[Federal Register Volume 71, Number 77 (Friday, April 21, 2006)]
[Rules and Regulations]
[Pages 20784-20817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3745]
[[Page 20783]]
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Part III
Department of Energy
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10 CFR Part 300
Guidelines for Voluntary Greenhouse Gas Reporting; Final Rule
Federal Register / Vol. 71, No. 77 / Friday, April 21, 2006 / Rules
and Regulations
[[Page 20784]]
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DEPARTMENT OF ENERGY
10 CFR Part 300
RIN 1901-AB11
Guidelines for Voluntary Greenhouse Gas Reporting
AGENCY: Office of Policy and International Affairs, U.S. Department of
Energy.
ACTION: Final rule.
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SUMMARY: Section 1605(b) of the Energy Policy Act of 1992 directed the
Department of Energy (DOE) to issue guidelines establishing a voluntary
greenhouse gas reporting program. On February 14, 2002, the President
directed DOE, together with other involved Federal agencies, to
recommend reforms to enhance the Voluntary Reporting of Greenhouse
Gases Program established by DOE in 1994. DOE issued interim final
General Guidelines on March 24, 2005, and also on that date published a
notice of availability inviting public comment on draft Technical
Guidelines needed to fully implement the revised Voluntary Reporting of
Greenhouse Gases Program. This notice of final rulemaking responds to
public comments on the interim final General Guidelines and draft
Technical Guidelines; sets forth the final General Guidelines; and
announces the availability of the final Technical Guidelines.
DATES: Effective Date: The final General Guidelines and Technical
Guidelines are effective June 1, 2006. The incorporation by reference
of the Technical Guidelines is approved by the Director of the Federal
Register as of June 1, 2006.
FOR FURTHER INFORMATION CONTACT: Mark Friedrichs, PI-40, Office of
Policy and International Affairs, U.S. Department of Energy, 1000
Independence Ave., SW., Washington, DC 20585, or e-mail:
[email protected]
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Background
B. Process for Implementing the Guidelines
II. Overview of Major Changes Made in Response to Comments
III. Discussion of Public Comments and the Final Revised Guidelines
A. Implementation Schedule
B. Process for Updating or Amending the Guidelines
C. Distinction Between Reporting Under the Program and
Registering Reductions
1. Reporting Under the Program
2. Registration Requirements
D. Entity Definitions, Boundaries and Statements
1. Entity Definition
2. Entity Boundaries--General
3. Entity Boundaries--U.S. and Non-U.S. Emissions
4. Entity Statements
E. Large v. Small Emitters
F. Aggregators
G. Other Definitions
H. Start Year and First Reduction Year
I. Electricity Dactors and Benchmarks
J. Inventories
1. Requirement for Entity-Wide Inventories With a Quality Rating
of at Least 3.0
2. De minimis Exclusion From Entity-Wide Emission Inventories
3. Ratings for Estimation Methods Using Default Values
4. References to Continuous Emissions Monitoring Systems (CEMS)
5. Citations of Protocols and Emission Factors Developed by
Other Organizations
6. Options for Simplifying Emission Reports
7. Eliminate Requirements To Report Emissions From Biogenic
Sources and To Report Certain Non-Fuel Uses of Fossil Fuels
8. Treatment of Agriculture and Forestry
9. Stationary Source Combustion
10. Mobile Sources
11. Industrial Processes
12. Indirect Emissions
13. Geologic Sequestration
K. Reductions
1. Selecting Appropriate Reduction Calculation Methods
2. Base Periods and Base Values
3. Enabling Reporters To Choose More Stringent Base Values
4. Emissions Intensity
5. Absolute Emissions
6. Changes in Carbon Stocks
7. Avoided Emissions
8. Action-Specific Methods
9. Estimating Reductions From Energy Generation and Distribution
L. Offset Reductions
M. Certification and Verification
1. Certification
2. Independent Verification
N. Reporting and Recordkeeping
O. Report Review and Acceptance Process
P. Publication of General Guidelines in the Code of Federal
Regulations
IV. Regulatory Review and Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under the Treasury and General Government
Appropriations Act, 2001
G. Review Under Executive Order 12988
H. Review Under the Unfunded Mandates Reform Act of 1995
I. Review Under the Treasury and General Government
Appropriations Act, 1999
J. Review Under Executive Order 13211
K. Congressional Review
I. Introduction
A. Background
Section 1605(b) of the Energy Policy Act of 1992 (EPACT) directs
the Department of Energy, with the Energy Information Administration
(EIA), to establish a voluntary reporting program and database on
emissions of greenhouse gases, reductions of these gases, and carbon
sequestration activities (42 U.S.C. 13385(b)). Section 1605(b) requires
that DOE's guidelines provide for the ``accurate'' and ``voluntary''
reporting of information on: (1) Greenhouse gas emission levels for a
baseline period (1987-1990) and thereafter, annually; (2) greenhouse
gas emission reductions and carbon sequestration, regardless of the
specific method used to achieve them; (3) greenhouse gas emission
reductions achieved because of voluntary efforts, plant closings, or
state or federal requirements; and (4) the aggregate calculation of
greenhouse gas emissions by each reporting entity (42 U.S.C.
13385(b)(1)(A)-(D)). Section 1605(b) contemplates a program whereby
voluntary efforts to reduce greenhouse gas emissions can be recorded,
with the specific purpose that this record can be used ``by the
reporting entity to demonstrate achieved reductions of greenhouse
gases'' (42 U.S.C. 13385(b)(4)).
In 1994, after notice and public comment, DOE issued General
Guidelines and sector-specific guidelines that established the
Voluntary Reporting of Greenhouse Gases Program for recording
voluntarily submitted data and information on greenhouse gas emissions
and the results of actions to reduce, avoid or sequester greenhouse gas
emissions. The 1994 General Guidelines and supporting documents may be
accessed at http://www.eia.doe.gov/oiaf/1605/guidelns.html. The
Guidelines were intentionally flexible to encourage the broadest
possible participation. They permit participants to decide which
greenhouse gases to report, and allow for a range of reporting options,
including reporting of total emissions or emissions reductions or
reporting of just a single activity undertaken to reduce part of their
emissions. From its establishment in 1995 through the 2004 reporting
year, 417 entities, including utilities, manufacturers, coal mine
operators, landfill operators and others, have reported their
greenhouse gas emissions and/or their emission reductions to EIA.
