these buyers and sellers, which in turn affect firms that buy from and sell to these buyers and sellers, etc. The interactions caused by these additional purchases and expenditures are further magnified by the spending of employees who earn income from the firm and the affected businesses. These direct and indirect effects can be estimated using an economic analysis tool know as Input-Output Analysis (I/O analysis).

15.  Non-attainment represents a “red flag” in the site selection process for both new facilities and expansions, especially for manufacturing prospects.  Non-attainment involves a more complex, expensive environmental permitting process that can reduce the competitiveness of existing business and industry.  Once in non-attainment, there is potential risk of significant increases in economic costs (e.g., emissions controls, penalty fees) on both industry and consumers if air quality does not improve sufficiently over time.

16.  In nonattainment areas, very stringent permitting rules – Nonattainment New Source Review (NNSR) – apply. These provisions are codified under LAC 33:III.504. NNSR provisions:  require LAER to be applied to each source of NO X and/or VOC emissions at a new major source and to each new or physically modified source of NO X and/or VOC emissions when an existing major stationary source undergoes a major modification; and  require NO X and/or VOC offsets to be applied at a ratio dependent on the nonattainment area’s classification – 1.10 to 1 (“marginal”) or 1.15 to 1 (“moderate”).

17.  In attainment areas, the required technology is BACT, or best available control technology, not LAER.  BACT is defined as an emissions limitation based on the maximum degree of reduction for each regulated pollutant that LDEQ, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such source or modification through application of production processes or available methods, systems, and techniques for control of such pollutant.  Therefore, if a certain technology is effective at reducing NO X or VOC emissions, but at a disproportionate cost to the reductions it can achieve, it can be eliminated.

18.  LAER is defined as the more stringent rate of emissions based on the following:  the most stringent emissions limitation which is contained in the implementation plan of any state for such class or category of major stationary source, unless the owner or operator of the proposed stationary source demonstrates that such limitations are not achievable; or  the most stringent emissions limitation which is achieved in practice by such class or category of stationary source. This limitation, when applied to a modification, means the lowest achievable emissions rate for the new or modified emissions units within the stationary source.  Importantly, when selecting LAER, it is important to note that a viable technology cannot be eliminated for economic reasons, no matter its capital or annual operating costs.

19.  Under NNSR, NO X and/or VOC emissions at a new major source or the increase in emissions associated with the project which triggered a netting analysis at an existing major stationary source must be offset by greater emission reductions according to the appropriate offset ratio. Major stationary sources are subject to the Emission Reduction Credit (ERC) Banking Program (LAC 33:III.Chapter 6) for the purpose of utilizing emission reductions as offsets in accordance with LAC 33:III.504.  All ERC claimed as offset credit must be from decreases of the same regulated pollutant or pollutant class (e.g., VOCs). Interpollutant trading is not allowed. ERC may be generated at the source (in the case of an existing major stationary source) or may be purchased from another source within the same nonattainment area.

20.  We estimate that the annual monetary value of health benefits from reducing ozone concentrations in Houston is approximately $10 per person per microgram per cubic meter (24-hr average) reduced (95% confidence interval, $0.070-$40). The central estimate exceeds past estimates by approximately a factor of five, driven by the inclusion of mortality.  Based on EPA’s Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standard for Ground-Level Ozone, a fifty million dollar investment would generate a reduction potential of 3 micrograms per cubic meter of ozone. Assuming a very conservative estimate of $2 per person per microgram per cubic meter the monetary benefit to the Baton Rouge five parish nonattainment area could be valued in excess of $6,000,000.

21.  To evaluate the evidence likely to contribute significantly to benefits, we focus on four health outcomes:  premature mortality  chronic asthma  respiratory hospital admissions  minor restricted activity days

22.  Who is responsible for policy decisions? ◦ The inherent conflict between those whose career is in government and those whose are not.  Who is responsible for carrying out a policy once it is established?  Meeting based v. Mission based policy.  “Why does it takes longer to obtain a permit for a landfill in the 21 st Century than it did to complete a gothic cathedral in the 12 th Century?”  “The interdepartmental committee is the last refuge of a desperate bureaucrat”