Forest carbon boost in California ETS offset rules
Carbon News and Info > Climate change news > Carbon finance, emissions trading & offsets
Tuesday, 2 November 2010
[This story updates an earlier version Monday 1 Nov]
The forest carbon sector in the US has received a boost with the release of draft rules for the Californian cap and trade scheme. The rules released by the state’s Air Resources Board (ARB) for consultation include a doubling of the limit originally proposed for the use of offsets in the scheme, from 4 per cent of an emitter’s obligation to 8 per cent, and early-action recognition of voluntary-market credits back to 2005.
To help lower the cost of compliance to the scheme, Californian emitters can buy offset credits generated across the United States from projects to reduce emissions in four areas initially. The four are forestry, urban forestry, livestock manure treatment and the reduction of ozone-depleting substances.
The increased offsets limit means a total of 232 million offset credits will be allowed over the period 2012 to 2020.
Offset protocols in other reduction activities will be considered for inclusion as soon as next year. Offset projects from Canada and Mexico may also be eligible in future. As well as project-based offsetting, the ARB will also pursue larger, sector-wide offsetting programs over time, including avoided deforestation, or REDD, in tropical developing countries such as Brazil and Indonesia.
The rules of the forestry offset protocol would make carbon credits from afforestation & reforestation, improved forest management and avoided conversion activity - to the Climate Action Reserve (CAR) standard - eligible for compliance in the California trading scheme. The relevant version of the protocol is CAR’s Forest Protocol, version 3.2, which updates the voluntary market standard for use in the state regulatory compliance scheme.
In detail, ARB’s Forest Offset Protocol allows the following activity:
Reforestation; planting trees on land that has been out of forest cover for at least 10 years or has been subject to a recent significant disturbance. Sustainable harvesting is allowed, if certified.
Improved Forest Management (IFM); undertaking management activities to maintain and increase carbon stocks on forested lands. Must use a mix of native species.
Avoided Conversion; preventing the conversion of high-risk forestland to a non-forest land use by dedicating the land to continuous forest cover through a conservation easement or transfer to public ownership.
Reforestation and IFM projects on private, tribal and non-federal public lands are eligible, and only private land for avoided conversion.
Permanence of emissions reductions must be ensured for 100 years from the date of the last credit issuance in a project, via third party verification every six years over that time. A buffer reserve account must be held with ARB to cover any losses. The proportion to held in reserve will vary from project to project depending on an individual risk rating assessment.
Early action
The cap and trade scheme is set to begin in 2012 but provision for early-action recognition in the draft rules would see offset credits from voluntary-market projects already underway to earlier versions of the CAR standard in the four approved areas become eligible. Specifically, credits from projects conducted between 1 January 2005 and the end of 2014, but commencing before 2012, will be eligible. The early action recognition of voluntary credits is designed to help jump-start offsets supply to the compliance market, ARB says.
California’s cap-and-trade scheme is emerging as a critical market for forest-based offset credits, said MaryKate Hanlon, senior analyst at forestry investment manager New Forests. “The latest draft regulation takes important steps to clarify how forests can play a role in generating early action and regular offsets as well as in sector-based offset programs.”
“Increasing flexibility for covered entities to meet emission-reduction liabilities is likely to improve market performance and environmental outcomes,” Hanlon said. “A clear signal of forthcoming regulations means more projects on the ground, and specifically, commitments to long-term land management strategies for forest owners.”
Final approval of rules is expected in a vote by the Air Resources Board on December 16.
Download:
Compliance Offset Protocol for US Forest Projects [3.3 MB]
Saturday, November 13, 2010
Indonesia- haze
“HAZE” is a weasel word for the eye-stinging, throat-rasping smog that periodically engulfs parts of South-East Asia. The resort to euphemism points to why the pollution, which smothered much of the region in 1997, has been a nearly annual torment since the early 1990s: a reluctance to get tough with the country responsible, Indonesia, whose forest fires cause the scourge. Unlike the earthquake, tsunami and volcanic eruption that ravaged Indonesia this week, the fires are man-made.
