5 Colo. Code Regs. § 1001-31-A-II

Current through Register Vol. 47, No. 24, December 25, 2024

Section 5 CCR 1001-31-A-II - Definitions

II.A. "2015 GHG emissions" means the direct emissions reported in metric tons of CO2e by a GEMM 2 facility to the EPA's Greenhouse Gas Reporting Program ( 40 CFR, Part 98 , Subparts C through JJ), for calendar year 2015.

II.B. "2030 social cost of GHGs" means for carbon dioxide, $89 per metric ton of carbon dioxide; for methane, $2,500 per metric ton of methane; for nitrous oxide, $33,000 per metric ton of nitrous oxide; and for all other greenhouse gases, the corresponding cost of CO2e.

II.C. "Additional emissions reductions" means GHG emission reductions that exceed any GHG emission reductions otherwise required by law, regulation, or legally binding mandate.

II.D. "Alternate account representative" means an individual designated pursuant to Part D, Section II.C. to take actions on the manufacturing stationary source' accounts.

II.E. "Annual emissions limitation" means the number of metric tons of CO2e an EITE stationary source may emit as calculated in Part C, Section III.A.1.

II.F. "Auction" means the process of creating a market for the sale of GHG credits by taking bids from potential GHG credit buyers, taking offers from potential GHG credit sellers, determining which GHG credits buyers purchased, determining how many GHG credits will be sold and to which buyers, and determining the auction settlement price. The auction will not collect payment from winning bidders but will instead instruct buyers to which sellers they must direct payment.

II.G. "Auction administrator" means the Division or the Division's agent charged with administering an annual auction for the voluntary sale of GHG credits.

II.H. "Auction settlement price" means the price announced by the auction administrator at the conclusion of each annual auction pursuant to Part D, Section IV.

II.I. "Audit plan" means the proposed audit scope, timelines and team submitted by the EITE stationary source to the Division for approval pursuant to Part C.

II.J. "Audit report" means the resulting document from the audit containing all the information and data required under Part C.

II.K. "Audit scope" means the GHG emission units and the energy consumption sources included in the energy and emissions control audit and identified in the approved audit plan.

II.L. "Audit team" means one or more persons performing the audit. The audit team must consist of at least one qualified third-party auditor. Additional capabilities and knowledge of the audit team must include, but are not limited to, technical expertise with specific operating and maintenance practices for the industry being audited; expertise in conducting GHG and energy management system audits; and expertise of the EITE stationary source's domestic and international market. The audit team must include individual(s) with documented audit expertise in the relevant industrial sector.

II.L.1. A bachelor's level college degree or equivalent in science, technology, business, statistics, math, environmental policy, economic, or financial auditing; or evidence demonstrating completion of significant and relevant work experience or other personal development activities that have provided the applicant with the communication, technical, and analytical skills to conduct audit; and

II.L.2. Sufficient workplace experience to act as an auditor, including a minimum two years of full-time experience in a professional role that involved emissions data management, emissions technology, emissions inventories, environmental auditing or other technical skills necessary to conduct the audit.

II.M. "Carbon dioxide equivalent" (CO2e) means a standard used to compare the emissions from various greenhouse gases based upon their global warming potential (GWP). The CO2e is determined by multiplying the mass amount of emissions (metric tons per year), for each GHG constituent by that gas's GWP, codified in 40 CFR Part 98 , Subpart A, Table A-1 (as of December 11, 2014), and summing the resultant values to determine CO2e (metric tons per year).

II.N. "Certification body" means a professional organization that has been accredited to issue lead auditor certifications for a specific sector or to a specific standard.

II.O. "Co-benefits" means the additional benefits associated with the reduction of harmful air pollutants to local communities, including localized air quality benefits.

II.P. "Colorado EnviroScreen" means Colorado's interactive environmental justice mapping tool, which compiles 35 environmental, health, and demographic indicators to identify and visualize areas with higher environmental health risks, as of the effective date of the rule. The tool also shows places that meet the statutory definition of a disproportionately impacted community in § 24-4-109(2)(b)(II), C.R.S. (May 23, 2023).

II.Q. "Combined heat and power unit" (also known as a "cogeneration unit") means a unit that simultaneously produces both electric power and useful thermal output from the same primary energy source, and may include facilities where electricity is generated from waste steam or is generated by a stationary combustion turbine.

