PA Nutrient Trading
Nutrient Credit Clearinghouse Rulebook and Mock Auction
On July 22, 2010 the Pennsylvania Infrastructure Investment Authority (PENNVEST), in cooperation with the Pennsylvania Department of Environmental Protection (DEP), announced its inaugural step in the creation of a Nutrient Credit Clearinghouse within the Chesapeake Bay watershed in Pennsylvania. These documents will provide additional information on the announcement, the Rulebook for the Clearinghouse as well as information pertaining to the mock auction.
In order to address questions and gather comments regarding the posted material and the auction process, the following meetings have been scheduled:
The exact time for each meeting, information on accessing the webinar, and the location of the meetings, will be posted shortly.
Nutrient Trading Webinar planned for April 16, 2010 beginning at 9:30am
Proposed Rulemaking:
Upcoming Trading Workshops
These workshops are made possible through the partnership of PA Department of Environmental Protection, PA Department of Agriculture, PA Infrastructure Investment Authority (PENNVEST), PA Farm Bureau, PA Builders Association, PA Municipal Authorities Association, Chesapeake Bay Foundation, PennAg Industries Association, PA Association of Conservation Districts and Penn State Extension.
Workshop Presentations
and Handouts:
Workshop
Agenda
Nutrient
Trading Program and Banking and Exchange Presentation
PA
Farm Bureau Presentation
Municipal
Authority Presentation
Lycoming
County Nutrient Trading Project Presentation
Nutrient
Trading Overview
Nutrient
Trading Program- Credit Generation Berks County
Nutrient
Trading Program- Credit Generation Lancaster County
Nutrient
Trading Program- Credit Generation Dauphin County
Information and Survey Concerning PENNVEST's Role in PA's Nutrient Credit Market
The Pennsylvania Infrastructure Investment Authority (PENNVEST) will be “clearing” trades in Pennsylvania’s Nutrient Trading Program to facilitate the execution of transactions by market participants. Specifically, PENNVEST will enter into contracts with nutrient credit sellers to buy credits that they will subsequently sell to regulated point sources. The documents below seek to: introduce and explain the role PENNVEST will serve in Pennsylvania’s Nutrient Trading Program; and, the questionnaire is to gauge the interest of market participants in using PENNVEST’s services, and elicit feedback from market participants so that PENNVEST’s services can be customized to accommodate stakeholder needs.
Individual responses from this questionnaire will be reviewed by staff from the Chicago Climate Exchange (CCX), PENNVEST, and Pennsylvania’s Department of Environmental Protection (DEP) for informational objectives only. Responses to the questionnaire are voluntary and will be treated as confidential and non-binding. Individual responses will not be disseminated. If you wish to complete a questionnaire please send it via email (johara@theccx.com) or fax (312-554-3373) to Jeffrey O’Hara by January 29, 2010.
Information
Buy Side Questionnaire
Sell Side Questionnaire
Credit trading is a market-based program that provides
incentives for entities to earn nutrient reduction credits by going beyond
legal obligations to remove nutrients from a watershed. The credits can be
traded to help others more cost-effectively meet their nutrient reduction
obligations or goals. The primary purpose of the Trading Program is to provide
for more efficient ways for National Pollutant Discharge Elimination System
(NPDES) permittees to meet their effluent limits for nutrients and sediment.
Currently, the focus of the program is on the Chesapeake Bay Watershed.
The Department has determined that the Farmland Preservation component of
the current policy as it relates to the acceptance of land conversion proposals
should be revised. This proposed revision is based on the Department’s review
of the scientific basis for granting land conversion credits and the potential
conflicts the current policy may have with other Commonwealth policies and
directives, including the Governor’s Executive Order on Farmland Preservation.
The guidance is now changed to clarify that land conversion proposals that
seek to generate nutrient reduction credits from the conversion of agricultural
land to another development type (i.e. commercial, residential etc) will no
longer be accepted for review.
The Department is seeking comments on the Farmland Preservation revision of draft technical guidance 392-0900-001. Interested persons may submit written comments on this substantive change to the draft technical guidance document by June 29, 2009. Comments submitted facsimile will not be accepted. The Department will accept comments submitted by e-mail. A return name and address must be included in each e-mail transmission. Written comments should be submitted to Ann Smith, Water Planning Office, P. O. Box 2063, Harrisburg, PA 17105-2063, (717) 787-4726, annsmith@state.pa.us.
The draft technical guidance has been posted to the eLibrary in Technical Guidance Draft Documents/392-0900-001. The specific link is: http://www.dep.state.pa.us/TechnicalGuidance/Draft_technical_guidance.asp
General
Trading Principles:
Documents
being posted as final include the following:
Trading of Nutrient and Sediment Reduction
Credits - Policy and Guidelines - This policy was
finalized in December 2006 however the Department is currently seeking comments
on a substantive change regarding Farmland Preservation. Once the policy is
noticed as final the document will be available again on this website.