The haze has returned this year. Air-pollution indices in Singapore and the south of the Malaysian peninsula had reached their highest levels since 2006 until rainfall on October 23rd brought relief. In parts of Sumatra, the neighbouring Indonesian island spewing out the smog, it had been getting hard to breathe.
This was trivial compared with 1997, when huge tracts of Borneo as well as Sumatra smouldered and the haze covered an area more than 3,000km (1,900 miles) wide. It affected six countries and perhaps 70m people and closed airports. That year was one of El Niño conditions and extended drought. Fires set to clear land for plantations spread into forests. Apparently extinguished, many smouldered in underground peat, then inflamed again.
This year much more limited fires have raged, mainly in Riau, a province in central Sumatra of 6m people and about 90,000 sq km—roughly the size of Portugal. But some schools in Malaysia had to shut. In Singapore, where the air quality helps attract expatriates fleeing pollution in Hong Kong, the environment agency advised people with heart and respiratory conditions to avoid outdoor activities.
The timing of the haze’s reappearance was cruel for the Association of South-East Asian Nations (ASEAN), a ten-member regional block whose impotence the smog mocks. The group’s environment ministers had just met to discuss their 2002 agreement on “Transboundary Haze Pollution” and note that their efforts had helped reduce haze. The galling truth is that Indonesia—the prime source of the problem—has not ratified the agreement. A club that works by consensus and abhors sanctions has only moral suasion. And Indonesia is the regional giant.
It would be wrong, however, to think that regional diplomacy is as pusillanimous and Indonesian environmental hooliganism as unchecked as in 1997. ASEAN does, albeit ineffectually, now set some standards of behaviour for its members, as opposed to tiptoeing fastidiously away from their “internal affairs”. And, unlike in 1997, Indonesia has been quick to acknowledge its responsibility for this year’s smog, and to ask for help.
Using fire to clear land has been illegal in Indonesia since 1995. But everywhere corruption and inefficiency undermine implementation of the law. And fire remains for many smallholders and big plantations the cheapest, quickest way of clearing logged land of rejected or overlooked trees and the undergrowth, thereby making it available for other uses—often, these days, to serve the booming palm-oil industry. In Riau, even beside main roads there are bleak, blackened landscapes, shrouded in white smoke, where the peat soil still smoulders under charred tree-stumps. Between them, infant oil palms are already growing.
The haze is an acute and chronic symptom of a disease even more serious for Indonesia and the world: Indonesia’s deforestation. In 1982 more than three-quarters of Riau was forested. Only about a quarter is now. But here too there are signs of hope. Stung by the criticism Indonesia receives as one of the world’s biggest emitters of carbon—a consequence of its destruction of so much carbon-rich forest and peatland—its government is cleaning up its act. It plans to cut carbon emissions by 41% by 2020, so long as it receives the compensation from an inchoate scheme, known as REDD (Reduced Emissions from Deforestation and Degradation), whereby rich countries pay poorer ones to conserve trees.
As a signal of good intent, Indonesia’s president, Susilo Bambang Yudhoyono, in May announced a two-year moratorium in 2011-12 on commercial deforestation. The reward was a promise of $1 billion in REDD funds from Norway. Many greens are cheering this. Joko Arif of Greenpeace calls it “a really good step”. But he laments that it does not cover existing logging concessions, so felling will continue. He also cautions that much must be done to make the moratorium work—starting with a proper mapping of forests. Otherwise, enforcing the ban will be arbitrary.
Norway’s environment minister, Erik Solheim, was in Jakarta this week to thrash out some thorny disputes, such as one over who will monitor the Norwegian money—an international institution or an Indonesian one? This was not resolved, though the United Nations Development Programme is to be the conduit for an initial $30m for a “preparation phase”.
The colour REDD
That dispute is based on doubts about Indonesia that colour both regional anger over the haze and worries about whether REDD is feasible there. Cynics see the country as irredeemably corrupt. It will continue, they say, to light bonfires that shorten its neighbours’ lives, having its cake of REDD money, even as its chainsaws eat the rainforest. But there is a more optimistic interpretation: it is beginning to assume a role of regional leadership and enjoys its seat on the G20. It badly wants the respectability that comes with a reputation for environmental responsibility.