On February 14, 2002, the President directed the Secretary of
Energy, in consultation with the Secretary of
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Commerce, the Secretary of Agriculture, and the Administrator of the
Environmental Protection Agency, to propose improvements to the current
section 1605(b) Voluntary Reporting of Greenhouse Gases Program. These
improvements are to enhance measurement accuracy, reliability, and
verifiability, working with and taking into account emerging domestic
and international approaches.
On May 6, 2002, DOE published a Notice of Inquiry soliciting public
comments on how best to improve the Voluntary Reporting of Greenhouse
Gases Program (67 FR 30370). Written comments were received from
electric utilities; representatives of energy, manufacturing and
agricultural sectors; Federal and State legislators; State agencies;
waste management companies; and environmental and other non-profit
research and advocacy organizations. DOE held public workshops in
Washington, DC, Chicago, San Francisco and Houston during November and
December of 2002 to receive information and hear the views of
interested persons. In addition, the U.S. Department of Agriculture
sponsored two workshops in January 2003 to solicit input on the
accounting rules and guidelines for reporting greenhouse gas emissions
in the forestry and agriculture sectors. These workshops explored in
greater depth many of the issues raised in the Notice of Inquiry and
addressed in the written comments.
On December 5, 2003, DOE proposed revised General Guidelines (68 FR
68204). A public workshop was held on January 12, 2004, to discuss that
proposal and to receive public comment. Approximately 200 persons
attended the workshop. In addition, over 300 written comments were
received by the close of the public comment period on February 17,
2004.
DOE published interim final revised General Guidelines on March 24,
2005 (70 FR 15169), and, in a notice published in the Federal Register
on the same day, made available for public comment the draft Technical
Guidelines necessary to fully implement the revisions to the Voluntary
Program (70 FR 15164). DOE sponsored a public workshop on these revised
guidelines on April 26 and 27, 2005, and USDA and DOE co-sponsored
another workshop on May 5, 2005. In response to public comments, DOE
extended the period for comments on the revised guidelines by 30 days
to June 22, 2005. Ultimately, DOE received over 90 written comments,
totaling over 1000 pages. All written comments and transcripts of the
public workshops are available on the Web and can be accessed at:
http://www.pi.energy.gov/enhancingGHGregistry/. On September 19, 2005,
DOE published a notice in the Federal Register delaying the effective
date of the interim final guidelines until June 1, 2006 (70 FR 54835).
DOE now publishes final General Guidelines and announces the
availability of final Technical Guidelines that are incorporated by
reference in the General Guidelines. The revised General and Technical
Guidelines are designed to enhance the measurement accuracy,
reliability and verifiability of information reported under the 1605(b)
program and to contribute to the President's climate change goals. The
key elements of the revised guidelines remain the same as those present
in the interim final General Guidelines:
Enable larger emitters to register reductions if they
provide entity-wide emissions data and can demonstrate they achieved
entity-wide emission reductions that contribute to the President's goal
of reducing the greenhouse gas emissions of the U.S. economy.
Provide for simplified procedures for small emitters to
report and to register reductions.
Provide for simplified reports from entities that do not
want to register their reductions.
Encourage companies and other reporting entities to report
at the highest level.
Require participants to ensure the accuracy and
completeness of their reports, and encourage independent verification.
Allow participants to report and register reductions
achieved internationally.
Based on the framework set forth by the interim final guidelines
and the various improvements made in response to the public comments
received, today's final revised guidelines will enhance:
Measurement accuracy by creating a ranking system for
methods to calculate emissions, incorporating the best available
inventory methods, and enabling more sources to be covered;
Reliability by creating a more systematic approach to
reporting, stressing inventories and entity-wide reporting; and
Verifiability by creating a more transparent reporting
system for emissions and reductions, requiring recordkeeping and
encouraging independent verification.
The Secretary of Energy has approved issuance of this final rule.
B. Process for Implementing the Guidelines
The General Guidelines set forth in this notice and the Technical
Guidelines incorporated by reference will go into effect on June 1,
2006. In the near future, EIA intends to make available for public
review and comment draft forms for collecting the data covered by these
guidelines, including the Simplified Emissions Inventory Tool (SEIT)
referenced in the guidelines. After taking into account any public
comments it receives and complying with the requirements of the
Paperwork Reduction Act of 1995, EIA anticipates that final forms will
be issued before the end of 2006. In addition, EIA will be developing
the software necessary to permit electronic reporting and the creation
of an automated and widely accessible data base. EIA does not
anticipate completing the necessary software until mid-2007. If time
and resources permit, EIA may conduct cognitive testing of beta
versions of the reporting software. Should EIA conduct such testing,
EIA will solicit potential participants via a public notice, postings
to its website, or some other means. According to the forms and
software schedule currently anticipated by EIA, the revised guidelines
will be used to govern the 2007 reporting cycle. Until then, entities
interested in reporting under the program during the 2006 reporting
cycle should use the existing guidelines and forms.
II. Overview of Major Changes Made in Response to Comments
The public comments received by DOE expressed considerable support
for the emphasis of the revised guidelines on entity-wide reporting on
all greenhouse gas emissions, including the added requirements imposed
on entities that are seeking to register reductions. There was also
substantial support for DOE's efforts to enhance the quality,
consistency and credibility of the emission inventories and reductions
being reported. The comments, however, raised a number of concerns
regarding the potential burdens of reporting under the revised
guidelines, possible incompatibilities with various existing reporting
programs or protocols, and the limitations on reporting certain types
of emission reductions, especially those occurring outside the
boundaries of the reporting entity. While the basic framework of the
guidelines remains the same, DOE has made a number of changes designed
to address these concerns, and has adopted many of the specific
recommendations made during the comment period.
