5 Colo. Code Regs. § 1001-31-C-I

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

Section 5 CCR 1001-31-C-I - Audit Requirements

I.A. Energy and GHG Emission Control Audits

I.A.1. By December 31, 2022, and December 31 every five years thereafter, owners or operators of each EITE stationary source must conduct energy and GHG emission control audits to establish greenhouse gas best available emission control technology (GHG BAECT) and energy best management practices (energy BMPs) and determine whether the stationary source is employing GHG BAECT and energy BMPs at the EITE stationary source, and submit the audit report to the Division.

I.A.2. Each EITE stationary source must conduct an audit within twelve (12) months of reporting direct GHG emissions equal to or greater than 25,000 metrics tons CO2e per year under Regulation Number 22, Part A and/or 40 CFR Part 98 and every five years thereafter.

I.A.3. Audits must be conducted by a qualified third-party auditor and meet or exceed nationally or internationally accepted energy and GHG accounting and management audit standards or protocols.

I.B. Audit Plan

I.B.1. Each EITE stationary source must submit an audit plan to the Division for approval at least 120 days prior to beginning the audit as required in Section I.A. The Division will review the audit plan and notify the EITE stationary source within 60 days of submission of any deficiencies. If notified of deficiencies, the EITE stationary source must submit a revised audit plan for final approval no later than 30 days prior to beginning the audit. The EITE stationary source must receive approval from the Division of the audit plan prior to beginning the audit. Such approval shall not be unreasonably withheld. The audit plan must include:

I.B.1.a. A description of all the emission units at the EITE stationary source that directly release one or more GHGs, ordered from largest emitting to smallest emitting emission units averaged over the past 5 years, quantified in CO2e as well as broken out by GHG type. Using this list, the emission units that comprise at least the top 80% of the EITE stationary source's direct GHG emissions shall be identified, documented and included in the GHG emissions audit scope. Additionally, any individual emissions unit that comprises 2% or more of the EITE stationary source's direct GHG emissions shall be identified, documented and included in the GHG emissions audit scope.

I.B.1.b. Unless the EITE stationary source is utilizing Section I.B.1.c. to show employment of energy BMPs, a description of all the emission units at the EITE stationary source that consume energy, averaged over the past five (5) years and ordered from largest consuming to smallest consuming. Using this list, the energy consumption sources that comprise the top 80% of the EITE stationary source's energy consumption shall be identified, documented and included in the energy audit scope.

I.B.1.c. If an EITE stationary source is certified to the Federal Energy Star Program or ISO 50001, the EITE stationary source will be determined to be employing energy BMPs and the energy audit will be limited in scope. Proof of certification of the EITE stationary source to one or more of these existing standards must be included in the audit plan to utilize this option.

I.B.1.c.(i) If an EITE stationary source is planning on becoming certified to one of these standards, the EITE stationary source must submit the certification or registration timeline or plan, including key milestones towards certification or registration with certification scheduled for no more than 12 months after the audit date.

I.B.1.d. Records of any previous third-party audit results that the EITE stationary source proposes to use to support the audit on a supplementary basis or to avoid duplication of data collection efforts that have been performed within three (3) years prior to the planned audit date. To be accepted, supplementary audit data must be verified and validated by a third party and result from an audit that meets or exceeds nationally or internationally accepted energy and GHG accounting audit standards or protocols.

I.B.1.e. A description of the audit team members, including experience, qualifications, and role in the audit, and existing or previous business relationship, and the nature of such relationship with the owner or operator of the EITE stationary source. If there is an existing or previous business relationship, a list and description of work done for the owner or operator of the EITE stationary source.

I.B.1.e.(i) The Division may reject a proposed qualified third-party auditor or audit team if it does not meet the qualifications in Sections II.H. and II.KK., failed to conduct a previous audit to the satisfaction of the Division, or is deemed to have a previous or existing relationship with the source that is so pervasive that the auditor would be unable to conduct the audit in an unbiased and independent manner.

I.B.1.f. The specific GHG and/or energy audit standards, protocols or procedures to be used for conducting the audit, if applicable.

I.C. Audit Reports

I.C.1. Each EITE stationary source must complete the audit report in accordance with Sections I.C.1.a. through III.C.1.e. and submit the audit report to the Division by December 31 of the audit year that includes the following elements for all GHG emission units listed in accordance with Section I.B. and specified in the Division-approved audit plan, at a minimum.

I.C.1.a. The GHG BAECT analysis. The audit team must analyze GHG BAECT as follows:

I.C.1.a.(i) Identify all available control technologies and strategies with practical potential for application to reduce GHG emissions from the GHG emission units included in the audit scope. Identify the current GHG emissions rate of each audited emission unit at the time of the audit.