Moreover, there are two reasons for taking the moratorium seriously. Indonesia’s palm-oil, pulp-and-paper and coal-mining industries are trying furiously to scupper it. And one theory as to why so many fires have been set this year is that those lighting them fear they may not be able to clear land as easily once the moratorium is in force. If you try hard, you can see light through the haze. Just don’t breathe too deeply
The haze has returned this year. Air-pollution indices in Singapore and the south of the Malaysian peninsula had reached their highest levels since 2006 until rainfall on October 23rd brought relief. In parts of Sumatra, the neighbouring Indonesian island spewing out the smog, it had been getting hard to breathe.
This was trivial compared with 1997, when huge tracts of Borneo as well as Sumatra smouldered and the haze covered an area more than 3,000km (1,900 miles) wide. It affected six countries and perhaps 70m people and closed airports. That year was one of El Niño conditions and extended drought. Fires set to clear land for plantations spread into forests. Apparently extinguished, many smouldered in underground peat, then inflamed again.
This year much more limited fires have raged, mainly in Riau, a province in central Sumatra of 6m people and about 90,000 sq km—roughly the size of Portugal. But some schools in Malaysia had to shut. In Singapore, where the air quality helps attract expatriates fleeing pollution in Hong Kong, the environment agency advised people with heart and respiratory conditions to avoid outdoor activities.
The timing of the haze’s reappearance was cruel for the Association of South-East Asian Nations (ASEAN), a ten-member regional block whose impotence the smog mocks. The group’s environment ministers had just met to discuss their 2002 agreement on “Transboundary Haze Pollution” and note that their efforts had helped reduce haze. The galling truth is that Indonesia—the prime source of the problem—has not ratified the agreement. A club that works by consensus and abhors sanctions has only moral suasion. And Indonesia is the regional giant.
It would be wrong, however, to think that regional diplomacy is as pusillanimous and Indonesian environmental hooliganism as unchecked as in 1997. ASEAN does, albeit ineffectually, now set some standards of behaviour for its members, as opposed to tiptoeing fastidiously away from their “internal affairs”. And, unlike in 1997, Indonesia has been quick to acknowledge its responsibility for this year’s smog, and to ask for help.
Using fire to clear land has been illegal in Indonesia since 1995. But everywhere corruption and inefficiency undermine implementation of the law. And fire remains for many smallholders and big plantations the cheapest, quickest way of clearing logged land of rejected or overlooked trees and the undergrowth, thereby making it available for other uses—often, these days, to serve the booming palm-oil industry. In Riau, even beside main roads there are bleak, blackened landscapes, shrouded in white smoke, where the peat soil still smoulders under charred tree-stumps. Between them, infant oil palms are already growing.
The haze is an acute and chronic symptom of a disease even more serious for Indonesia and the world: Indonesia’s deforestation. In 1982 more than three-quarters of Riau was forested. Only about a quarter is now. But here too there are signs of hope. Stung by the criticism Indonesia receives as one of the world’s biggest emitters of carbon—a consequence of its destruction of so much carbon-rich forest and peatland—its government is cleaning up its act. It plans to cut carbon emissions by 41% by 2020, so long as it receives the compensation from an inchoate scheme, known as REDD (Reduced Emissions from Deforestation and Degradation), whereby rich countries pay poorer ones to conserve trees.
As a signal of good intent, Indonesia’s president, Susilo Bambang Yudhoyono, in May announced a two-year moratorium in 2011-12 on commercial deforestation. The reward was a promise of $1 billion in REDD funds from Norway. Many greens are cheering this. Joko Arif of Greenpeace calls it “a really good step”. But he laments that it does not cover existing logging concessions, so felling will continue. He also cautions that much must be done to make the moratorium work—starting with a proper mapping of forests. Otherwise, enforcing the ban will be arbitrary.
Norway’s environment minister, Erik Solheim, was in Jakarta this week to thrash out some thorny disputes, such as one over who will monitor the Norwegian money—an international institution or an Indonesian one? This was not resolved, though the United Nations Development Programme is to be the conduit for an initial $30m for a “preparation phase”.
