Virginia Measure Could Make Pollution Trading Work

The Virginia legislature is poised to sharpen the edge of a big tool in the Commonwealth’s Chesapeake Bay restoration tool box: pollution credit trading.

Two identical bills (Senate Bill 77 and House Bill 176) making their way through the General Assembly would widen the state’s existing pollution trading program to include more traders and establish clearer rules to ensure accountability and transparency.

A little background: A chief focus of the Bay cleanup is reducing harmful nitrogen and phosphorus (nutrient) pollution, getting it down to levels the Bay ecosystem can handle. Each of the Bay states has been given a limit – in Virginia’s case, 59 million pounds of nitrogen and 7 million pounds of phosphorus per year – to achieve by 2025 (these limits are the Bay TMDL, or total maximum daily load). The Bay’s excess nutrient pollution comes from a variety of sources, principally municipal sewage and industrial wastewater and agricultural and urban runoff. Great efforts are and will continue to be made to cut pollution from these sources. 

Pollution trading is a voluntary, market-based tool first established in Virginia in 2005 to allow wastewater treatment plants and new development projects in the Chesapeake Bay watershed to meet nutrient pollution limits more cost-effectively. Trading allows participants that achieve pollution reductions that exceed a set “baseline” of required performance to sell the extra “nutrient credits” to other participants.

Virginia’s Watershed Implementation Plan (WIP) calls for expanding the state’s nutrient trading program as a key strategy for reducing existing pollution and “offsetting” new pollution from future growth. It envisions extending the trading program to several new participants that may face costly onsite nutrient pollution reductions, including large-city storm sewer systems that handle runoff from existing developed areas, confined animal feeding operations (CAFOs), and septic system owners.

Last year, the Virginia General Assembly authorized a study of the trading program with an eye to expand it. A diverse group of stakeholders and market experts met over the past year and developed recommendations for a report that went to Assembly members in January. The two bills now in the legislature would implement many of the study’s recommendations.

The bills expand the existing trading program to include the large city storm sewer systems, CAFOs, and industrial stormwater dischargers; restrict participation to those with TMDL goals in their permit; set an appropriate baseline for new participants; create a transparent trading “registry”; address some of the current shortcomings in local water quality protection; require retirement of 5% of all traded credits to offset uncontrolled sources elsewhere; add public notice provisions; and call for new regulations to set out more specific rules for generating and verifying credits.

This legislation also retains several critical rules found in the existing trading program, including:

• Only credits that represent quantifiable net pollution reductions can be traded.
• The “baselines” for farmers and new development must meet TMDL and/or permit requirements.
• Pollution reductions must be installed and operating before they can be traded.
• Nonpoint sources (NPS) credits generated with government funds cannot be traded.
• A minimum 2:1 credit ratio for NPS to point source trades must be provided.
• A preference for use of more localized credits by new development.
• Nutrient credits used by new development must be secured in perpetuity.

Of course, the bills still must be fully approved by the legislature, and they don’t address every issue that some critics of pollution trading have raised. Nonetheless, the Chesapeake Bay Foundation believes the measures improve upon Virginia's existing program and will go a long way toward ensuring the state has a credible and transparent trading program that sets the bar for the rest of the Bay region.

If you’re a Virginian, we encourage you to contact your state legislators and urge them to support this cost-effective tool for reducing Bay pollution.

Chuck Epes
Chesapeake Bay Foundation 

Photos: CBF staff.

Comments

[Desiree (www.greenmomster.org)]

I've contacted my representative and senator on this issue -- I hope the other VA readers will do the same!

[Chuck Epes]

Thank you, Desiree!
Chuck Epes