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To reduce the potential burdens of reporting under the revised
guidelines, DOE's final guidelines:
Enable entities that have their reports independently
verified or that certify their use of higher quality inventory methods
to file less detailed reports;
Increase the ratings of some commonly used methods for
estimating emissions;
Enable reports on non-U.S. emissions to be consolidated
regionally or globally (as long as U.S. data is kept separate); and
Clarify the flexibility available to reporters that wish
to avoid or minimize the complexities of accounting for changes in
carbon stock or other provisions.
To increase the compatibility of the revised guidelines with
various existing reporting programs and protocols, DOE's final
guidelines update its references to existing protocols and update the
emission factors drawn from such protocols; provide an exception in
section 300.5(b) for participants in EPA's Climate Leaders or DOE's
Climate VISION who may wish to use base periods that end as early as
2000; and attempt to increase the alignment of various definitions and
methods with those used by other existing programs.
To expand the opportunities for reporting offset emission
reductions, DOE's final guidelines, among other things: (1) Add new
action-specific methods for demand-side management programs, the
substitution of fly ash for cement by concrete mixers, and anaerobic
digestion of waste at agricultural facilities and wastewater treatment
plants; (2) enable multiple reporting entities to register portions of
the offset reductions achieved by a single other entity, as long as the
other entity complies with all of the requirements for registration and
has entered into an agreement with each of the reporting entities; and
(3) permit the accelerated reporting of carbon stock increases expected
to occur on land that is being reforested, restored and permanently
protected.
DOE has not adopted the recommendation of commenters who advocated
that DOE mandate participation in the 1605(b) program because such a
mandate is beyond the statutory authority of DOE.
III. Discussion of Public Comments and the Final Revised Guidelines
This section of the Supplementary Information discusses the issues
raised by the public comments on the interim final General Guidelines
and the draft Technical Guidelines and any changes to the guidelines
that DOE has made in response to the comments.
A. Implementation Schedule
A few comments suggested that DOE consider a delay in the start of
the revised program or a phased implementation of the new requirements.
DOE does not consider either a delayed or phased implementation of the
revised guidelines to be necessary or practical. Starting the program
in calendar year 2007 should give most reporters sufficient time to
prepare to meet the requirements of the new program. If individual
reporters require additional time, they may delay their own
participation. Entities that are unable to meet all of the requirements
for registration may simply choose to meet only the requirements for
reporting under the program until such time as they are prepared to
meet all of the requirements for registration. Another available option
would be to take more time to complete the entity's first or second
annual reports. For example, an entity could decide to submit its
report on 2006 emissions during 2008, rather than by the 2007 deadline
for reports that are to be included in EIA's first public report on
2006 emissions (likely to be issued in late 2007 or early 2008).
Entities may submit reports on prior year emissions and emission
reductions at any time.
B. Process for Updating or Amending the Guidelines
DOE intends to review and, if necessary, update the guidelines
approximately every three years, although exceptional circumstances may
require amendment of the guidelines at other times. Modifications to
either the General Guidelines or the Technical Guidelines will be
subject to public notice and comment. Some commenters noted that this
public process might be too cumbersome and time consuming for the
adoption of routine updates to the many emission factors and protocols
cited by the guidelines. To address this concern, DOE has modified some
provisions of the Technical Guidelines to direct reporters to use the
most current version of certain government-sponsored or consensus-based
factors, methods and protocols.
C. Distinction Between Reporting Under the Program and Registering
Reductions
The revised guidelines set forth the requirements for all reporters
under the 1605(b) program as well as requirements that must be met by
only those reporters that are seeking to register emission reductions
(see section 300.1(b) and (c) of this rule for a description of the
requirements for reporting and registering emissions and reductions).
More specifically, while some new requirements are imposed on all
reporters by the revised guidelines, the requirements for entity-wide
reports and use of high quality emission inventory and reduction
methods are imposed only on those entities that are seeking to register
reductions. The distinct requirements for reporting under the program
and for registering reductions are key to achieving DOE's objective of
enhancing the overall quality and credibility of the reductions
documented by the program, while at the same time preserving most of
the flexibility available to reporters under the original program
guidelines.
Some commenters recommended that the distinction between reporting
under the program and registering emission reductions be eliminated,
which would enable all reporters to receive the same level of
recognition, regardless of whether or not they met the entity-wide
reporting requirements. DOE believes that the elimination of this
distinction would significantly diminish the incentive for large
emitters to improve the overall quality of their reports by undertaking
the more costly activities associated with emission inventories and
entity-wide assessments of reductions, which are required for
registration.
In addition to objecting on policy grounds to the distinction
between reported registered reductions and other reported reductions,
one commenter argued that in the absence of express authorization,
there is no legal basis in section 1605(b) for changing from a unitary
system of reporting to a two-tier system that distinguishes between two
types of reported emissions and reductions. Other commenters contended
that because section 1605(b) expressly includes reductions from plant
closings among the information that entities may report under the
program, DOE may not exclude such reductions from the reductions that
can be registered under the revised guidelines.
DOE rejects the comments arguing that DOE may not distinguish among
different types of reported emissions and reductions within EIA's
database because there is no express authority for such differentiation
in section 1605(b). Section 1605(b) broadly charges DOE with issuing
guidelines, after opportunity for public comment, for the ``voluntary
collection and reporting of information on sources of greenhouse
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gases.'' 42 U.S.C. 13385(b)(1). Further, the guidelines must include:
Procedures for the accurate voluntary reporting of information on--
(A) greenhouse gas emissions [starting with a statutorily-prescribed
baseline period and annually thereafter]; (B) annual reductions of
greenhouse gas emissions and carbon fixation achieved through any
measures, including [a list of such measures]; (C) reductions in
greenhouse gas emissions achieved as a result of--(i) voluntary
reductions; (ii) plant or facility closings; and (iii) State or
Federal requirements; and (D) an aggregate calculation of greenhouse
gas emissions by each reporting entity.