The colour REDD
That dispute is based on doubts about Indonesia that colour both regional anger over the haze and worries about whether REDD is feasible there. Cynics see the country as irredeemably corrupt. It will continue, they say, to light bonfires that shorten its neighbours’ lives, having its cake of REDD money, even as its chainsaws eat the rainforest. But there is a more optimistic interpretation: it is beginning to assume a role of regional leadership and enjoys its seat on the G20. It badly wants the respectability that comes with a reputation for environmental responsibility.
Moreover, there are two reasons for taking the moratorium seriously. Indonesia’s palm-oil, pulp-and-paper and coal-mining industries are trying furiously to scupper it. And one theory as to why so many fires have been set this year is that those lighting them fear they may not be able to clear land as easily once the moratorium is in force. If you try hard, you can see light through the haze. Just don’t breathe too deeply
Bloomberg EU May Allow Forest Carbon Credits to Fill Gap, BNP Trader Says
Bloomberg
EU May Allow Forest Carbon Credits to Fill Gap, BNP Trader Says
November 11, 2010, 10:41 AM EST
MORE FROM BUSINESSWEEK
Tesco, Cambridge, Face 3.5 Billion Pound Tax on Carbon in U.K.
Morgan Stanley Sells Carbon Developer Stake to Mercuria Energy
Indonesia May Import Rice for First Time Since 2007
EU to Sell 300 Million CO2 Permits by End-’12 for Aid
EU May Limit Steel, Cement Emission Credits, RWE Says
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By Mathew Carr
Nov. 11 (Bloomberg) -- The European Union may allow use of emission credits from forest protection to help fill any gap from a ban of some industrial-gas credits, a banker at BNP Paribas SA said.
The EU carbon market may have room in its third phase, which runs from 2013 to 2020, for credits under a program known as Reduced Emissions from Deforestation and Forest Degradation, or REDD, should the bloc restrict industrial-gas credits and adopt a tighter emission-reduction target for 2020, said Christian Del Valle, director of environmental markets and forestry at the Paris-based bank. The region’s target is currently to cut emissions by 20 percent from 1990 levels.
“Policy makers might seek to offer another source of credits for cost control,” Del Valle said yesterday in an interview at the Climate Finance 2010 conference in London. “Some member states may be open to allowing REDD in certain circumstances.”
Almost 200 nations are meeting later this month in Cancun, Mexico, to discuss replacing or extending the Kyoto Protocol, which runs through 2012, slowing emissions and shifting the world to low-carbon energy sources. Inclusion of forestry projects would increase the number of credits available to polluters to cover greenhouse-gas emissions after 2012.
Some EU officials are saying the bloc reserves the right to allow additional UN credits into its program, the world’s biggest carbon market, De Valle said. “Doing so would send a strong signal internationally that Europe is serious about addressing deforestation in tropical countries.”
“There is still some resistance from the east and south” of Europe to the adoption of a tighter emission target for 2020, possibly a 25 percent or 30 percent reduction on 1990 levels, he told the conference earlier.
--Editors: Mike Anderson, Catherine Airlie.
To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
EU May Allow Forest Carbon Credits to Fill Gap, BNP Trader Says
November 11, 2010, 10:41 AM EST
MORE FROM BUSINESSWEEK
Tesco, Cambridge, Face 3.5 Billion Pound Tax on Carbon in U.K.
Morgan Stanley Sells Carbon Developer Stake to Mercuria Energy
Indonesia May Import Rice for First Time Since 2007
EU to Sell 300 Million CO2 Permits by End-’12 for Aid
EU May Limit Steel, Cement Emission Credits, RWE Says
STORY TOOLS
e-mail this story
print this story
0digg
add to Business Exchange
By Mathew Carr
Nov. 11 (Bloomberg) -- The European Union may allow use of emission credits from forest protection to help fill any gap from a ban of some industrial-gas credits, a banker at BNP Paribas SA said.
