Exploring Trading to Reduce Impacts of Acid Mine Drainage: Cheat River, West Virginia

1
Exploring Trading to Reduce Impacts of Acid Mine
DrainageCheat River, West Virginia

• Evan Hansen Downstream Strategies, LLC
• Paul Ziemkiewicz, Jerry Fletcher, Todd Petty W.
  Va. University
• Gordon Hester EPRI
• Martin Christ, Rick Herd

2
(No Transcript)
3
(No Transcript)
4
(No Transcript)
5
(No Transcript)
6
(No Transcript)
7
(No Transcript)
8
The Cheat TMDL

• Acid mine drainage acidity and metals
• Abandoned and active coal mines
• 55 segments of Cheat and tributaries on 303(d)
  list
• TMDL finalized in 2001
• Few steps taken toward implementation

9
Difficulties in implementing the Cheat TMDL

• Point sources
• Lack of agency experience writing coal NPDES
  permits with WQBELs
• Nonpoint sources
• Reductions often huge, difficult, expensive
• Funding is scarce
• No implementation plan

10
(No Transcript)
11
(No Transcript)
12
A Cheat trading framework

• Help implement the Cheat TMDL
• Reproducible for
• acid mine drainage
• other pollution problems due to orphan sites
• Useful as West Virginia develops a trading
  program

13
Goals and Objectives

• Make TMDL implementation an effective,
  self-sustaining, locally-driven process
• Develop an approach with
• clear watershed remediation objectives
• funds for management and remediation projects
• minimized friction among parties
• focused effort on prioritized watershed
  remediation needs

14
Remediating on a watershed basis

• Requires
• organization,
• planning, and
• management

15
The Crux

• Poor fit between remediation and regulatory
  strategies
• Most investment toward fraction of the problem
• Millions for construction, pennies for management
  
• Need higher lever level of organization and
  management to coordinate the many funding and
  program opportunities
• Management takes professionals and they cost money

16
Regulation vs. remediation

• The cost of removing a ton of acid load from acid
  mine drainage increases as the discharge is
  cleaned up
• 90 of AMD comes from orphan sites
• The TMDL requires tightening of NPDES discharge
  limits (and reductions as orphan sites)
• May cost a permittee thousands of dollars to
  remove 1 ton of acid load
• The same money spent on an orphan site may remove
  50 tons

17
Managing Investments in Watershed Improvement

• Investments can be fit into a single watershed
  plan
• Investments can be compared
• Environmental benefits Tons of pollutant removed
• Ecological benefits Stream miles with recovered
  aquatic life
• Trading can play a role

18
Challenge Solution
Few permitted coal discharges remain in watershed most already meet TMDL WLAs. Allow cross-pollutant trades.
Need common currency to evaluate cross-pollutant trades. Use ecounits to ensure that cross-pollutant trades result in net ecological benefit.
Difficult to perform ecological analyses Establish Watershed Mgt. Authority to lower transaction costs and guide trading investments toward priorities.
19
Challenge Solution
Hard to ensure that purchased credits resulted in real, measurable improvements Allow purchase of credits banked from public AMD remediation investments.
20
Proposed defn of ecounits

• WV Stream Condition Index
• (benthic macroinvertebrates, 0-100)
• X
• Stream segment area (length x width)

21
How to calculate the cost of an ecounit?

• Calculate how impaired the watershed is now (how
  many ecounits are recoverable)
• Calculate cost to fully remediate AMD
• Divide to get average cost of recovering an
  ecounit
• AVERAGE COST IS IMPORTANT

22
Watershed Management Authority

• Develop and implement the plan
• Coordinate public remediation investments
• Solicit and evaluate trades
• Recommend trades to state regulatory agency
• Build, operate, and maintain remediation projects
• Manage trust fund and credit bank

23
Funding the Process

• Trust fund will accept cash paid for credits
• Portion of trust fund available to develop and
  update the plan, pay staff, and for other
  professional services
• Most spent on additional remediation to generate
  more credits

24
How trading might work for the Cheat

• Authority develops plan for TMDL implementation
  remove about 11,000 tpy acid load from lower
  Cheat
• Current public AMD remediation projects generate
  credits
• Friends of the Cheat
• Army Corps
• Clean Water Act 319

25
(No Transcript)
26
The Albright Power Plant

• Thermal pollution variance may not be renewed
• Thermal pollution affects about one mile of the
  Cheat during low flow periods in late summer
• Without variance, the utility must close the
  plant, install cooling towers, or negotiate a
  trade
• Cost of cooling towers in multiple 10m

27
First cross-pollutant trade?

• In return for variance, utility would make
  payment
• Amount based on
• Ensuring net ecological benefit (ecounits)
• Trading ratio
• Authority would use funds to remediate AMD and
  generate more credits

28
Summary Key aspects of Cheat trading program

• Integrated into Watershed Management Authority
• Watershed management plan guides investments
• Trades are one of many types of investments
• Cross-pollutant trades, with net ecological
  benefits and appropriate ratios
• Credit bank, capitalized by public investments