Appendix
A- Nutrient Criteria Specific for the Chesapeake Bay Watershed
Attachment
1: Point Source Allocation Strategy
Attachment
2: Overview of Wastewater Planning Program Procedures
Attachment
3: Overview of the Agriculture Sector's participation in Nutrient Trading

Before credits can be applied to effluent limits in an NPDEs permit, they must be certified, verified, and registered by the Department. The permit will specify this requirement and the terms will be defined within the permit to provide additional clarity.The flow chart below will outline the three steps of the process as it relates to the certification, verification and registration of credits. Additional details on the three steps are included in the proposal information section.
Additional Clarification for Proposals:
The following points are added as clarification
points that will need to be addressed when submitting a proposal.
Proposal
Checklist:
Baseline Checklist
This checklist is being added as a tool to help with proposal submission. It
will discuss compliance issues and will provide observation examples. This checklist
was developed by the Agricultural Workgroup that met throughout 2006.
Proposal Review Process:
Proposals will be reviewed by a panel of Department and selected experts, as identified by the Department, for technical acceptability, and consistency with program, policy and legal requirements.
Proposal
Approval:
Following proposal review, the Department will respond in writing with its determination. When the Department is satisfied that the nutrient and sediment reductions supplied in the proposal meet the requirements described in the policy, it will issue an approval letter, certifying credits that would be generated from the activity described in the proposal. The letter provides approval of the methodology used to calculate, and thereby certifies, the nutrient reductions from the activities proposed by the submitting entity. It does not guarantee that nutrient reductions have actually occurred, or that the credits may be used in a particular trade or permit, unless stated otherwise. The letter may include conditions, which must be met before registration of credits.
Once credits are sold and they are to be applied to effluent limits in an NPDES permit, the credit generator (or other entity chosen) will need to submit the verification documents confirming that the credit-generating projects have actually been implemented and maintained and that the corresponding reductions have been achieved. Verification documents will need to be submitted for each year that those credits are to apply towards permit compliance.
The Department will review the submitted information to ensure it matches what was certified and that the reductions have occurred. The Department also reserves the right to conduct onsite inspections or review other records of the credit generator in order to confirm verification.
Upon verification the credits will be registered and a registration number will be provided to both the credit purchaser and the credit generator. This registration number will then be reported on an NPDES permit discharge monitoring report. This will occur for each year that the credits are applied towards permit compliance.
Calculation Spreadsheet:
The calculation spreadsheets, have been developed by World Resources Institute (WRI), Pa Environmental Council (PEC) and DEP along with input from the Agricultural workgroup and others, and were developed as a tool that can be used to help with the calculation of credits that could be generated through the implementation of BMPs.
Note: these spreadsheets may be updated and corrected as needed, so please check this website or contact DEP to ensure you are using the most up-to-date version. In addition, at this time, these spreadsheets should not be used to calculate reductions generated from the carbon sequestration BMP and the water control structure BMP.
Should you have questions related to the spreadsheets or how to calculate reductions from a practice that is currently not included, please contact the Water Planning Office.
Nitrogen
Calculation Spreadsheet
The
following BMP Descriptions document provides a listing, description and efficiencies
for Agriculture, Urban and Mixed Open BMPs that have been or are pending approval
for use in the Chesapeake Bay Program Watershed Model.
BMP
Descriptions
Edge of Segment Ratio:
The Edge of Segment (EOS) Ratio is a factor that is unique to each watershed model segment that has been determined by the Chesapeake Bay Watershed Model in order to estimate the EOS load for individual non-point sources within a watershed segment. To identify the appropriate EOS for a project, please review the EOS Percent Load Table. Please note that the segment numbers used in the table refer to the same segment numbers that are used in the delivery ratio map.
The Delivery Ratio is a factor that compensates for the natural attenuation or loss of nutrients and sediments as they travel in water. In order to apply the appropriate delivery ratio to the calculation of credits please refer to the Delivery Ratio Map.
As stated in Appendix A, to ensure that the Trading Program is not trading away reductions that are needed to meet the Pennsylvania Tributary Strategy goals for non-point source reductions, the Department has established maximum tradable loads for each watershed segment. The following document outlines how this tradable load was derived.
PA's Tradable Load Description -PDF
Swine Manure Information:
The report entitled “Manure Production, Analysis, and Estimates of Nutrient Excretion in Swine” compiled by Mr. Ken Kephart was recently approved by the State Conservation Commission (SCC) Board. This report includes data that will be put into an easy to read new hog manure chart that will be used by the Nutrient Management Program. Should an entity be looking to submit a proposal related to Swine manure, the appropriate values contained in this report are utilized in calculations or other proposal documents.