The EU carbon market may have room in its third phase, which runs from 2013 to 2020, for credits under a program known as Reduced Emissions from Deforestation and Forest Degradation, or REDD, should the bloc restrict industrial-gas credits and adopt a tighter emission-reduction target for 2020, said Christian Del Valle, director of environmental markets and forestry at the Paris-based bank. The region’s target is currently to cut emissions by 20 percent from 1990 levels.
“Policy makers might seek to offer another source of credits for cost control,” Del Valle said yesterday in an interview at the Climate Finance 2010 conference in London. “Some member states may be open to allowing REDD in certain circumstances.”
Almost 200 nations are meeting later this month in Cancun, Mexico, to discuss replacing or extending the Kyoto Protocol, which runs through 2012, slowing emissions and shifting the world to low-carbon energy sources. Inclusion of forestry projects would increase the number of credits available to polluters to cover greenhouse-gas emissions after 2012.
Some EU officials are saying the bloc reserves the right to allow additional UN credits into its program, the world’s biggest carbon market, De Valle said. “Doing so would send a strong signal internationally that Europe is serious about addressing deforestation in tropical countries.”
“There is still some resistance from the east and south” of Europe to the adoption of a tighter emission target for 2020, possibly a 25 percent or 30 percent reduction on 1990 levels, he told the conference earlier.
--Editors: Mike Anderson, Catherine Airlie.
To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
Carbon Forester, ERA Ecosystem Restoration Associates Inc.
Carbon Forester, ERA Ecosystem Restoration Associates Inc.
Ecosystem Marketplace
The Carbon Forester position assists in determining the feasibility of
areas for forest carbon projects, carries out carbon modeling, prepares
project ...
See all stories on this topic:
Ecosystem Marketplace
The Carbon Forester position assists in determining the feasibility of
areas for forest carbon projects, carries out carbon modeling, prepares
project ...
See all stories on this topic:
Thursday, November 11, 2010
Forest carbon boost in California ETS offset rules
Tuesday, 2 November 2010
[This story updates an earlier version Monday 1 Nov]
The forest carbon sector in the US has received a boost with the release of draft rules for the Californian cap and trade scheme. The rules released by the state’s Air Resources Board (ARB) for consultation include a doubling of the limit originally proposed for the use of offsets in the scheme, from 4 per cent of an emitter’s obligation to 8 per cent, and early-action recognition of voluntary-market credits back to 2005.
To help lower the cost of compliance to the scheme, Californian emitters can buy offset credits generated across the United States from projects to reduce emissions in four areas initially. The four are forestry, urban forestry, livestock manure treatment and the reduction of ozone-depleting substances.
The increased offsets limit means a total of 232 million offset credits will be allowed over the period 2012 to 2020.
Offset protocols in other reduction activities will be considered for inclusion as soon as next year. Offset projects from Canada and Mexico may also be eligible in future. As well as project-based offsetting, the ARB will also pursue larger, sector-wide offsetting programs over time, including avoided deforestation, or REDD, in tropical developing countries such as Brazil and Indonesia.
The rules of the forestry offset protocol would make carbon credits from afforestation & reforestation, improved forest management and avoided conversion activity - to the Climate Action Reserve (CAR) standard - eligible for compliance in the California trading scheme. The relevant version of the protocol is CAR’s Forest Protocol, version 3.2, which updates the voluntary market standard for use in the state regulatory compliance scheme.
In detail, ARB’s Forest Offset Protocol allows the following activity:
Reforestation; planting trees on land that has been out of forest cover for at least 10 years or has been subject to a recent significant disturbance. Sustainable harvesting is allowed, if certified.
Improved Forest Management (IFM); undertaking management activities to maintain and increase carbon stocks on forested lands. Must use a mix of native species.
Avoided Conversion; preventing the conversion of high-risk forestland to a non-forest land use by dedicating the land to continuous forest cover through a conservation easement or transfer to public ownership.
Reforestation and IFM projects on private, tribal and non-federal public lands are eligible, and only private land for avoided conversion.
Permanence of emissions reductions must be ensured for 100 years from the date of the last credit issuance in a project, via third party verification every six years over that time. A buffer reserve account must be held with ARB to cover any losses. The proportion to held in reserve will vary from project to project depending on an individual risk rating assessment.
