Friday, August 24, 2012

Electric Power Research Institute (EPRI) Announces Plan to Initiate Water Quality Pilot Trades
Faced with a planned federal mandate to cut water pollution from power plants, American Electric Power and other utility companies might simply pay farmers to do the job for them.

In a “water quality trading” test program ... farmers could cut polluted stormwater runoff from their fields and sell the reductions as credits to power companies.

Streams, rivers and lakes should be cleaner.  Installing and operating pollution-treatment systems at power plants would likely be much more expensive
Farming frequently is cited in government reports as the No. 1 source of the phosphorus and nitrogen pollution that plagues streams and lakes. The compounds, which are found in manure and fertilizers, run off fields during storms.  Power plants release nitrogen from ammonia, which is used in scrubbers and filters to cut air pollution. Nitrogen and phosphorus help grow thick mats of toxic, blue-green algae in lakes. Nitrogen also flows down the Ohio and Mississippi rivers to help form a vast, oxygen-depleted dead zone in the Gulf of Mexico.  Ohio and other states are working under a federal mandate to come up with phosphorus and nitrogen limits for streams. When those limits would be set is not clear.
AEP’s Cardinal station, located along the Ohio River ... would be among the first plants to participate in the program.... A company spokeswoman said it would cost $52 million to install a system to keep Cardinal’s ammonia out of the Ohio River and at least $3 million a year to operate it.  Paying farmers to cut a similar amount of phosphorus, she said, could cost as little as $100,000 a year.  Farmers typically plant buffer strips of grass along ditches and streams instead of using those areas to grow crops. The strips absorb manure and fertilizers washed from fields during storms.  Whether farmers participate depends on whether they can make more money from selling credits than they could growing corn or soybeans.
While some states have adopted trading policies or rules to govern trading within their jurisdictions, this is the first interstate trading program where several states will operate under the same rules and a water quality credit generated in one state can be applied in another. 
EPRI launched its Ohio River Basin water quality trading project in 2009 as a first-of-its-kind interstate multi-credit trading program. It represents a comprehensive, scientifically-based approach to designing and developing markets for nitrogen, phosphorus and potentially greenhouse gas reduction credits.

The project supports the adoption of agricultural conservation practices to reduce nutrient loads in Ohio River Basin waters and improve local and regional water quality.

Pilot trades are expected to include at least three power plants or other participants and up to 30 farms implementing agricultural conservation best management practices on up to 20,000 acres. Nutrient reductions are expected to total approximately 45,000 pounds of nitrogen and 15,000 pounds of phosphorus annually.

The pilot project is already the world's largest water quality trading program operating under a common trading plan. At full-scale, the project could include up to eight states in the Ohio River Basin and would potentially create credit markets for 46 power plants, thousands of wastewater facilities and other industries, and approximately 230,000 farmers.
The Electric Power Research Institute, Inc. (EPRI)
Press Release dated August 9, 2012

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