February 24, 2011 Public Webcast

Transcription

1 Audio: Ohio River Basin Trading Program for Wastewater Treatment Plants February 24, 2011 Public Webcast Jessica Fox EPRI Greg Youngstrom ORSANCO Mark Kieser Kieser & Associates, LLC

2 Announcements This webcast and the audio will be recorded, and your participation provides consent to that recording. 2

3 Questions & Answers: If you have a question during the webcast you can Let us know you have a question Type your question to the presenters using the Q&A Feature 3

4 Purpose of this Webcast Provide Overview of Ohio River Basin Trading Project Summarize water quality trading Questions and Discussion Volunteers for WWTP Steering Committee 4

5 New York Times Series: Toxic Waters 5

6 Project Objective & Approach Objective: Reduce overall loading of nutrients within the Ohio River Basin using water quality trading. Approach: Impacts to water quality come from many sources. It will take non-traditional collaborations and new approaches to achieve cost-effective improvements. 6

7 Project Collaboration Electric Power Research Institute American Electric Power American Farmland Trust Ohio Farm Bureau Federation Hoosier Energy Hunton & Williams Kieser & Associates, LLC Miami Conservancy District Tennessee Valley Authority ORSANCO Duke Energy EPA USDA 7

8 Project Responds to Regulations EPA identified waters impaired from nutrients and initiated National Strategy and Plan to promote State adoption of Nutrient Water Quality Standards EPA Needs to Accelerate Adoption of Numeric Nutrient Water Quality Standards. EPA August 26, 2009 EPA Science Advisory Board asked to Complete Review of Nutrient Guidance by December, 2009 EPA SAB responded to Lisa Jackson, recommendations for Nutrient Criteria implementation, January 8, 2010 Increasing pressure on states to adopt nutrient standards. 8

9 Nitrogen in Power Plants NH 3 Power Plant Ammonia Cycle NH 3 Boiler NH 3 FUEL: Coal, Oil, Gas, etc o c Hot-side SCR or SNCR ESP NH o c Cold- Side SCR Option NH 4 + Air PRE-HEAT NH 4 + NH 4 + FGD NH 3 NH + 4 Stack NH 3 NH 4 + NH 3 NH 4 + Pond NH 4 + NH 4 + NH 4 + Figure 1 Power Plant Ammonia Slip Pathways 9

10 Meeting Water Quality Targets Trading Technologies BMP Water Quality Target Trading is another option for meeting WQ target. 10

11 What is Water Quality Trading? 11

12 Conditions for Water Quality Trading One of the tools used in the watershed management to efficiently achieve water quality goals. A market-like tool for water quality compliance Not suitable in every watershed application. Type of impairment, pollutants of One concern pollutant and presence source of potential with buyers high and sellers all must overlap. treatment costs pays another to make a voluntary and surplus pollutant reduction for a lower cost. From EPA 2004 Water Quality Trading Assessment Handbook 12

13 Watershed Scale Programs 13

14 State-based Trading Programs 14

15 Potentially Tradable Pollutants Conventional pollutants that: Come from both point and nonpoint sources Have a water-quality based effluent limit such as: Total nitrogen Total phosphorus Sediments CBOD In some settings, temperature and flow are traded Pollutants NOT traded: - Persistent Bioaccumulative Toxics 15

16 When is WQT used? After WWTPs treat to minimum required level (e.g., TBELs, Secondary Treatment Technology) For compliance flexibility and cost savings to meet: TMDLs WQBELs (WLAs, nutrient standards) Offsets required for growth/expansion 16

17 WWTP Trading Example Total Phosphorus (mg/l) TP (mg/l) Must Treat Tradable 0 Raw Secondary TMDL 17

18 How does a WWTP trade? Buyer identifies credit need for compliance Seeks credit information via a WQT registry Buyer contracts to purchase credits with a: Credit generator Third party Broker Aggregator Credit clearinghouse Trading credits must meet regulator/trading program requirements of buyers and sellers Buyers retains all NPDES permit liability Seller/agent retains civil contract liability for performance 18

19 What is the cost of a credit? Market-driven (supply & demand) Depends on the trading ratio 20 lbs/yr TP reduction needed for compliance with 2:1 ratio requires purchase of 40 lbs/yr reduction What is the WWTP willing to pay? Level of risk a buyer is willing to take 19

20 WQT Benefits (PS/NPS trading) Benefits via Trading Treatment Plant Upgrade Agriculture Management Practices Pollutant reduced Yes Yes Other pollutants reduced Maybe Yes Habitat improved No Yes Canopy enhanced No Yes Stabilized stream banks No Yes Decreased stream velocity No Yes Wetlands created No Yes Floodplains enhanced or preserved No Yes Assimilative capacity increased No Yes 20

21 Goals of Ohio River Trading Project Demonstrate role of trading in achieving local and regional nutrient reduction targets. Accelerate water quality improvements. Quantify and demonstrate economic benefits to stakeholders. Quantify ecological co-benefits wildlife habitat, wetlands, greenhouse gas sequestration. Inform policy decisions on the use of market-mechanisms. 21