Early action
The cap and trade scheme is set to begin in 2012 but provision for early-action recognition in the draft rules would see offset credits from voluntary-market projects already underway to earlier versions of the CAR standard in the four approved areas become eligible. Specifically, credits from projects conducted between 1 January 2005 and the end of 2014, but commencing before 2012, will be eligible. The early action recognition of voluntary credits is designed to help jump-start offsets supply to the compliance market, ARB says.
California’s cap-and-trade scheme is emerging as a critical market for forest-based offset credits, said MaryKate Hanlon, senior analyst at forestry investment manager New Forests. “The latest draft regulation takes important steps to clarify how forests can play a role in generating early action and regular offsets as well as in sector-based offset programs.”
“Increasing flexibility for covered entities to meet emission-reduction liabilities is likely to improve market performance and environmental outcomes,” Hanlon said. “A clear signal of forthcoming regulations means more projects on the ground, and specifically, commitments to long-term land management strategies for forest owners.”
Final approval of rules is expected in a vote by the Air Resources Board on December 16.
Download:
Compliance Offset Protocol for US Forest Projects [3.3 MB]
Related stories:
California issues softened ETS rules
[This story updates an earlier version Monday 1 Nov]
The forest carbon sector in the US has received a boost with the release of draft rules for the Californian cap and trade scheme. The rules released by the state’s Air Resources Board (ARB) for consultation include a doubling of the limit originally proposed for the use of offsets in the scheme, from 4 per cent of an emitter’s obligation to 8 per cent, and early-action recognition of voluntary-market credits back to 2005.
To help lower the cost of compliance to the scheme, Californian emitters can buy offset credits generated across the United States from projects to reduce emissions in four areas initially. The four are forestry, urban forestry, livestock manure treatment and the reduction of ozone-depleting substances.
The increased offsets limit means a total of 232 million offset credits will be allowed over the period 2012 to 2020.
Offset protocols in other reduction activities will be considered for inclusion as soon as next year. Offset projects from Canada and Mexico may also be eligible in future. As well as project-based offsetting, the ARB will also pursue larger, sector-wide offsetting programs over time, including avoided deforestation, or REDD, in tropical developing countries such as Brazil and Indonesia.
The rules of the forestry offset protocol would make carbon credits from afforestation & reforestation, improved forest management and avoided conversion activity - to the Climate Action Reserve (CAR) standard - eligible for compliance in the California trading scheme. The relevant version of the protocol is CAR’s Forest Protocol, version 3.2, which updates the voluntary market standard for use in the state regulatory compliance scheme.
In detail, ARB’s Forest Offset Protocol allows the following activity:
Reforestation; planting trees on land that has been out of forest cover for at least 10 years or has been subject to a recent significant disturbance. Sustainable harvesting is allowed, if certified.
Improved Forest Management (IFM); undertaking management activities to maintain and increase carbon stocks on forested lands. Must use a mix of native species.
Avoided Conversion; preventing the conversion of high-risk forestland to a non-forest land use by dedicating the land to continuous forest cover through a conservation easement or transfer to public ownership.
Reforestation and IFM projects on private, tribal and non-federal public lands are eligible, and only private land for avoided conversion.
Permanence of emissions reductions must be ensured for 100 years from the date of the last credit issuance in a project, via third party verification every six years over that time. A buffer reserve account must be held with ARB to cover any losses. The proportion to held in reserve will vary from project to project depending on an individual risk rating assessment.
Early action
The cap and trade scheme is set to begin in 2012 but provision for early-action recognition in the draft rules would see offset credits from voluntary-market projects already underway to earlier versions of the CAR standard in the four approved areas become eligible. Specifically, credits from projects conducted between 1 January 2005 and the end of 2014, but commencing before 2012, will be eligible. The early action recognition of voluntary credits is designed to help jump-start offsets supply to the compliance market, ARB says.
California’s cap-and-trade scheme is emerging as a critical market for forest-based offset credits, said MaryKate Hanlon, senior analyst at forestry investment manager New Forests. “The latest draft regulation takes important steps to clarify how forests can play a role in generating early action and regular offsets as well as in sector-based offset programs.”
