NEFCO releases study aiming at reducing releases of phosphorus and nitrogen

The Nordic Environment Finance Corporation (NEFCO) has published today a pre-feasibility study on a future nutrient trading system aimed at reducing releases of phosphorus and nitrogen into the Baltic Sea.  The study "Framework for a Nutrient Quota and Credits' Trading System" has been funded by the Finnish ministry of environment and written by the consulting agency Green Stream Network.

The report was published in connection to the Helsinki Commission's (HELCOM) annual meeting in Finland. The study reviews various possibilities of setting up a regional nutrient trading system, which could work as a complementary alternative to reducing the releases of nutrients into the Baltic Sea.

"If the releases of nutrients into the Baltic Sea continue to increase despite current measures, it will lead to a situation where already agreed national release targets are exceeded. In such a situation we need to explore innovative ways to reduce releases of phosphorus and nitrogen", said Senior Manager Karl-Johan Lehtinen at NEFCO.  

The report foresees no fundamental judicial obstacles that would hinder the set up of a regional nutrient trading system. However, the system needs to address the burden sharing and equitable allocation between states, the role of European Community legislation, the impact of state aid jurisprudence and the principle of subsidiarity.

Phosphorus and nitrogen credits could be sold and purchased by private companies, foundations, funds and international finance institutions. The nutrient trading system would differ significantly from current international carbon trade systems mainly in geographical terms. The carbon trade is global whereas the trade with phosphorus and nitrogen would be a regional system open only to players operating in the Baltic Sea drainage area. 

The study outlines a model where the trade system could be established and implemented in four different stages. The municipal waste water treatment plants would be included in the system already in the first stage of the trading system.  The second phase would focus on point releases from industrial facilities or fish farms. The agricultural sector would be targeted in the third stage, whereas air-born releases and technology used for reducing the internal load from the bottom sediments would be included in the fourth stage.

NEFCO is an international finance institution owned by the five Nordic countries. NEFCO finances investments and projects in Russia, Ukraine, Estonia, Latvia, Lithuania and Belarus, in order to generate positive environmental effects of interests to the Nordic region.

For additional information, please contact:
Karl-Johan Lehtinen, Senior Manager, NEFCO, +358 40 593 1239
Magnus Rystedt, Managing Director, NEFCO, +358 50 329 6224
Mikael Sjövall, Communications Manager, NEFCO, +358 50 3535 045
Juha Ruokonen, Consultant, Green Stream Network, +358 40 840 8005

Download our report here