I.C.1.a.(i)(A) Control technologies and strategies must include, but are not limited to, fuel use, raw material use, energy efficiency improvements, preheating/heat reuse and strategic energy management options), and carbon capture and underground storage or utilization.

I.C.1.a.(ii) Eliminate technically infeasible control technologies and strategies.

I.C.1.a.(ii)(A) Notwithstanding Section I.C.1.a.(ii), the audit team must perform a feasibility assessment of carbon capture and underground storage or utilization technology for any single emissions unit evaluated with direct emissions of 100,000 tons per year or greater CO2e in any of the previous five years as reported under Regulation Number 22, Part A and/or 40 CFR Part 98 . The audit team shall include this analysis in the audit report.

I.C.1.a.(iii) Rank remaining emission unit control technologies and strategies in descending order based on the reduction in direct GHG emissions per ton of product or output.

I.C.1.a.(iv) Perform a cost-effectiveness analysis on all control technologies and strategies for the emissions unit considering the full lifetime of the equipment. The cost-effectiveness analysis must include an estimate of the net levelized cost per ton of GHG emission reductions ($/ton CO2e) over the life of each proposed control method. The audit team must document in the audit report the discount rate, which is of no more than 8%, used for the cost-effectiveness analysis. The net levelized cost analysis should include, but is not necessarily limited to, the following costs and benefits:

I.C.1.a.(iv)(A) Engineering and design costs;

I.C.1.a.(iv)(B) Equipment costs, including installation;

I.C.1.a.(iv)(C) Available tax credits and/or incentive programs; and

I.C.1.a.(iv)(D) Changes in the annual costs resulting from the control technology/method including energy costs, operations and maintenance costs, and changes to productivity and/or product quality.

I.C.1.a.(v) Eliminate cost-prohibitive GHG reduction measures considered. GHG reduction measures with a cost-effectiveness of equal to or less than the social cost of GHGs cannot be eliminated as cost-prohibitive, except for a demonstrated, unreasonable burden on competitiveness as analyzed in Section I.C.1.a.(vi).

I.C.1.a.(vi) Consider the economic, energy, and environmental impacts arising from each option under consideration. In this case, economic reasonableness includes an analysis of the economic impact of the emission unit control option on the EITE stationary source's competitiveness within the marketplace. The audit team must document these determinations and associated analyses in the audit report.

I.C.1.a.(vii) Additional required documentation for all control technologies and strategies must include, but are not limited to, overall implementation cost, control efficiency, remaining useful life of the equipment, impacts to land use approvals, and a quantification of any co-benefits. The level of analysis conducted and documented shall consider the nature of the GHG BAECT measure and potential impacts of these additional criteria.

I.C.1.a.(viii) The GHG BAECT analysis may reference recently permitted GHG best available control technologies (BACT), operational or process limits in the EITE stationary source's air pollution permits or in the RACT/BACT/LAER Clearinghouse for similar operations as applicable.

I.C.1.b. The energy BMP analysis.

I.C.1.b.(i) Unless the EITE stationary source successfully demonstrates that it currently employs energy BMPs pursuant to Section I.C.1.b.(ii) or (iii) and provides the requisite supporting information pursuant to Sections I.C.1.b.(ii)(A) and (B) or I.C.1.b.(iii)(A) to I.C.1.b.(iii)(C), the audit team must analyze energy BMPs as follows:

I.C.1.b.(i)(A) Identify all available energy efficiency measures for the specific energy consumption sources included in the audit scope. Any energy efficiency measure considered to be a GHG BAECT option but not recommended as GHG BAECT must be included in the energy BMP analysis for that GHG emission unit, as applicable. This analysis can exclude any control technologies that redefine the stationary source.

I.C.1.b.(i)(B) Eliminate technically infeasible energy efficiency measures.

I.C.1.b.(i)(C) Rank remaining energy efficiency measures based on the reduction in energy use per ton of final product manufactured at the facility.

I.C.1.b.(i)(D) Perform a cost-effectiveness analysis on all energy efficiency measures considering the full lifetime of the measure. The cost-effectiveness analysis must include an estimate of the net levelized cost per energy consumption reduction over the life of the equipment. The audit team must document in the audit report the discount rate, which is of no more than 8%, used for the cost-effectiveness analysis. The net levelized cost analysis should include, but is not necessarily limited to, the following costs and benefits:

I.C.1.b.(i)(D)(1) Engineering and design costs;

I.C.1.b.(i)(D)(2) Equipment costs including installation;

I.C.1.b.(i)(D)(3) Available tax credits and/or incentive programs; and

I.C.1.b.(i)(D)(4) Changes in the following annual costs resulting from the control technology/method including energy costs, operations and maintenance costs, and changes to productivity and/or product quality.