II.R. "Compliance year" means any year in which a GEMM 2 facility must comply with a GEMM 2 annual GHG emissions requirement.

II.S. "Credit account" means an account for a manufacturing stationary source that is created by the Division or its agent, to which the Division and/or the manufacturing stationary source transfers GHG credits to meet the manufacturing stationary source's compliance obligations.

II.T. "Direct GHG emissions" means GHG emissions from a manufacturing stationary source that are reported to the State of Colorado under Regulation Number 22, Part A and/or to the EPA under Part 98 and measured in terms of CO2e.

II.U. "Disproportionately impacted community" means those communities that meet the definition contained in § 24-4-109(2)(b)(II), C.R.S. (May 23, 2023). For purposes of Regulation Number 27, disproportionately impacted community means any census block group identified in the disproportionately impacted community layer in the most recent version of Colorado EnviroScreen as of the date of the effective rule.

II.V. "Energy and GHG emission control audit" (the audit) means a rigorous examination of the GHG emissions and energy consumption of an EITE stationary source with the goal of analyzing and recommending GHG BAECT and energy BMPs, and identifying opportunities for reduction in GHG emissions and energy consumption for the facility, conducted consistent with the requirements set forth in this section.

II.W. "Energy best management practices" (energy BMPs) means the best energy efficiency practices available to the EITE stationary source, based on the maximum degree of energy efficiency that is achievable on a case-by-case basis, taking into account energy, environmental, and economic impacts, and is achievable for such facility through application of production process improvements and available equipment or process control methods, systems, and techniques, and includes incorporating all the key elements of strategic energy management (SEM), such that the facility continually improves its energy performance, reduces energy costs, and reduces GHG emissions associated with energy use.

II.X. "Energy efficiency" means using less electricity or fuel to produce the same quantity of product or service.

II.Y. "Energy-intensive, trade-exposed manufacturing stationary source" (EITE stationary source) means a source that principally engages in cement and concrete product manufacturing, NAICS code 3273; foundries, NAICS code 3315; iron and steel mills and ferroalloy manufacturing, NAICS code 3311; and/or pulp, paper, and paperboard mills, NAICS code 3221.

II.Z. "Federal ENERGY STAR ® Program" means the EPA's voluntary program for industrial manufacturers through which specific energy performance indicators are measured and compared across industries and to which facilities are certified if they are achieving an Energy Star scoring of 75 or greater.

II.AA. "GEMM 2 facility" means a stationary source located in Colorado that principally engages in manufacturing activities and directly emits equal to or greater than 25,000 metric tons per year of CO2e emissions, as reported pursuant to Regulation Number 22; including any existing EITE stationary source that emits equal to or greater than 25,000 metric tons per year of CO2e emissions and elects to be regulated under Part B. Manufacturing activities include the mechanical, physical, or chemical transformation of materials, substances, or components into new products. This is limited to facilities with NAICS codes beginning with 31-33.

II.BB. "GEMM 2 facility GHG baseline emissions" means, for stationary sources qualifying as GEMM 2 facilities as of January 1, 2023, the higher reported direct GHG emissions from either the 2021 or 2022 calendar year, measured in metric tons of CO2e as reported pursuant to Regulation Number 22, Part A., as revised to correct any previous inaccuracies or to account for capital investments between 2015 and 2021 that increased a GEMM 2 facility's production capacity by over thirty (30) percent, for which additional production, as of 2022, was not yet realized. If a GEMM 2 facility met the criteria for the production-based adjustment, the GEMM 2 facility's baseline was revised upwards to account for seventy-five (75) percent of the GHG emissions increase resulting from the production capacity expansion, provided, however, that if the GEMM 2 facility met the requirements of Part B, Section I.A.1, its GEMM 2 facility baseline was revised upwards to account for one-hundred (100) percent of the GHG emissions increase resulting from the production capacity expansion.

II.CC. "GEMM 2 annual GHG emissions requirement" means for each stationary source qualifying as a GEMM 2 facility as of January 1, 2023, the calculated CO2e emissions requirement that a GEMM 2 facility must comply with in a calendar year as determined pursuant to Part B, Section I.A.

II.DD. "GHG best available emission control technology" (GHG BAECT) means a GHG emission control technology for a GHG emission unit based on the maximum degree of GHG reductions achievable on a case-by-case basis, taking into account energy, environmental, and economic impacts, employment of which is demonstrated by compliance with the GHG BAECT and energy BMP intensity rate determination.