42 U.S.C. 133385(b)(1)(A)-(D) (emphasis added).
Nothing in the statute limits the information on sources of
greenhouse gases reported under the program to that described in
section 1605(b)(1)(A)-(D). Rather, the information described in (A)
through (D) is the minimum information that may be reported under DOE's
procedures. While the text of section 1605(b) does not specifically
address the question of whether DOE may create categories of reported
greenhouse gas information within the EIA database, DOE's procedures
must provide for the accurate voluntary reporting of information. One
of the goals of registration under the final revised guidelines is to
enhance the accuracy and reliability of greenhouse gas emissions and
reductions information. Thus, the text of section 1605(b), read in its
entirety, supports DOE's view that establishment of a category of
registered emissions for emissions and reductions that meet certain
requirements for entity-wide reporting is implicitly authorized by the
statute.
DOE also rejects the comment that because section 1605(b) expressly
includes reductions from plant and facility closings among the
information that entities may report under DOE's procedures, DOE may
only establish categories of reported information that include
reductions from plant and facility closings. DOE's textual analysis
stated above in rejecting the argument that DOE may not establish a
two-tiered reporting system applies here as well. Nothing in the
statute limits DOE's authority to go beyond the minimum information
categories in section 1605(b)(1)(A)-(D), and the requirement that DOE's
procedures provide for the accurate voluntary reporting of information
is implicit authorization for DOE to establish a system of registration
that enhances the accuracy and reliability of information reported on
an entity-wide basis.
Several commenters suggested that the revised program guidelines
should include a summary of the guidelines' requirements for reporting
and for registering emissions and reductions. In response, DOE is
providing a summary of the requirements in section 300.1 of today's
General Guidelines. The requirements for reporting and registering
emissions and reductions are described in the following sections of
this Supplementary Information.
1. Reporting Under the Program
Each reporter under the program must be an ``entity,'' as defined
in the guidelines and must file an entity statement. Reporters not
intending to register emission reductions must, at minimum, meet the
entity statement, record keeping, and certification requirements set
forth in sections 300.5(f), 300.9, and 300.10, respectively. They may
choose to report their emissions and/or their emission reductions on an
entity-wide basis or for selected elements of their entities, selected
gases or selected sources. Emission inventories for any year back to
1990 may be reported, and emission reductions may be reported for any
year back to 1991, relative to base periods of one to four years,
ending no earlier than 1990. All reporting entities, whether or not
they intend to register reductions, must use the emission inventory and
emission reduction calculation methods specified in the Technical
Guidelines. For example, as discussed in section III.K.8. of this
Supplementary Information, the guidelines now provide for the reporting
of the emissions and reductions associated with chlorofluorocarbons
(CFCs), although such reductions are not eligible for registration. In
the future, DOE may revise the guidelines to add methods that permit
the reporting and, in some cases, the registration of reductions
associated with other gases. While entities that do not intend to
register reductions need not ensure that their emission inventories
achieve a weighted average quality rating of 3.0 or higher (a
requirement that is discussed in section III.J.1 below), they must
calculate and report the weighted average quality rating of any
emission inventories they do report. In most situations, entities not
registering reductions may choose an emissions intensity, absolute
emissions or generic action-specific method to calculate the emission
reductions they report. However, in those situations where a special
calculation method is provided, such as sequestration, the sale of
distributed energy, or an action-specific method, the entity must use
the appropriate method provided in the Technical Guidelines. Entities
not intending to register reductions may also report (but not register)
offset reductions achieved by third parties outside their boundaries as
long as such reductions are reported separately and calculated in
accordance with methods specified in the guidelines. The third party
that achieved these reductions must agree to their being reported as
offset reductions, and must also meet all of the other minimum
requirements of reporting under the program, including the provision of
an entity statement, the maintenance of records, and necessary
certifications as stipulated in Sec. Sec. 300.9 and 300.10.
2. Registration Requirements
Entities that intend to register reductions must meet a number of
additional requirements, although these requirements differ depending
on whether the entity is a large or small emitter.
To be eligible for registration, a reduction must have been
calculated using a base period ending no later than 2002, unless the
entity has committed under the Climate Leaders or Climate VISION
programs to reduce its entity-wide emissions relative to a base period
that ends earlier than 2002, but no earlier than 2000.
In order to register reductions, large emitters must submit entity-
wide emission inventories that meet or exceed the minimum quality
requirements specified in Sec. 300.6(b) and the Technical Guidelines.
Any registered reductions must be based on entity-wide assessments of
annual changes in net emissions, determined in accordance with
Sec. Sec. 300.7 and 300.8 and the Technical Guidelines. They must also
meet the entity statement and certification requirements specified in
Sec. Sec. 300.5 and 300.10.
Small emitters must also submit emission inventories that meet
minimum quality requirements and base their registered reductions on
assessments of annual changes in net emissions, but small emitters may
restrict these inventories and assessments to a single type of
activity, such as forest management, building operations or
agricultural tillage, rather than covering all of their entity's
emissions. Small emitters must also submit entity statements, certify
the accuracy of their reports and meet other requirements of reporting
and registering.
Both large emitters and small emitters that have met the
requirements for registering their own reductions may also register
offset reductions achieved by other entities, as long as they have an
agreement with the third party to do
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so and these third parties have met all of the requirements for
registration. Small emitters that serve as aggregators may register
offset reductions without reporting on their own emissions. Entities
that report offset reductions achieved by very small emitters (those
typically emitting less than 500 metric tons of CO2
equivalent emissions per year) as a result of demand management or
other programs that reduce greenhouse gas emissions, may register such
reductions as long as they are calculated in accordance with the
action-specific method identified in section 300.8(h)(5).
D. Entity Definitions, Boundaries and Statements
Most of the comments on these provisions of the interim final
guidelines were generally supportive, although a few significant
concerns were raised and a number of specific changes were recommended.
1. Entity Definition
Several commenters urged DOE to require entities to report at their
highest level of aggregation within the United States, while other
commenters urged DOE to provide entities even more flexibility in how
they define themselves for the purpose of reporting under the program.
