Bion Announces Approval from Pennsylvania Department of Environmental Protection for both its Nutrient Credit Calculation and Comprehensive Multi-Media Measurement Protocols

May 20, 2008. New York, New York.

Bion Environmental Technologies, Inc. (OTCBB: BNET) announced today that it has received confirmation from the Pennsylvania Department of Environmental Protection (DEP) that it has approved Bion’s nutrient credit calculation protocol. The protocol determines how many nitrogen and phosphorus credits will be received for nutrient reductions achieved through installation of Bion’s comprehensive waste management technology. The DEP’s approval extends to Bion’s innovative multi-media measurement protocol, enabling the certification of credits both for ammonia air emission reductions as well as significantly reducing the leaching and runoff potential of land applied nutrients.

This approval marks the first time the DEP has approved a nutrient credit protocol that has allocated nitrogen credits for ammonia air emissions reductions. The DEP’s registry of approved credit proposals and contracts/trades can be found on the Department’s website at http://www.dep.state.pa.us/river/Nutrient%20Trading.htm#Registry. The credits generated from Bion’s approved protocol will be listed at this location.

Bion recently signed a memorandum of understanding with a large dairy in Lancaster County, Pennsylvania to retrofit its existing dairy operation with a Bion Comprehensive Environmental Management System designed to reduce ammonia emissions and soluble nutrients in the effluent. Bion chose to undertake this project due in large part to Pennsylvania’s nutrient credit trading program, which was established to provide cost-effective reductions for the excess flow of nutrients (nitrogen and phosphorus) into the Chesapeake Bay watershed by issuing credits to agricultural operations that implement voluntary reductions. The Bion installation will initially treat the manure from the main 1,400-head dairy barn, with follow-on expansions designed to capture the remaining manure from the milk house, heifers, dry cows, calves, and potentially the manure from the co-located chicken facilities.

Based on credit calculations approved by the DEP, Bion’s Pennsylvania installation will generate 1 pound of nutrient credits for about every 2 pounds of nutrients mitigated, for a total of 175,109 pounds of nitrogen credits and 21,899 pounds of phosphorus credits annually from the initial 1,400 cows. These credits can be sold in advance of generating site-specific data, but need to be validated and trued up at the end of each DEP monitoring year. Nitrogen credits have already been sold under short term contracts for up to $7 to $9 per pound per year in the Susquehanna River watershed to offset nutrient discharges from municipal wastewater treatment facilities. The long term credit market (20 plus years) that Bion plans on initiating will provide for an added value to municipalities who are used to dealing with long term infrastructure- and treatment-oriented investments. Additional purchasers may include new commercial and residential real estate developments that must meet a zero-discharge limitation to be in compliance with Pennsylvania’s Chesapeake Bay tributary strategy regulations.

Under the DEP’s tributary strategy regulations, municipal wastewater treatment plants in the watershed are facing estimated facility upgrade capital costs as high as $1.2 billion to bring their nutrient discharges under the mandated effluent guidelines. According to data from the Pennsylvania Municipal Authorities Association, a majority of municipal authorities have upgrade costs that exceed $10 per pound of nitrogen reduction. In fact, many of 184 authorities that are impacted will exceed total costs (upgrade capital plus ongoing operations and maintenance) of $30 per pound and higher on an annual basis going forward, particularly as the full extent of O&M costs are realized. By purchasing credits to offset those discharges on a long term basis, overall nutrient reductions in the Bay can be achieved at a fraction of the cost now facing the taxpayers of Pennsylvania.

A multi-media approach (both air emissions and effluent discharges) to managing the nutrients associated with large scale confined animal feeding operations (CAFOs) is vital to solving the critical problem of eutrophication, where excessive nutrients in a body of water fuel the growth of algae, creating dense algae blooms that rob aquatic life of sunlight and dissolved oxygen. Greater than 40% of the nitrogen credits from Bion’s Pennsylvania installation will result from the system’s reduction of ammonia emissions from the livestock waste that, when untreated, volatilize to the atmosphere and are re-deposited downwind – a continued unregulated source of nutrients in the Bay and other water bodies. Although not currently regulated, the substantial ammonia emissions from existing livestock facilities are under close scrutiny by state and federal agencies and other organizations for their impacts on the environment as well as potential health impacts.

