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Groups Begin Nutrient Trading Pilot Program in Ohio River

12.01.2011

On August 25, 2011, the Electric Power Research Institute (EPRI) announced that it and its partners had received a $1 million grant from the U.S. Department for Agriculture, along with a $400,000 matching grant from Duke Energy and American Electric Power, to begin a pilot nutrient trading program for the Ohio River.  The pilot trading program is part of an effort to eventually create a full-scale cap-and-trade system for nutrient pollution in the Ohio River watershed.

Nutrient pollution has been the subject of increased regulatory scrutiny in recent years. The National Pollutant Discharge Elimination System (NPDES) permits issued to point sources of nutrients often contain stringent limits that require major capital investment in additional treatment systems and result in significant new operation costs.  Meanwhile, nonpoint sources of runoff, such as farms, contribute significantly to nutrient loading but are not subject to NPDES permitting requirements.  Nutrient trading allows holders of NPDES permits to purchase credits from nonpoint sources of nutrient pollution.  These nonpoint sources can achieve nutrient reductions more effectively and at a fraction of the cost of point sources by implementing best management practices (BMPs) such as installing buffer zones and planting certain crops that reduce runoff.

EPRI’s pilot program in the Ohio River will initially involve trades between at least three NPDES permit holders and dozens of farms implementing BMPs on around 20,000 acres in Ohio River states.  The participating groups expect the initial trades to result in reductions of “up to 45,000 pounds of nitrogen and 15,000 pounds of phosphorous annually” according to a press release.

If successful, the pilot program could result in full-scale nutrient credit trading in the Ohio River by 2015.  Other states have attempted such programs in the past, but these efforts have stalled due to various concerns about the availability of trading credits and the ability to measure the effectiveness of BMPs.  The Ohio River pilot program is likely to be carefully monitored as a potential example for areas across the nation dealing with nutrient issues.


To view a complete PDF of the Third/Fourth Quarter 2011 issue of the Environmental Letter, click HERE.

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