The final guidelines retain the basic approach put forward in the
interim final General Guidelines: entities must have a legal basis and
are encouraged--but not required--to report at their highest level of
aggregation within the United States. If an entity chooses to report at
a lower level of aggregation, the reporting entity must have a legal
basis and must be defined in a way that is consistent with the
management structure of the parent company or organization.
Section 300.2 of the interim final rule defines ``entity or
reporting entity'' as the whole or part of any business, institution,
organization or household that is recognized as an entity under any
U.S. Federal, State or local law that applies to it; is located, at
least in part, in the United States; and whose operations affect U.S.
emissions of greenhouse gases. Some commenters argued that the
``legally distinct entity'' test is too inflexible and urged DOE to
abandon the test. One stated that electricity providers may have
different reporting options due to differences in State regulation or
the absence of such regulation. The commenter recommended revising the
definition to allow an entity to consist of a set of corporate business
and other organizational units that comprise a single business
activity, even though they may not be legally distinct. Another
commenter stated that the definition of ``entity'' would pose a problem
for global corporations that are legally structured by product line,
rather than by country. A large industry association did not criticize
the substance of DOE's definition of ``entity or reporting entity,''
but rather offered drafting guidance that it considered would better
accomplish DOE's intent. It also suggested a separate definition of
``reporting entity.''
After considering the comments, DOE has retained the requirement
that an entity that reports under the 1605(b) program must be
recognized as an entity under a U.S. Federal, State or local law. In
light of changes to the provisions for reporting non-U.S. emissions
(discussed elsewhere in this Supplementary Information), DOE does not
believe the definition of ``entity'' in the final guidelines will pose
a problem for global corporations. While not necessarily agreeing with
many of the criticisms of the interim final guideline definition of
``entity or reporting entity,'' DOE found the suggested drafting
improvements to be helpful and has included several of them in revised
definitions for the terms ``entity'' and ``reporting entity.'' These
changes include increased emphasis on the coverage of government
bodies, agencies or other institutions, which DOE always intended to be
encompassed by the broad definition of entity included in the
guidelines.
2. Entity Boundaries--General
The organizational boundaries of reporting entities largely
determine which emissions and sources are covered by the entity's
reports. DOE's interim final General Guidelines encourage entities to
use financial control as the primary basis for determining the
organizational boundaries of the reporting entity. While the interim
guidelines encourage the use of financial control as the basis for
setting organizational boundaries, they permit entities to use other
methods, such as equity share or operational control, as long as they
are explained.
Boundary definitions are important because they determine what
emission and emission reductions a particular reporting entity may
assume responsibility for when reporting under the program. As a
voluntary reporting program, however, 1605(b) boundaries do not
determine the legal rights of reporting entities to emissions or
emission reductions. They are used only as the basis for DOE
recognition of any registered reductions reported under the program.
The comments received by DOE on these provisions of the guidelines were
generally supportive of DOE's approach, although some encouraged even
more flexibility. No changes have been made to the provisions included
in the interim final guidelines.
Financial control encompasses all buildings, facilities, lands,
vehicles and equipment that are wholly owned by the entity or in which
the entity has a controlling financial interest. Conversely, it usually
does not include buildings, facilities, lands, vehicles and equipment
that are wholly owned by a different entity or in which another entity
has a controlling financial interest. However, financial control would
exist if an entity has a long-term lease or other long-term agreement
that gives it effective control over capital investment and operational
decisions.
An alternative method for determining entity boundaries is equity
share, where more than one entity has a financial interest in a
particular facility or emission source, and each of the entities takes
responsibility for reporting only a portion of the facilities emissions
and reductions. Operational control, where an entity controls the day-
to-day operations of facility or source, but does not exercise long
term financial control might also be an option under certain
circumstances. If either equity share or operational control is chosen
as the method for determining boundaries, the reporting entity must
inform the other entities that share responsibility for particular
sources of its intention to report under the 1605(b) in order to ensure
that the sources emissions or reductions are not double-counted under
the program. Finally, the General Guidelines have been modified to
provide further guidance regarding the coverage of partially-owned or
leased sources, and sources that are neither owned nor leased by the
reporting entity.
3. Entity Boundaries--U.S. and Non-U.S. Emissions
The interim final guidelines permit entities to define their entity
so as to include operations, and their associated emissions, located
outside of the United States. They also permit certain non-U.S.
entities to be the source of offset emission reductions, as long as
they meet all of the requirements of the revised guidelines. The
interim final General Guidelines would allow entities to both report
and register emissions and emission reductions occurring outside of the
United States, subject to certain requirements. One of these
requirements is that non-U.S. emissions
[[Page 20789]]
and reductions must be reported separately from U.S. emissions and
reductions. DOE has clarified the guidelines to indicate that this does
not mean that the U.S. and non-U.S. emissions and reductions must be
submitted in separate reports. Under the final guidelines, non-U.S.
emissions and reductions must be included in one or more distinct
subentities identified in the entity's report to EIA and must be
separately sub-totaled before being considered as part of the entity's
net emission reductions qualifying for registration. Unless
specifically identified by the report, EIA will presume that all non-
U.S. reductions are governed, at least in part, by national or
international greenhouse gas regulations, and that such reductions
might be eligible for transfer or trading to other entities. However,
reporters will not be able to register emission reductions that do not
meet the requirements of these guidelines, whether or not they are
eligible for transfer or trading under a foreign national or multi-
national scheme.
In allowing entities to both report and register emissions and
emission reductions occurring outside of the United States, the interim
final General Guidelines require that emissions and reductions for each
country be segregated in the report submitted to EIA. One stakeholder,
a large multinational corporation, argued that this would place an
undue burden on companies having operations in numerous countries,
particularly where business units that provide an appropriate level of
aggregation (i.e., as separate subentities) cross national borders. In
the final guidelines, DOE encourages entities that wish to report or
register non-U.S. activities to segregate emissions and reductions from
each country in a separate subentity. However, reporters are permitted
to aggregate non-U.S. emissions and reductions at regional and even
non-U.S. global levels, as long as they identify each of the countries
covered and the country-specific factors used to generate their
reports.