According to a 2004 report by the Chesapeake Bay Foundation, there are approximately 185 million livestock animals (dairy cows, beef cattle, pigs, chickens, and turkeys) present in the Bay watershed at any given time. These animal operations produce 44 million tons of manure each year containing nearly 600 million pounds of nitrogen and 165 million pounds of phosphorus – representing a significant source of potential nutrient reductions and credits. According to data compiled by the Chesapeake Bay Program, animal manure accounted for 40% of the total nitrogen and 54% of the total phosphorus deposited in the watershed – much of this in soluble form that ultimately finds its way into the Bay. The Pew Oceans Commission reported in 2003 that runoff of excess nitrogen from animal feedlots is one of the greatest pollution threats to coastal marine life today.

Pennsylvania’s nutrient credit trading program allows for voluntary credit trading between a ‘non-point source’ (such as a dairy or other agricultural sources) and a ‘point source’ of effluent releases, such as a municipal waste water treatment plant or a housing development. For example, Bion can reduce the nutrients from an existing dairy (below its baseline discharge levels) much more cheaply on a ‘per pound’ basis than a municipal wastewater treatment plant can reduce nutrients to meet its revised permit limitations. The municipal authority can purchase credits from Bion to offset its nutrient discharges, rather than spending significantly more money to make the plant upgrades necessary to achieve its own reductions. The program is similar to the highly successful U.S. acid rain ‘cap and trade’ program that achieved 100% compliance in reducing sulfur dioxide emissions in the 1990s at a fraction of the cost that was originally anticipated.

As stated in the (David and Lucille) Packard Foundation’s 2008 Agriculture Strategic Plan, “A significant opportunity may now exist in the United States to support efforts to incorporate non-point source pollutants in emerging water quality trading markets. This would help address nitrogen pollution problems in the U.S., and also set the stage for changes in other countries as well.” The Foundation’s Plan specifically addresses nutrient credit markets and allocates $15 million annually with the five-year goal of three well functioning (reasonable liquidity, active farmer participation, significant trading volume) nutrient trading markets within the United States that involve non-point sources of pollution. The Plan further states that “Within the Chesapeake Bay region, the Foundation will continue to provide support to efforts to create a well functioning nutrient trading market or markets.”

An extensive 2 1/2-year examination (released in May 2008) conducted by the Pew Commission on Industrial Farm Animal Production concluded that, “The current industrial farm animal production system often poses unacceptable risks to public health, the environment and the welfare of the animals themselves.” A U.N. Food and Agriculture Organization report in 2006 called the global livestock sector "one of the top two or three most significant contributors to the most serious environmental problems at every scale."

Mark Smith, Bion’s President, stated, “The Pennsylvania DEP’s approval of Bion’s credit calculation methodology and multi-media measurement protocol is a significant milestone for Bion: both in terms of acknowledgement of the significant role that ammonia emissions from livestock operations play in nitrogen deposition, as well as Bion’s ability to largely eliminate this substantial, yet at this time unregulated, source of emissions. We look forward to continued work with the DEP and other stakeholders to provide solutions in the region.”


About Bion: Bion's patented technology platform largely mitigates the environmental impacts of livestock facilities, such as dairies and cattle feedlots. The platform removes up to 95% of the nutrients in the wastewater effluent and reduces ammonia emissions by greater than 90%. Bion has been providing solutions to the livestock industry since 1990.

By virtually eliminating the environmental impact of livestock waste, Bion's technology creates the opportunity to develop sustainable integrated agriculture operations, comprised of large scale livestock operations balanced with highly-efficient biofuel production, in locations that maximize market opportunities. These state-of-the-art facilities incorporate onsite production and use of co-products - renewable energy produced from the livestock wastes and the distiller grains from the ethanol process - and produce significant advantages in environmental, energy and economic efficiency. For more information, see Bion's website: www.biontech.com.

This material includes forward-looking statements based on management's current reasonable business expectations. In this document, the word 'projects', 'will', 'believes' and similar expressions identify certain forward-looking statements. These statements are made in reliance on the Private Securities Litigation Reform Act, Section 27A of the Securities act of 1933, as amended. There are numerous risks and uncertainties that could result in actual results differing materially from expected outcomes. Bion undertakes no obligation to update forward looking statements.

Contact information:

Mark A. Smith
President
303-517-5302
mas@biontech.com
Craig Scott
Vice President-Capital Markets/IR
303-843-6191 direct
cscott@biontech.com