“Increasing flexibility for covered entities to meet emission-reduction liabilities is likely to improve market performance and environmental outcomes,” Hanlon said. “A clear signal of forthcoming regulations means more projects on the ground, and specifically, commitments to long-term land management strategies for forest owners.”
Final approval of rules is expected in a vote by the Air Resources Board on December 16.
Download:
Compliance Offset Protocol for US Forest Projects [3.3 MB]
Related stories:
California issues softened ETS rules
Wednesday, November 10, 2010
PENNVEST Announces Results of First Nutrient Credit Trading Auction
HARRISBURG, Pa., Nov. 1, 2010 /PRNewswire-USNewswire/ -- The Pennsylvania Infrastructure Investment Authority (PENNVEST), working closely with the Department of Environmental Protection and representatives of the Chicago Climate Exchange, held its first auction for nutrient credits on Oct. 28 and 29. Credits representing the annual removal of 21,000 pounds of nitrogen from the Susquehanna River watershed and the Chesapeake Bay over each of the next three years were sold for a price of $3.04 per credit.
"This first auction demonstrates the viability of the financial mechanism that we have developed to aid in improving the waters of the Chesapeake Bay," said Paul Marchetti, PENNVEST executive director. "This auction was a significant first step forward in our plan to foster trades in the Bay watershed."
PENNVEST is implementing a new initiative to encourage the trading of nutrient credits within the Chesapeake Bay watershed to promote cost-effective solutions to the problem of nitrogen and phosphorous discharges. These nutrients encourage algae growth in the Bay, which ultimately reduces oxygen levels needed by aquatic plants and animals.
There are many ways to reduce nutrient discharges, including implementing farming practices that reduce water runoff. Reducing discharges below certain levels creates nutrient credits that farmers can sell to wastewater treatment plants, which must meet certain permitted limits for these discharges. By using the credits purchased through the auction, treatment plants can, in many cases, meet required discharge levels in a much more affordable way than by building upgrades to their facilities.
PENNVEST will encourage the trading of nutrient credits by acting as a clearinghouse in the credit market. It will enter into contracts to both buy and sell credits. By participating in these transactions, PENNVEST will provide market certainty to both buyers and sellers which, in turn, should help encourage more activity in this market. Hosting periodic auctions, such as the one held last week, will be one way in which PENNVEST will facilitate these nutrient credit trades.
More information on the auction and the nutrient credit trading program is available online at www.pennvest.state.pa.us, under "Recent News."
Media contact: Paul Marchetti, 717-783-4496
"This first auction demonstrates the viability of the financial mechanism that we have developed to aid in improving the waters of the Chesapeake Bay," said Paul Marchetti, PENNVEST executive director. "This auction was a significant first step forward in our plan to foster trades in the Bay watershed."
PENNVEST is implementing a new initiative to encourage the trading of nutrient credits within the Chesapeake Bay watershed to promote cost-effective solutions to the problem of nitrogen and phosphorous discharges. These nutrients encourage algae growth in the Bay, which ultimately reduces oxygen levels needed by aquatic plants and animals.
There are many ways to reduce nutrient discharges, including implementing farming practices that reduce water runoff. Reducing discharges below certain levels creates nutrient credits that farmers can sell to wastewater treatment plants, which must meet certain permitted limits for these discharges. By using the credits purchased through the auction, treatment plants can, in many cases, meet required discharge levels in a much more affordable way than by building upgrades to their facilities.
PENNVEST will encourage the trading of nutrient credits by acting as a clearinghouse in the credit market. It will enter into contracts to both buy and sell credits. By participating in these transactions, PENNVEST will provide market certainty to both buyers and sellers which, in turn, should help encourage more activity in this market. Hosting periodic auctions, such as the one held last week, will be one way in which PENNVEST will facilitate these nutrient credit trades.
More information on the auction and the nutrient credit trading program is available online at www.pennvest.state.pa.us, under "Recent News."
Media contact: Paul Marchetti, 717-783-4496
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