4. Entity Statements
DOE's interim final guidelines include a number of specific
requirements for the contents of the entity statements to be submitted
by all reporters, although the specific requirements vary somewhat
depending on whether the reporter is a large or small emitter
interested in registering reductions, or a reporter that is not
intending to register reductions. Very few comments were received on
the requirements and no significant changes have been made to the
provisions concerning the entity statement.
E. Large v. Small Emitters
Under the interim final guidelines, ``small emitters'' are a
special category of reporters that are exempted from certain
requirements for the registration of reductions, including entity-wide
emission inventories and entity-wide assessments of reductions. DOE
received a substantial number of comments on these provisions. Several
of these comments were critical of the exemptions and argued that small
emitters deserve no special treatment. These were countered by a number
of other comments that argued that the burdens on small emitters under
the interim final guidelines are too onerous, and the exemptions should
be expanded. After considering these comments, DOE believes that the
provisions in the interim final guidelines strike the proper balance
between relieving the burden on small emitters and requiring the
submission of emissions information for registration. Consequently, DOE
has not significantly altered these provisions of the guidelines. It
should be noted that small emitters seeking to register reductions are
only required to report on the emissions and reductions associated with
a single, chosen ``activity,'' rather than all of the entity's
activities. Finally, the guidelines continue to permit entities to use
a Simplified Emissions Inventory Tool (SEIT), to be provided by the
Energy Information Administration, to estimate their emissions for
purposes of determining whether the entity is a small or large emitter,
and for estimating the quantity of emissions excluded as de minimis.
The guidelines now clearly state that the SEIT may not be used for the
preparation of emission inventories.
F. Aggregators
In the interim final guidelines, DOE provides some special guidance
for entities that register reductions on behalf of other entities, so-
called ``aggregators.'' Large emitters that serve as aggregators must
meet all of the requirements for registration, including submission of
entity-wide emission inventories and entity-wide assessment of their
emission reductions. However, entities that are small emitters can
register the offset reductions of other entities and not report on any
of their own emissions or reductions, although such small emitters
would have to submit an entity-statement and an estimate of their total
emissions indicating that they qualified as a small emitter. While
aggregators can be either small or large emitters, DOE believes that
most are likely to be small organizations or companies that would
qualify as small emitters. Some aggregators, such as trade
associations, might report on behalf of large emitters, but the
potential benefits of such indirect reporting by large emitters are
limited because essentially the same data and certifications would have
to be provided to DOE, whether the entity reported directly or through
an aggregator. DOE received some requests for clarification of these
requirements, but none of the comments suggested major changes.
G. Other Definitions
The interim final General Guidelines, and the Glossary accompanying
the draft Technical Guidelines, define terms used in the guidelines.
These definitions were the focus of considerable comment, and many
comments offered specific suggestions for changes. Others recommended
the addition of new definitions of terms or, in some cases, the
transfer of a definition that appeared in the Glossary to the
definition section of the General Guidelines. A few comments noted
differences between terms and definitions used in the DOE guidelines
and comparable terms and definitions used in other protocols for the
reporting of greenhouse gas emissions. While DOE has attempted to
minimize such differences, DOE has concluded that in some situations,
it is necessary to use a new term or define a term in a way that
differs from the usage or definition of the term used by other
programs. For this reason, DOE urges reporters and other users to
carefully review the definitions contained in both the final General
Guidelines and the final Technical Guidelines.
The following sections summarize the comments received on
definitions and DOE's response to the comments.
Activity of a small emitter. This term is used to define the
minimum scope of reports by small emitters interested in registering
reductions. It has been modified slightly to more clearly indicate that
it applies to anthropogenic actions that result in emissions or
sequestration.
Anthropogenic. This definition has been moved from the Glossary to
the General Guidelines and has been modified to more closely parallel
the definition of this term under the Climate Leaders and Climate
VISION programs.
Avoided emissions. The definition of this term has been modified to
enable it to encompass more types of ``avoided emissions'' in the
future. Its practical scope is still strictly limited by the reduction
calculation methods
[[Page 20790]]
specifically identified and permitted under the guidelines. As
modified, the term encompasses any emission reduction that occurs
outside an entity's boundary that results from changes in the activity
of an entity, but in practice avoided emissions is still strictly
limited to the emissions displaced by increases in the distribution of
various types of energy that have been derived from renewable, nuclear
or other low or non-emitting sources.
Carbon dioxide equivalent. A definition for this term has been
added to the General Guidelines.
Carbon stocks. The definition of this term has been slightly
modified to clarify its scope in the context of these guidelines, as
suggested by public comment.
Climate Leaders and Climate VISION. The definitions of these
programs have been modified and moved to the General Guidelines.
Direct emissions. The definition has been modified to link such
emissions to sources within the organizational boundaries of reporting
entities.
Distributed energy. A definition for this term has been added to
the General Guidelines. The term ``exported energy,'' sometimes used in
the interim final guidelines, is no longer used.
The definition for ``entity-level reporting,'' which previously
appeared in the Glossary, has been deleted.
The definition of ``entity statements'' that appears in the
Glossary has been deleted. The meaning of the term ``Entity
Statements'' is fully described in section 300.5(d) and (e).
Greenhouse gases. The definition has been modified to more clearly
identify the gases that may be the subject of reports under the
guidelines.
Incidental lands. A definition for this term has been added to the
General Guidelines.
Indirect emissions. The definition for this term has been modified
to parallel similar modifications made to the definition of ``direct
emissions.'' The definition of ``emission, indirect'', which appears in
the Glossary, is repetitive and has been deleted. While the indirect
emissions are currently limited to those associated with the generation
of energy by another entity that is ultimately used by the reporting
entity, the definition leaves open the possibility that other types of
indirect emissions may be added in the future.
Intergovernmental Panel on Climate Change (IPCC). The definition
for the IPCC that appears in the Glossary has been modified in response
to comments received.