II.EE. "GHG BAECT and energy BMP intensity rate" means the total direct GHG emissions per unit of production from the emissions units within the audit scope after GHG BAECT and energy BMPs are operational as determined in Part C.

II.FF. "GHG credit" means a uniquely identifiable and tradable compliance instrument equal to one metric ton of CO2e reduced, which is generated, issued, transferable, and may be retired pursuant to Part D. The GHG credit must be real, additional, quantifiable, permanent, verifiable, and enforceable and provide additional emissions reductions beyond a facility's compliance obligation.

II.GG. "GHG credit trading system" means a GHG credit accounting, tracking, and trading system established by the Division and/or its agent where GHG credits are issued by the Division or its agents to manufacturing stationary sources in the system, and may be transferred between regulated sources, and retired under this Regulation Number 27.

II.HH. "GHG mitigation plan" means the plan produced by a GEMM 2 facility pursuant to Part A, Section III.B.1.

II.II. "GHG reduction plan" means the plan produced by a GEMM 2 facility under Part B, Section II.A., or the plan produced by a stationary source constructed on or before the effective date of this rule that becomes a GEMM 2 facility after the effective date of this rule under Part B, Section I.B, as applicable.

II.JJ. "Greenhouse gas" (GHG) means carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and Nitrogen Trifluoride (NF3).

II.KK. "Harmful air pollutant" as used in this section means pollutants designated by EPA as criteria air pollutants (carbon monoxide, lead, nitrogen dioxide, ozone, particulate pollution (PM) (PM2.5 and PM10) and sulfur dioxide) or hazardous air pollutants. This term is not intended to articulate different thresholds or standards for those pollutants listed as harmful air pollutants than currently established under the federal Clean Air Act or the Colorado Air Pollution Prevention and Control Act and their respective implementing regulations.

II.LL. "Independent third party" means an engineering or consulting firm selected by the State of Colorado; which is not affiliated with the stationary source, its subsidiaries, or related entities and has no common ownership with the stationary source. The capabilities and knowledge of the firm must include, but are not limited to, background, experience, and recognized abilities to perform the assessment activities, data analysis, and report preparation and experience working with the industry subject to this section.

II.MM. "International Organization of Standardization" (ISO) means the independent, non-governmental international standard-setting body composed of representatives from various national standards organizations.

II.NN. "ISO 50001: Energy Management Systems - Requirements with guidance for use" (ISO 50001) means the internationally accepted standard which specifies the requirements for an organization to demonstrate that it has a sustainable energy management system in place, has completed the energy planning process, and has a commitment to continual improvement of its energy performance.

II.OO. "Lead auditor" means an individual who has met the requirements of and is certified as a lead auditor through a professional certification body.

II.PP. "Management system" means the policies, processes, and procedures used by an organization to ensure that it can fulfill the tasks required to achieve its GHG emissions or energy management objectives.

II.QQ. "Manufacturing stationary source" means an EITE stationary source or a GEMM 2 facility.

II.RR. "Net meter" means a renewable energy resource or renewable energy storage on the EITE stationary source's property which supply energy directly to the EITE stationary source's energy provider in exchange for a Power Purchase Agreement where the customer receives credit for the energy production.

II.SS. "Non-GHG BAECT emissions" means the GHG mass emissions from an EITE stationary source that are not covered by the audit.

II.TT. "North American industry classification system (NAICS) code(s)" means the six-digit code(s) that represents the product(s)/activity(s)/service(s) at a facility or supplier as listed in the Federal Register and defined in "North American Industrial Classification System Manual 2007," available from the U.S. Department of Commerce, National Technical Information Service, Alexandria, VA 22312 (as published March 13, 2023).

II.UU. "Permanent" means the GHG emission reductions are not reversible, or, when the GHG emission reductions are reversible, that mechanisms are in place to replace any reversed emission reductions to ensure that all reductions that are awarded GHG credits endure.

II.VV. "Plain-language" means writing that is clear, concise, well-organized, and follows other best practices appropriate to the subject or field and is easily understandable.

II.WW. "Primary account representative" means an individual authorized by a manufacturing stationary source to make submissions to the Division or its agent in all matters pertaining to this Regulation Number 27 that legally bind the authorizing source.