Manure
Production, Analysis, and Estimates of Nutrient Excretion in Swine Report-
PDF
Approved Proposals:
To review the proposals that have been certified or review the available tradable load please refer to the excel document entitled “Proposal Registry and Tradable Load Tracking”. This document will be updated as proposals are certified.
Proposal Registry and Tradable Load Tracking - XLS
Contracts/Trade:
| Buyer |
Seller |
Region |
Date
of Agreement (signature date) |
Length
of Agreement |
N
Credits* |
Price |
P
Credits* |
Price |
| Mount Joy Borough Authority | Brubaker Farms | SC | 26-Feb-07 | 3 years | 11,718 |
$3.81
|
||
| Dunn Lake | Red Barn Trading Company | NE | 17-Oct-06 | 5 years | 223 |
$9
|
3 |
$4
|
| Hamm Equities LLC | Red Barn Trading Company | SC | 2-Feb-07 | 5 years | 1592 |
$9
|
73 |
$4
|
| Fairview Township, York County | Red Barn Trading Company | SC | 10-Apr-08 | 15 years | 20,000 |
Starts
@ $5/N in 2010 and escalates up to the highest amount of $7.56/N in
year 2024 |
||
| Quail Creek Homeowner's Association | Chesapeake Nutrient Management, LLC | SC | 14-Jul-08 | 20 years | 538 |
|
40 |
|
| Airy View Heights | Red Barn Trading Company | SC | 20-Feb-09 | 5 years | 635 |
$10 |
48 |
$5 |
Camp
Iroqoina |
Red
Barn Trading Company |
NE |
17-Mar-09 |
5
years |
8 |
$15 |
11 |
$10 |
| Tamarack Mobile Home Park | Chesapeake
Nutrient Management, LLC |
SC |
April
28, 2008 |
20
years |
21.5 |
$4.50 |
* Credits are listed as the quantity purchased each year over the length of the contract.
Verified and Registered Credits:
|
Buyer |
Seller |
Credits
Registered |
Credit
Generating Activity |
Compliance
Year |
| Tamarack
Mobile Home Park |
Chesapeake
Nutrient Management |
22
Phosphorous |
Poultry
manure export |
October 2008 - September 2009 |
With the support of the PA DEP Growing Greener grant program, the World Resources Institute (WRI) in partnership with the Pa Environmental Council (PEC) has developed an on-line nutrient trading platform, NutrientNet, for the Potomac and Susquehanna Watersheds in Pennsylvania to support the PA nutrient trading program. NutrientNet is an online tool comprised of estimation tools, which estimate the amount of credits needed or generated by a particular practice, and a marketplace, where users can buy or sell credits.
Note: If you are having trouble accessing NutrientNet, via the link provided, please copy the link and place it in address bar of your browser.
Applications for PENNVEST funding for wastewater projects that will take place in the Chesapeake Bay Watershed must include nutrient trading as part of the cost effectiveness analysis. As supplement to the "Handbook for PENNVEST Wastewater Projects "(Document Number 381-5511-113), this document provides additional nutrient trading examples that can be used in the cost-effectiveness analysis.
If you wish to enter into a trade for reduction credits prior to the sample contract and related guidance being posted, that contract can be submitted to the Department for comment.
To assist with outreach, the Department revised the existing fact sheet to match up with the final policy which can be viewed below.
The trading workgroup will be meeting again in June 2008..
Posted below are status reports from the various workgroup meetings.
Trading Workgroup Meeting Dates
Dauphin, Chester, Bedford, Berks, Cumberland, Lebanon, Mifflin, Potter, Somerset and Union County Conservation Districts received grants to implement of credit generating BMPs that can be sold and used towards permit compliance.
Many of the grants have been completed and the districts invested in projects such as: numerous acres of cover crops and no-till, the installation of riparian forest buffers, stream bank fencing, mortality composters, animal waste structures, and poultry manure export to mine land reclamation to grow hybrid poplars. Many of the projects completed are still under review, so there is not a cumulative total of generated credits, but a final report of the projects installed and the credits generated will be produced and posted when completed.
Pennsylvania
Association of Conservation Districts, Inc. (PACD) received a grant to support
those conservation districts that have received grants to implement nutrient
trading program activities. As part of their grant activities, PACD will act
as an aggregator of credits for Berks, Union, Mifflin and Somerset.
Questions regarding the Trading Program or any of the information posted on this site should be directed to Ann Roda, DEP’s Water Planning Office, 717-772-4785, annsmith@state.pa.us.