Net emission reductions. This refers to the sum of all reductions
in a given year that qualify for consideration as registered
reductions. It has been only slightly modified to improve its clarity.
Offset. The definition has been modified to improve its clarity.
Registration. A definition for this term has been added to the
General Guidelines.
Reporting entity. A definition for this term has been added to the
General Guidelines.
Sequestration. The definition has been simplified, but its intended
scope remains broad.
Source. The definition has been slightly expanded to emphasize its
broad scope.
Small emitter and large emitter. Definitions for both of these
terms have been added to the General Guidelines.
Start year. The definition has been simplified to improve its
clarity, as suggested by public comments.
Total emissions. The definition has been modified to correct an
error, as suggested by public comments.
H. Start Year and First Reduction Year
The interim final General Guidelines provide that reporters not
intending to register reductions can establish base periods as early as
the 1987-1990 timeframe identified in section 1605(b) and can report
reductions beginning as early as 1991. However, the interim final
guidelines provide that entities intent on registering reductions must
establish base periods of no more than four years that end no earlier
than 2002, and may not register reductions that were achieved prior to
2003.
DOE received a number of comments on these provisions of the
interim final guidelines, most of which recommended that entities be
allowed to report emissions and emission reductions that occurred prior
to 2002/2003. Some commenters indicated that they had made commitments
under the Climate Leaders or Climate VISION programs that used base
periods that ended prior to 2002 and that they were able to report the
progress made toward the achievement of these commitments prior to
2003. In response to these comments, DOE has modified the guidelines to
permit entities that have made a commitment to reduce entity-wide
emissions under the Climate Leaders or Climate VISION to establish base
periods that end as early as 2000. This exception would permit most,
but not all participants in these programs to use the same base periods
used in such voluntary programs in their reports to DOE under the 1605b
program.
DOE believes that even with this exception, the program will
continue to be focused on recent and future efforts to reduce
greenhouse gas emissions and consistent with providing an indication of
the reporting entities' contributions to the President's goal of
reducing greenhouse gas emissions intensity of the U.S. economy by 18
percent between 2002 and 2012. The revised General Guidelines still
permit reporting of historical activity, however, and therefore fully
comply with the statutory requirements of section 1605(b).
I. Electricity Factors and Benchmarks
The interim final guidelines establish several different kinds of
emission factors and benchmarks intended to approximate the emissions
associated with electricity use, the emissions avoided as a result of
reduced electricity demand, or the emissions avoided by increasing
generation from non-emitting or low-emitting sources. For emission
inventories, the interim final guidelines provide that entities should
convert their electricity demand to emissions using factors supplied by
DOE that would be based on the regional averages of electric sector
emissions intensities. DOE stated that entities should use factors that
were derived from the national average emissions intensity of the
electric sector as a whole for calculating reductions associated with
reduced electricity demand or increased generation from non-emitting or
low-emitting sources. DOE indicated that the national average emissions
intensity was considered to be a better indicator of the actual
emissions likely to be displaced by reduced demand or increased
generation.
Many commenters recommended making the factors used for inventories
and for calculating reductions the same, although some supported the
DOE's rationale for proposing different factors. Some advocated
regional factors as better indicators of the emissions and reductions
associated with specific sources. Others advocated national factors as
good indicators of actual emissions and reductions, and as a way of
simplifying the reporting burden of entities that operated in multiple
regions. Some utilities recommended that the benchmark used for
estimating avoided emissions be based on the regional averages of
fossil-fired generating plants, which they argued would be a better
indictor of the emissions being displaced. Other utilities recommended
that entities be permitted to choose either a system-specific
benchmark, based on the emissions intensity of marginal plants, or a
regional average.
After careful consideration of the comments, DOE has adopted the
[[Page 20791]]
recommendation of some utilities to base the factors used to estimate
the emissions avoided by reduced electricity demand or increased
generation from non-emitting or low-emitting sources on the regional
average emissions intensities of fossil-fired generating plants, with
the proviso that no regional value may exceed 0.9 metric tons of
CO2 per megawatt hour (MWH). The maximum value of 0.9 metric
tons per MWH is designed to ensure that all utilities have a clear
incentive to build new capacity that is at least as efficient as the
most efficient coal-fired generating plants. DOE chose not to provide
generators with the flexibility to choose national or regional values,
or to develop their own, system-specific values in order to avoid the
significant self-selection bias that would result from such
flexibility.
The definition of the U.S. regions to be used in calculating the
indirect emissions associated with electricity use and avoided emission
benchmarks is an important technical issue. In the draft Technical
Guidelines, DOE indicated its intent to use North American Electric
Reliability Council (NERC) regions as the basis for the indirect
emission factors used in preparing emission inventories. Some comments
suggested that NERC subregions, especially for the western United
States would be more appropriate. Others urged DOE to consider the use
of EPA's eGRID regions. In choosing among these and other options, DOE
considered whether: (1) It would be possible to provide meaningful
values for all possible reporting years (the earliest possible
reporting year is 1987) based on readily available public data; (2)
reporters would be able to readily determine which factor applied to
specific facilities or operations; and (3) the resulting factors would
provide a good approximation of the indirect emissions associated with
electricity use or demand reductions in a particular region. After
careful consideration, DOE concluded that basing indirect emission
factors on either NERC or eGRID regions would not achieve one or more
of these three objectives. For example, because the NERC and eGRID
regions cut across state lines, it will likely be difficult for
reporters to determine which region is applicable to a specific
facility.
