Background
The Colorado Department of Public Health and Environment (CDPHE) Air Pollution Control Division (Division) has released Emission Reduction Credit and Nonattainment New Source Review (NANSR) Offsets Guidance for the Emission Reduction Credit (ERC) program that explaining how companies apply for and trade emission reduction credits. The Guidance expands on the ERC and offset requirements of Air Quality Control Commission (AQCC) Regulation No. 3, most recent version effective July 15, 2026. ERC program eligibility, certification process, and transfer of credit procedures are listed in Part A, Section V of Regulation No. 3.
While the ERC program itself is not new, the Guidance introduces many changes in the application process, credit availability, transfer processes, and application fees. The document outlines the ERC certification process and eligibility, establishes a public credit registry to streamline credit trading, and introduces substantial fee increases for ERC applications. The document also provides directions on the use of ERCs purchased as offsets for nonattainment New Source Review (NANSR). Colorado’s Denver Metro/Northern Front Range (DMNFR) is currently classified as “severe” nonattainment for the 2008 ozone standard and may be reclassified as “extreme” in the future. Therefore, the ERC trading program will become increasingly important for major sources in the DMNFR area.
What is the ERC Program?
Through the emission reduction credit program, companies can earn credits for verified emission reductions resulting from emission reduction actions such as permanently shutting down emission units or installing control devices. Once certification is received, companies can use the credits as emission offsets for future projects at that site or a nearby site. Alternatively, companies could choose to sell their emission credits to other facilities in the area. The program is designed to improve or maintain air quality while still providing opportunities for industrial growth.
While the ERC program is designed to encourage companies to continue economic expansion in the state, the emission credits are not a 1:1 offset, thereby requiring emissions to be reduced by an amount larger than the associated emissions increase. The emissions offset ratio currently in effect for the DMNFR nonattainment area is 1.3:1 due to the severe nonattainment classification. If the region is reclassified as extreme nonattainment, the offset ratio will be 1.5:1 in order to provide a pathway back to attainment. These emissions offset ratios are established by Colorado Regulation No. 3 and the U.S. EPA.
Highlights of the ERC Guidance
Key items addressed within the Guidance document include:
- Definitions of creditable reductions and basis for calculating baseline and reduction quantities;
- Steps for the application process and issuance of ERCs.
- ERC certification, use, and transfer applications are submitted through the Division’s online ERC application form.;
- Once the reduction has been made, the source must submit an ERC Reduction Occurrence Notification Form to certify that the reduction has been made.
- Establishment of a public facing credit registry to view all ERC credit owners and tons of credit certified to streamline the credit trading process;
- Guidance on the use of ERCs for offsets under NANSR;
- Guidance on transfer of ownership of ERCs; and
- ERC application and certification fees.
- APEN filing fees and hourly processing fees will be charged for all submitted applications. The ERC Certification application processing fee will only be charged if the ERC application is approved. Fees applicable to the ERC application are listed below. While hourly processing fees cannot be determined until the application is processed, filing and certification fees are fixed. Fees for the use of ERCs will be based on the applicable APEN filing fees, Permit Unit hourly processing fees, and ERC unit hourly processing fees associated with the applicable application.
- All ERC application fees are listed in the table below[1].
| Fee Description | Cost |
| APEN Filing Fee | $675 |
| Permit Unit Hourly Processing Fees | $410/hr |
| ERC Unit Hourly Processing Fees | $410/hr |
| ERC Certification Processing Fee for Approved ERC Application | $4,920 per emission point |
As with the original program, the amount of ERC credits will be based on baseline actual emissions from a facility which is required to take on new permit limits with the emission reduction. ERC certification is a multistep process. The Division first reviews the application and any corresponding permit action needed to make the reduction federally enforceable. After the reduction has occurred, the source submits the reduction notification form, and the Division verifies the reduction. If the applicable requirements are satisfied, the Division completes its final review and issues the ERC certificate.
Next Steps
The CDPHE is actively taking ERC credit and NANSR offset applications. ERC reduction and use forms are available on the division website.
Conclusion
The Emission Reduction Credit and NANSR Offset Guidance was published on May 15, 2026. An update was published on July 15, 2026 to revise processing fees in accordance with the July 15, 2026 revisions to Regulation No. 3. The Guidance is available on the CDPHE ERC website.
Trinity is prepared to help your company receive and trade ERC certifications and credits. If you would like to discuss the draft guidance and how the ERC program will impact your company’s plans for growth and operation in Colorado, please email Ashley Jones in Trinity’s Denver office or call 720.638.7647.
[1] Applicable fees are current as of July 15, 2026. Fees are subject to change.
