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:
-
webinar
– to be scheduled either Thursday, August 5, 2010 or Friday, August 6, 2010.
- meeting in person with PENNVEST, DEP and Chicago Climate Exchange (CCX) staff – on Wednesday, August 18, 2010
- a debriefing session for mock auction participants on Wednesday, September 15, 2010
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
Upcoming
Trading Workshops
-
January 25, 2010, Ramada Inn and Convention Center, 1450 S. Atherton Street,
State College PA. 9am
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
The following was noticed in the May 30, 2009 PA Bulletin:
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
Revision
to this site were made on 6/2/2009
Background
What
is Nutrient Trading?
-
Nutrient
and sediment trading is an approach to improve water quality using market
mechanisms to produce nutrient reductions at lower costs.
-
It
is a voluntary program for point or nonpoint sources that exceed their environmental
obligations to generate credits that may be traded to others who are seeking
nutrient reduction credits.
-
Market
mechanisms can provide for an efficient and effective means of solving environmental
challenges.
-
The
Department recognizes the many benefits of this approach, including flexibility
for the regulated community in meeting legal requirements, especially
when done on a watershed basis.
General
Trading Principles:
-
Must
involve comparable credits
(e.g.
nitrogen must be traded for nitrogen);
-
Must
be expressed
as mass per unit time
(e.g. pounds per year);Can occur only
between eligible parties;
-
Credits
generated
by
trading cannot
be used to comply with existing
technology-based
effluent limits except
as expressly authorized
by
federal regulations
-
May
only occur in a Department defined watershed. This can be on any number
of different scales, from a stream segment (e.g., in a TMDL) to the
entire river basin watershed;
-
Is
not allowed between sources outside of watershed boundaries;
-
May
take place between any combinations of eligible point sources,
non-point sources and third parties; and
- Each
trading entity must meet applicable eligibility criteria established by the
Department for this voluntary program.
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Policy,
Appendix and Other Attachments
Following
a year of extensive stakeholder meetings and public input, the Department of
Environmental Protection published the final version of its Trading of Nutrient
and Sediment Reduction Credits - Policy and Guidelines, Appendix A and three
attachments. These documents were noticed as final in the Pennsylvania Bulletin
on December 30, 2006.
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
Pennsylvania's
Chesapeake Bay Watershed
Currently,
trading can only occur in the Susquehanna and Potomac River Watersheds
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Credits and NPDES Permits
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.
Flow
Chart - PDF
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Step
1: Certification
Guidelines
for Proposals to Establish Reduction Credits:
Proposals need to meet the following minimum criteria in order
to be considered for approval:
-
Be
consistent with the legal obligations that support the Department's Trading
Policy, and appropriate appendices (e.g. Appendix A- Chesapeake Bay).
-
Include documentation that demonstrates that
credit-generating projects meet applicable baseline and trading thresholds.
Examples of information include text that explains how baseline and thresholds
are being met, and calculations to show nutrient reductions.
-
Meet applicable legal requirements and trading
thresholds, and acceptable standards for construction and performance,
throughout the credit generating cycle.
-
Use load reduction/credit generation calculations
and measurements that are scientifically recognized.
-
Contain an acceptable and credible process for
calculating credits with the applicable trading ratios (e.g. delivery
and reserve) applied.
-
Have appropriate notations in the proposal where
the submitting entity claims information and documents submitted in the
proposal is confidential business information, or protected trade secrets.
-
Contain details on the timing of credits (e.g.,
timing of delivery, phase-in period, timeframe for use in permits).
-
Include methods for documenting implementation
and maintenance of projects, and credit generation.
-
Include methods for credit verification, such
as documentation of implementation of nutrient and sediment reduction
methods, sufficient to allow the Department to verify that the nutrient
and sediment reduction efforts approved were properly implemented. This
is also referred to as a verification plan.
-
Include a plan to manage any elevated risks of
BMPs failure, such as where a single BMP is used in a concentrated geographic
area. Plans could include insurance products, and reducing concentration
of projects in a particular sub-watershed.
-
Include watershed specific "designated uses"
(e.g., warm water fishery, High Quality Water, Exceptional Value Water)
and specify impairment listings.
-
Include or acknowledge if a funding source, that
was used to pay for the reduction activity, has any restrictions or limits,
for credit sale or income.
-
Include background on the submitting entity,
research information and pictures, any calculations of nutrient reductions,
project participants, etc.
-
Include contact information of the submitting
entity.
Additional Clarification for Proposals:
The following points are added as clarification
points that will need to be addressed when submitting a proposal.
-
To
achieve certification, a proposal shall include the guidelines mentioned
above, as well as a completed checklist of the documents that must be submitted.
This checklist will include items like baseline and threshold compliance,
calculation information as well as a detailed verification plan.
- The
verification plan shall include a summary narrative of the project and sufficient
supporting documentation. Specific documentation will differ depending on
the project, but may generally include engineering plans (if appropriate),
photographic documentation of the installed BMP or receipts confirming BMP
activities, such as documentation showing the results of a truck that was
weighed to haul manure.
- Engineered
projects should include "as built" certification from the design
engineer.
- In the
proposal submission a maintenance plan will be required for certain BMPs,
such as riparian buffers to assure adequate and continued effectiveness.
- A Point
Source will need to submit the DMR information used to calculate the current
load.
- A Point
Source would also need to clarify in the submission, if they are looking to
generate credits for the compliance year or for the truing period. If it is
for the compliance year then the DMR information needs to reflect the past
compliance year information. If it is for the truing period then the DMR information
needs to be for that current compliance year.
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.
Baseline
Checklist - PDF
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.
Step
2: Verification
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.
Step
3: Registration
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.
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Calculation
Information
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
Phosphorous
Calculation Spreadsheet
Best
Management Practice Information:
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.
EOS
Percent Load Table
Delivery
Ratio:
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.
Delivery
Ratio Map- PDF
Tradable
Load:
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
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Registry of Approved Proposals
and Contracts/Trades
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 |
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To Top
NutrientNet
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.
http://pa.nutrientnet.org/
Project Comparison
Examples
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.
Cost
Effectiveness Analysis Example - PDF
Sample Contract
The
sample contract is being revised to incorporate changes recommended by a stakeholder
group. This revised contract should be posted soon. In addition, DEP plans to
issue Guidance, with input from that stakeholder group, describing basic contract
elements and providing several sample contracts, to provide maximum flexibility
to the trading parties.
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.
Fact Sheet
To
assist with outreach, the Department revised the existing fact sheet to match
up with the final policy which can be viewed below.
Nutrient
Trading Fact Sheet
Presentations
During the week of July 16, 2007,
Deputy Secretary Myers held three roundtable discussions (SC, NE and NC) with
treatment facility operators, municipal officials and consultants on how trading
could be used as an option for compliance. Please find below a copy of the
powerpoint presentation that was used for the sessions.
July
Outreach Presentation
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Workgroup Information
The trading
workgroup will be meeting again in June 2008..
Posted
below are status reports from the various workgroup meetings.
Status
6-18-07
Status 2-1-06
Status 3-2-06
Status 4-10-06
Status 5-22-06
Status 7-17-06
Status 10-31-06
Trading Workgroup Meeting Dates
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Conservation District Involvement
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.
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Questions
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.
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The
information outlined on this website is intended to supplement existing requirements.
Nothing on this site shall affect regulatory requirements. The information herein
is not an adjudication or a regulation. There is no intent on the part of the
Department to give the information on this website that weight or deference.
This information establishes the framework, within which the Department will
exercise its administrative discretion in the future. The Department reserves
the discretion to deviate from this statement if circumstances warrant.