PENNVEST Plans Nutrient Credit Trading Auction

HARRISBURG, Pa., Sept. 1 /PRNewswire-USNewswire/ -- The Pennsylvania Infrastructure Investment Authority (PENNVEST), working closely with the Department of Environmental Protection and representatives of the Chicago Climate Exchange, plans to hold an auction this fall for nutrient credits.

During a mock auction for nutrient credits conducted last week, hypothetical contracts were created for nearly 500,000 nitrogen and phosphorous credits in the Chesapeake Bay watershed.

"Our mock auction, which included 25 participants, demonstrates serious interest in nutrient credit trading in Pennsylvania's Chesapeake Bay watershed," said Paul Marchetti, PENNVEST executive director. "The mock auction was a significant 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 available for aquatic plants and animals. There are many ways to reduce these 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 their 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. One mechanism that PENNVEST will employ to facilitate these trades will be to host periodic auctions, starting this fall, in which buyers and sellers will participate simultaneously.

More information on the mock auction and the nutrient credit trading program is available online at www.pennvest.state.pa.us, under "Recent News."

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SOURCE PENNVEST