I.C.1.b.(i)(E) Eliminate cost-prohibitive energy efficiency measures considered. Energy efficiency measures with a cost-effectiveness equal to or under the social cost of GHGs cannot be eliminated as cost-prohibitive, except for a demonstrated, unreasonable burden on competitiveness shown in Section I.C.1.b.(i)(F).

I.C.1.b.(i)(F) Consider the economic, energy, and environmental impacts arising from each measure remaining under consideration. In this case, economic reasonableness includes an analysis of the economic impact of the measure on the EITE stationary source's competitiveness within the marketplace. The audit team must document these determinations and associated analyses in the audit report.

I.C.1.b.(i)(G) Additional required documentation for all analyzed measures include, but are not limited to, cost-effectiveness, remaining useful life of the equipment, impacts to land use approvals and any co-benefits. The level of analysis conducted and documented shall consider the nature of the energy efficiency measure and potential impacts of these additional criteria.

I.C.1.b.(ii) In lieu of performing the energy BMP analysis, certification within 12 months of the audit date under the annual Federal Energy Star Program will be determined as employment of energy BMPs for the EITE stationary source. Annual Energy Star certification documentation for all years subsequent to the previous audit as well as the current certification must be included in the audit report and contain:

I.C.1.b.(ii)(A) Specific BMP energy efficiency measures the EITE stationary source used to achieve the Federal Energy Star Program certification; and

I.C.1.b.(ii)(B) The annual Energy Performance Indicator (EPI) benchmarking spreadsheet demonstrating a score of 75 or higher submitted with the Energy Star application.

I.C.1.b.(iii) In lieu of performing the energy BMP analysis, registration to ISO 50001 within 12 months of the audit date will be determined as employment of energy BMPs for the EITE stationary source. Management system documentation must be included in the audit report and contain:

I.C.1.b.(iii)(A) Specific BMP energy efficiency measures the EITE stationary source used to achieve the ISO 50001 Program certification;

I.C.1.b.(iii)(B) Information on the energy management system including the Manual, Objectives and Goals, Energy Policy and results of the most recent energy management system audit; and

I.C.1.b.(iii)(C) The valid registration certificate.

I.C.1.b.(iv) If an EITE stationary source fails to achieve the annual certification by the EPA Energy Star Program or registration to ISO 50001, the source must submit a compliance action plan to the Division within 90 days of the certification or registration expiration. The plan must include the EITE stationary source's plan and timeline to implement energy BMPs to either reacquire certification in the EPA Energy Star Program, reacquire ISO 50001 registration, or comply with the requirements in Section I.C.1.b.(i). The energy BMPs must be achieved within twelve months after the compliance action plan is approved by the Division.

I.C.1.c. The GHG BAECT and energy BMP recommendation.

I.C.1.c.(i) The GHG BAECT recommendation will include:

I.C.1.c.(i)(A) Recommendations on the most effective direct GHG emissions control technology and strategy, or suite of technologies and strategies, for the GHG emissions unit analyzed as GHG BAECT;

I.C.1.c.(i)(B) A list of emissions control measures with a levelized cost less than or equal to $0; and

I.C.1.c.(i)(C) Recommendations on GHG BAECT options that provide greater co-benefits to the surrounding communities where the top emission unit control technologies or strategies are comparable in terms of cost-effectiveness.

I.C.1.c.(i)(D) A calculation of the Non-GHG BAECT emissions. Non-GHG BAECT emissions are calculated by subtracting the reported emissions from units evaluated for GHG BAECT from the facility annual emissions at the time of the first audit. This shall be calculated as follows:

Non-GHG BAECT Emissions = Total direct emissions from the most recent year reported - (reported emissions from the units evaluated for GHG BAECT)

I.C.1.c.(ii) The energy BMP recommendation will include:

I.C.1.c.(ii)(A) Recommendations on the most effective energy efficiency measures for the energy consumption sources analyzed to be set as Energy BMPs.

I.C.1.c.(ii)(B) A list of energy efficiency measures with a levelized cost less than or equal to $0;

I.C.1.c.(ii)(C) Recommendations on Energy BMP options that provide greater co-benefits to the surrounding communities where the top emissions unit control technologies or strategies are comparable in terms of cost effectiveness.

I.C.1.d. A plain-language summary of the audit findings, determinations, and recommendations in the top two languages spoken by the community surrounding the EITE stationary source. This summary shall include the list of GHG BAECT options for the emission units analyzed, how they were ranked and why they are being recommended.

I.C.1.e. Confidential business information must be clearly identified and be submitted in a separate, supplementary document to the audit report.

5 CCR 1001-31-C-I

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