Company-Specific Emission Reduction Plan (cERP), What’s Next?

Introduction

In January 2021 Colorado’s Department of Public Health and Environment (CDPHE) published a Greenhouse Gas (GHG) Pollution Reduction Roadmap meant to greatly reduce statewide GHG emissions. The roadmap was published in response to House Bill 19-1261, the Climate Action Plan to Reduce Pollution, which established GHG emissions reduction targets of 25% by 2025, 50% by 2030, and 90% by 2050 from 2005 levels. It establishes action items to be carried out in the near-term to make progress towards the 2025 and 2030 goals. Specifically, it indicates that significant emissions reductions from the oil and gas industry will be required. Additionally, in October 2020, the Air Quality Control Commission (AQCC) established a target of a 36% reduction from the 2005 baseline emissions by 2025 and a 60% reduction by 2030. These goals were mandated by law when they were included in House Bill 21-1266.

What Does This Mean For Me ?

Colorado has lived up to its word of their Pollution Reduction Roadmap and has published several related regulations. One of the prominent regulations being codified as a part of the Roadmap is the “Reduction of Emissions from Oil and Natural Gas Midstream Segment Fuel Combustion Equipment” which is codified in  CDPHE Air Quality Control Commission Regulation No. 7, Part B, Section VII. This regulation created a Midstream Steering Committee and requires midstream owners and operators to develop and submit a company-specific emissions reduction plan (cERP) to then be used by CDPHE to create a data-based regulatory midstream segment emissions reduction plan (ERP). The cERPs were to be submitted to the Colorado Midstream Steering Committee by September 30, 2023.  DHPE has released a guidance document entitled “Guidance Document for Company Emission Reduction Plans to be developed by Colorado Midstream Segment Owners or Operators” which outlined the cERP requirements including the following main items:

• Emissions calculation and inventory of GHG pollutants (CO₂, CH₄, N₂O, and CO₂ equivalent);
• Emissions calculation for a nonbinding emissions target;
• Identify and evaluate impact on disproportionately impacted communities;
• Identify and evaluate options to achieve GHG emissions reductions;
• Estimate NO_X and VOC impacts for each emissions reduction option;
• Estimate the cost of each emission reduction option; and
• Create a non binding list of potential emissions reduction options.

While the initial due date of the cERP submittal has passed, the action of CDPHE has not, CDPHE will do the following in the creation a midstream segment ERP:

• By March 31, 2024, the Midstream Steering Committee will develop a midstream segment ERP, and provide the proposed midstream segment ERP to the Division for review
• The midstream segment ERP will do the following:
  • Identify the total tons of CO₂e emissions reduction from midstream segment fuel combustion equipment by the ERP and for each individual owner and operator;
  • Identify specific facilities and equipment affected by the ERP;
  • Prescribe the timing and process for emissions reductions (including, but not limited to, electrification, retrofit, shut-down, or replacement);
  • Identify the environmental justice impacts to disproportionately impacted communities;
  • Prescribe an emissions reduction plan for equipment modified, constructed, or relocated to Colorado on or after September 30, 2023;
  • Prescribe record keeping and reporting requirements;
  • Report the total estimated cost to midstream segment owners and operators to achieve the CO₂e reductions;
• The Midstream Steering Committee is required to submit a regulatory proposal by August 31, 2024, with final rulemaking by December 31, 2024.

Does This Affect Me?

This regulation is applicable to midstream segment owners or operators, and midstream fuel combustion equipment. Midstream segments are defined as “the oil and natural gas compression segment and the natural gas processing segment that are physically located in Colorado and that are upstream of the natural gas transmission and storage segment” Meaning facilities which store, transport, and wholesale sell petroleum in Colorado are subject to this regulation and will be affected by the final ruling on December 31, 2024.

What Can I Do?

With the completion data of the ERP approaching, you should be keeping an eye on any CDPHE correspondence or ALL4 articles regarding the details of the final plan. ALL4 is always ready to assist, so if you have questions about Colorado’s ERP or compliance strategies do not hesitate to reach out to Evan Mia at emia@all4inc.com or 610-422-1162.