Maryland Bill to Jumpstart Nonpoint Nutrient Trading Pilot

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By Kathy Lundy Springuel

Maryland Gov. Larry Hogan (R) plans to push for legislation in 2017 that would create a funding source for pilot projects to “jumpstart the market” for trading nutrient reduction credits to help restore the Chesapeake Bay.

Hogan also announced plans to back a handful of energy-related initiatives during the 90-day General Assembly session, which starts Jan. 11.

Bill to Foster Nutrient Trading

Hogan said in a Jan. 3 news release that he will have a bill called the Clean Water Commerce Act introduced on his behalf.

The bill would “allow up to $10 million of the Bay Restoration Fund to be used to purchase nutrient reduction credits, enabling the state to meet its Chesapeake Bay watershed improvement plan goals by 2025 through innovation and public-private partnerships,” the statement said.

The Bay Restoration Fund, also dubbed the “flush tax,” has been collected from households and businesses since 2004 to help upgrade the state’s major wastewater treatment plants with enhanced nutrient removal technology.

Maryland Environment Secretary Benjamin Grumbles told Bloomberg BNA Jan. 3 that the proposal to tap the restoration fund for a market-based nutrient trading pilot program emerged from recommendations made by the University of Maryland Environmental Finance Center and discussions among the state’s 36-member nutrient trading advisory committee.

Nutrient trading would allow farmers to generate credits for reducing runoff of harmful nutrients and sell those credits to other entities, such as wastewater treatment plants, developers or local jurisdictions that may be unable to reduce their nutrient load or find it more economical to buy credits than to control runoff.

Guidance, Regulations Forthcoming

Grumbles said the Maryland Department of Agriculture already has adopted regulations governing how farmers may earn pollution reduction credits for sale to others.

The Maryland Department of the Environment, meanwhile, expects to finalize in the next few months a guidance manual that outlines safeguards for ensuring accountability and transparency in nonpoint nutrient trading, Grumbles said.

He said the MDE also expects to propose more formal regulations for such trading by the middle of the year.

The proposed legislation to jumpstart a nonpoint nutrient trading pilot project with a specific funding source “is more evidence that Maryland is fully committed to innovative and cost-effective solutions that foster real environmental improvement,” the state energy secretary said.

Exelon Money for Renewables

Hogan also announced that much of the $44 million that Exelon must pay in liquidated damages stemming from its 2012 merger with Constellation Energy will be invested in renewable energy projects through the state’s Strategic Energy Investment Fund.

In a 2013 filing with the Securities and Exchange Commission, Exelon said that it might incur liquidated damages if it was not possible to meet all commitments made in connection with the merger to develop new generating capacity in Maryland.

Hogan announced that $41 million of Exelon’s liquidated damages will be invested in “tier 1” renewable energy projects.

Tier 1 energy sources under Maryland’s renewable portfolio standard for electricity providers include 12 types of energy, including solar, wind, biomass, geothermal, ocean and waste-to-energy.

Other Energy Initiatives

In other areas, Hogan said his 2017 environmental agenda includes a proposal to spend $7.5 million to create the Green Energy Institute, a collaboration between the University of Maryland Energy Research Center and the Maryland Clean Energy Center “to develop and attract private investment and commercialize clean energy innovations in Maryland.”

Hogan also proposed a $3 million investment in the state’s existing EARN Maryland program to train 1,500 workers for jobs in environmental industries.

Additionally, the governor announced plans to increase the amount authorized for excise tax credits for those who purchase electric vehicles from $1.8 million to $2.4 million per year and double the amount of rebates offered for installing electric vehicle charging stations.

Faces Veto Override

Despite plans for renewable energy initiatives in 2017, Hogan faces the prospect of an early rebuke soon after lawmakers return to the statehouse this month.

Hogan vetoed legislation (S.B. 921/H.B. 1106) in 2016 that would have increased the amount of electricity Maryland suppliers must get from renewable sources from 20 percent by 2022 to 25 percent by 2020, claiming that the cost of doing so would harm ratepayers.

Several lawmakers have stated their intent to override the veto, which would require a three-fifths majority in each chamber, or 29 votes in the Senate and 85 in the House.

Although a few seats had turnover in November, it seems the General Assembly has enough votes to override the veto, judging from votes on the bills last year.

The prior Senate votes on the two companion bills were 31-14 in favor of S.B. 921 and 32-14 in favor of H.B. 1106. The House voted 91-48 and 92-43, respectively, on the bills.

To contact the reporter on this story: Kathy Lundy Springuel in Annapolis, Md., at correspondents@bna.com

To contact the editor responsible for this story: Larry Pearl in Washington at lpearl@bna.com

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