II.XX. "Process" means a specific operation at an EITE stationary source comprising a series of actions or steps which are carried out in a specific order to complete a particular stage in the manufacturing process.

II.YY. "Product" means the quantifiable material output of an individual manufacturing process or manufacturing facility.

II.ZZ. "Proof of certification" means an official document issued by the formal registrar or certifying body stating the scope of certification, the expiration date and the standards to which the stationary source is certified.

II.AAA. "Qualified third-party auditor" means one or more individuals who hold a valid lead auditor certification in greenhouse gas and/or energy management systems and have demonstrated capabilities to evaluate GHG reduction opportunities for large, energy-intensive, industrial manufacturing processes and facilities. Qualified third-party auditors must have worked as an auditor for at least two years, or must have worked as a project manager or lead person for not less than four years (two of which may be graduate level work) in:

(1) the development of GHG or other air emission inventories, or

(2) as a lead environmental data or financial auditor. The auditor must not be affiliated with the EITE stationary source, its subsidiaries, or related entities; there can be no common ownership between the EITE stationary source and the third-party auditor. The capabilities and knowledge of the auditor must include, but are not limited to, background, experience, and recognized abilities to perform the assessment activities, data analysis, and report preparation and experience lead auditing GHG or energy management systems for the industry subject to this section.

II.BBB. "RACT/BACT/LAER Clearinghouse" (RBLC) means EPA's central database of air pollution technology information, including past RACT, BACT, and LAER decisions contained in New Source Review (NSR) permits, to promote the sharing of information among permitting agencies and to aid in future case-by-case determinations.

II.CCC. "Real" means that GHG emission reductions result from a demonstrable action or set of actions and are quantified using appropriate, accurate, and conservative methodologies.

II.DDD. "Regulated source" means a source of greenhouse gas that is subject to a rule adopted by the Commission under Section 25-7-105(1)(e), C.R.S., that imposes specific and quantifiable GHG reduction obligations upon that source or group of sources.

II.EEE. "Residential building unit" means a building or structure designed for use as a place of residency by a person, a family, or families. The term includes manufactured, mobile, and modular homes, except to the extent that any such manufactured, mobile, or modular home is intended for temporary occupancy or for business purposes. Each individual residence within a building will be counted as one Residential building unit.

II.FFF. "Residential community" means an area where more than ten (10) residential building units are grouped together within a one (1) mile radius.

II.GGG. "Retail distributed generation" means a renewable energy resource or renewable energy storage that directly supplies building or process energy needs at a metered location, where surplus energy is supplied to the location's energy provider when energy production is greater than on-site demand and grid energy is supplied through a customer meter to the location during times when on-site production is less than demand.

II.HHH. "Social cost of GHGs" means the monetized damages associated with an incremental increase in GHG emissions in a given year. The social cost of GHGs must include separate calculations for carbon, methane, and nitrous oxide, and the social cost of any other GHGs must be calculated using carbon dioxide equivalent. For purposes of Regulation Number 27, the social cost of GHGs is established, using a two and one-half percent discount rate, by the Federal Interagency Working Group's Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide, Interim Estimates under Executive Order 13990, dated February 2021.

II.III. "Strategic energy management" (SEM) means a management system-based, continuous improvement approach to energy management that seeks to improve an organization's energy performance, reduce energy costs, and reduce GHG emissions associated with energy use; drives improvement in facility energy efficiency through equipment upgrades operations and maintenance improvements and behavioral changes.

II.JJJ. "Technically feasible" means that the GHG reduction measure can be implemented at the facility within existing technological and scientific limitations.

II.KKK. "Transfer" means, as to a GHG credit, the removal of a GHG credit from one manufacturing stationary source's account in the GHG credit trading system and placement of that credit into another manufacturing stationary source's account in the system if agreed to by both the transferor and transferee manufacturing stationary sources.

II.LLL. "Verifiable" means that a reported emission reduction resulting from a GHG credit at a regulated source is well documented and transparent such that it lends itself to an objective review by the Division to verify the emission reduction is real, using monitoring of emissions reductions relative to the GEMM 2 annual GHG emissions requirement or annual emissions limitation, as applicable, for the relevant compliance year.

5 CCR 1001-31-A-II

46 CR 10, May 25, 2023, effective 6/14/2023

46 CR 21, November 10, 2023, effective 12/15/2023