22 Project Schedule Phase I: Due Diligence 2007 Scoping of Pilot Project Concept 2008 Feasibility Study Business Case for Power Company Participation EPRI invested $1 Million in project planning and due diligence. Phase II: Implementation 2009 Received $2M in Funding (EPA, USDA, private) 2010 Outreach, planning, interstate collaborations 2011 Scoping pilot trades 2012 Execute pilot trades 22

23 Screening Criteria Ohio River Chesapeake Bay Catawba River Basin Pollution cap - measurable and restrictive Type Timing Nutrient discharge regulations Nitrogen Phosphorus Permitting cycle High Compliance Costs High variability in pollution control costs PS - Facilities with high impending treatment costs NPS Reduction costs Basis for strong credit supply and demand Baseline for PS and NPS (% reduction for all sources) Industry mix Seed funding (multiple potential funding sources) Program champion Lead identified Supporting organizations identified Conducive regulatory environment Interstate Coordination Organizations Regulatory authority Stakeholder Willingness Buyers Sellers Public Methods for calculating pollutant equivalency Modeling for load allocations Modeling WQ Data EPRI Report: Water Quality Trading Programs Pilot Project Review. 23

24 Organizational Structure Legal Counsel Project Team Governance/ Policy Committee Technical Committee Project Communications Committee Stakeholder Steering Committees Regulators Power Industry Municipal Point Sources Agricultural Conservation Groups 24

25 Agriculture Outreach American Farmland Trust Leading Ag Outreach Bluffton, IN. March 2010 Terre Haute, IN. March 2010 Columbus, OH. July 2010 Columbus, OH August, NRCS Nutrient Trading Tool. Georgetown, OH. October 14, more listening sessions planned in participants so far, representing about 10,000 farmers. Feasibility study estimated 10% farmer participation. There seems to be ample supply of credits. 25

26 Wastewater Treatment Plants ORSANCO Leading Outreach Nutrient Trading as a Means of Lowering Costs: Experiences from the U.S., USEPA s POTW Nutrient Reduction and Efficiency Conference, Evansville, Indiana, January 14, Water Quality Trading in the Ohio River Basin as a Future Compliance Tool, Ohio Water Environment Association Annual Meeting, Blue Ash, KY, November 18, Water Quality Trading Applications in the U.S., Illinois Association of Wastewater Agencies, Starved Rock State Park, Utica, IL, November 12, Water Quality Trading in the U.S. & New Opportunities in the Ohio River Basin, Wastewater Industrial Technical Training Education Conference (WITEC), Greenwood, IN, April 14, Ohio River Water Quality Trading Project Overview, Presentation to the ORB Sub-basin Steering Committee to the Gulf Hypoxia Task Force. Cincinnati, OH, June 3,

27 Power Plants EPRI leading Power Industry Outreach Steering Committee: AEP, Duke, Hoosier, and TVA Project Strategy Meetings (3 in 2010) EPRI Advisory Meetings (3 in 2010) Regular Calls and communications (monthly) Power Companies have identified more than 10 plants that we are evaluating for pilot trading. 27

28 Lowering Compliance Costs: Power Companies Power Plant Farmer BMP Substantial cost savings for buying nitrogen credits from a farmer verses installing technologies at each power plant. 28

29 Cost Savings with Trading Concentration Limits - Based on Actual Flows 8 mg/l TN 5 mg/l TN Facility Unit Cost Pounds Reduced Potential Annual Savings Unit Cost Pounds Reduced Potential Annual Savings TN ($/pound) TN TN ($/pound) TN Base Case $ ,989 $352, $ ,969 $416, Plant #2 N/A 0.0 N/A Plant #1A N/A 0.0 $ ,708 $890, Plant #3 $ ,025 $723, $ ,493 $803, Plant #4 N/A 0.0 N/A Plant #1E N/A 0.0 N/A Plant #1B N/A 0.0 $ ,730 $714, Plant #1C N/A 0.0 $ ,183 $806, Resulting Demand for Credits 74,424 Credits 131,083 Credits 29

30 Watershed Modeling Point Source For Pilot Trades We are using the model to test the impact of various program structure options 30 on water quality.

31 Carbon Credits Developing GHG Emissions Offsets by Reducing Nitrous Oxide (N20) Emissions in Agricultural Crop Production 31

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33 Project Timeline Functioning Market Transition to Long-term Governance Structure Pilot Trades Program Framework Project Outreach Strategy Planning $2M funding Collaboration Formed Project Identification Oct We Are Here 33

34 WWTP Steering Committee We would like to form a WWTP Steering Committee Activities: Review Business Case for WWTP Identify possible pilot trade locations Consider how best to structure project for WWTP Identify and address concerns Advise and inform project Commitment: Participate in periodic calls communication Possible in-person meeting, as feasible 34

35 Questions & Discussion 35

36 Questions & Answers: If you have a question during the webcast you can Let us know you have a question Type your question to the presenters using the Q&A Feature 36

37 Jessica Fox, EPRI, Project Manager Greg Youngstrom, ORSANCO Project