Emission Banking and Trading

The Delaware Emission Banking and Trading Program is a voluntary, market-based system that allows companies to earn credits for reducing their air pollution emissions. Companies can then sell these credits to other companies that need them to offset their own emissions.

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The goal of the program is to reduce overall air pollution emissions while still allowing for economic growth.

Reducing Ozone in Delaware

Ground-level ozone, one of the principal components of smog, is an air pollutant that harms human health and the environment. New Castle County, in Delaware, has been designated as a nonattainment area for ozone under the National Ambient Air Quality Standards.

The federal Clean Air Act requires new emission sources in nonattainment areas to offset emissions of volatile organic compounds and nitrogen oxides, which are ozone precursors. The Act allows for the use of market-based approaches, including emission trading, to meet that goal.

Emissions trading programs have two key components:

  • A limit on the total amount of a pollutant that can be emitted
  • Tradable allowances equal to the limit that authorize emission of a specific quantity of the pollutant

Delaware’s program is managed under the Emission Banking and Trading Program regulation (7 DE Admin. Code 1134).

Emission Reduction Credits

An emission reduction credit (ERC) is a credit earned by a company when it reduces its air emissions. ERCs — discrete quantities of actual emissions expressed in tons of pollutant reduced — represent reductions in emissions in one place that can be used to compensate for (or offset) emission increases which occur in a non-attainment area.

These reductions can be generated through the shutdown of individual pieces of equipment or of entire facilities. The credits can then be sold by the companies that hold them, to offset new emissions sources.

Emission Reduction Credit Audits

Delaware’s regulations require the Division of Air Quality to conduct periodic audits of the emission banking and trading program, to ensure that the goals of the program are being met.

2021 Emission Banking and Trading Program Emission Reduction Credit Audit (Aug. 2022)