Consequently, DOE decided to base these factors on the electric
sector emission intensities of state-based regions that approximate the
most current NERC regions and, in the case of the western United
States, appropriate subregions. The purpose of these state-based
regions is to approximate the actual emissions associated with the
electricity supplied to users, while also utilizing data that is
readily available for all reporting years and boundaries that are well
recognized by potential reporters. EIA will determine the most
appropriate State groupings for the development of the indirect and
avoided emission factors based on NERC regions and applicable
subregions, as defined in June 2006. Generally, those states that are
split among two or more NERC regions or subregions should be assigned
to the state grouping that contains most of the state's population. One
possible grouping that will be considered by EIA is: (1) New York,
Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire and
Maine; (2) New Jersey, Delaware, Pennsylvania, Maryland, West Virginia,
Ohio, Indiana and Michigan; (3) Illinois and Wisconsin; (4) Missouri,
Kentucky, Virginia, Arkansas, Tennessee, North Carolina, South
Carolina, Louisiana, Mississippi, Alabama and Georgia; (5) Florida; (6)
Texas; (7) Oklahoma and Kansas; (8) North Dakota, South Dakota,
Nebraska, Minnesota and Iowa; (9) Colorado, Utah, Nevada, Wyoming and
Montana; (10) New Mexico and Arizona; (11) Oregon, Washington and
Idaho; (12) California; (13) Hawaii; and (14) Alaska. EIA will provide
factors for 1999 and subsequent data years and will periodically (e.g.,
every three to five years) update these factors to reflect what they
determine to be significant and lasting changes in the electric sector
emissions intensity of the established state groupings. EIA will also
provide a set of values to be used for all data years prior to 1999.
Several comments focused on the treatment of transmission and
distribution (T&D) losses in the calculation of the factors used to
represent the emissions associated with electricity demand (to be
included in emission inventories) and reductions in electricity demand
(to be included in emission reduction calculations). Some noted that
T&D losses were not included in the emission factors widely used by the
Climate Leaders program. Others favored the inclusion of such T&D
losses in the factors representing emissions associated with
electricity demand and reductions. DOE decided to continue to include
such losses in the factors used to estimate both the inventories and
reductions associated with electricity use. By including such losses,
these factors will provide a better indicator of the emissions
resulting from electricity demand. Entities that wish to include both
generation and T&D losses in their reporting of indirect emissions to
the Climate Leaders program may do so, as long as they note that their
reports include both types of losses, based on the factors provided by
DOE.
J. Inventories
The interim final guidelines provide detailed guidelines for the
conduct of emission inventories. DOE received a large number of
comments that touched on emission inventory guidelines in some way.
Most comments were generally supportive of the framework for emission
inventories set forth in the General Guidelines and the more detailed
provisions of the draft Technical Guidelines. However, some commenters
raised concerns regarding the start year and de minimis requirements of
the interim final guidelines, while others suggested various
improvements to the methods cited or the quality ratings assigned to
these methods.
In the final guidelines, an emissions inventory is an accounting of
an entity's actual emissions (direct, indirect and sequestered) during
a specified year. An emissions inventory provides, by itself, a useful
record of an entity's actual emissions over time, but it also serves as
one of the inputs necessary for the calculation of the base values used
in determining emission reductions. For this reason, an emissions
inventory is usually a major element of an entity's first report under
the program.
Since emission inventories are a critical part of calculating
emission reductions, all reports under the revised program should
include some kind of inventory. Entities that do not intend to register
reductions and small emitters may restrict their inventory data to
those sources or activities that will be the focus of future emission
reduction calculations. However, large emitters that intend to register
reductions must submit entity-wide emission inventories and may exclude
from such inventories only de minimis emissions. Any entity that wishes
to register reductions must ensure that its annual inventories meet the
minimum quality requirements specified in the guidelines.
The following sections summarize the major comments that addressed
the emission inventory requirements of the interim final guidelines and
DOE's responses to the comments.
1. Requirement for Entity-Wide Inventories With a Quality Rating of at
Least 3.0
The interim final guidelines established a quality rating system
for emission inventories. Reporters could choose among a range of
different methods for measuring or estimating the emissions from
specific sources. Each
[[Page 20792]]
different method was assigned a rating of A, B, C or D and each of
these ratings was assigned a numerical value from 4.0 (for A rated
methods) to 1.0 (for D rated methods). Entities that were intent on
registering reductions would be required to complete emission
inventories that had a quantity-weighted quality rating of at least
3.0.
Most comments received by DOE supported the emphasis of the interim
final guidelines on quality entity-wide inventories. The final rule
retains the requirement for a 3.0 quality rating for the emissions
inventories that large emitters must submit as a prerequisite for
registering reductions. DOE believes that methods given an A or B
rating are sufficiently accurate to serve as the basis for entity-wide
reporting, while methods given a C or D rating should be used only for
those gases or sources that represent a small share of the reporting
entity's total emissions. Several commenters suggested that the A and B
methods available for specific sources or industrial sectors are too
burdensome and will make it difficult for some entities to prepare
inventories that meet the 3.0 quality rating. DOE has made some
modifications to the ratings for the available methods to ensure that a
cost-effective and practical A- or B-rated method is available for
every emissions source.
As the table below demonstrates, three very different companies
with diverse emission profiles could meet the 3.0 quality rating
threshold using an inventory approach specific to their company.
Company A is a large electric utility, with a vast preponderance of
emissions attributable to stationary fossil fuel combustion. As a
result, this company may use lower rated (and lower cost) methods for
estimating emissions from its smaller sources, such as fleet vehicles
and sulfur hexafluoride used as an insulator on transmission lines.
Similarly, a landfill operator could achieve the quality-rating
threshold by ensuring that it uses ``B'' or better-rated methods for
estimating methane emissions from the landfill. Company C, a large
Federal defense contractor, is able to offset its lower rated estimates
of emissions from mobile sources with higher rated methods for
estimating emissions from stationary combustion at its lone
manufacturing facility.
----------------------------------------------------------------------------------------------------------------
Emissions
Source metric tons Method Emissions weighted grade
CO2e grade
----------------------------------------------------------------------------------------------------------------
Company A (Large Utility)
Direct Emissions:
Stationary Combustion............................... 300,000 A = 4 300,000*4 = 1,200,000
Fleet Vehicles...................................... 10,000 C = 2 10,000*2 = 20,000
Sulfur Hexafluoride on T&D System................... 500 C = 2 500*2 = 1,000
Indirect Emissions:
Electricity in Commercial Offices................... 1,000 B = 3 1,000*3 = 3,000
-------------------------------------------------------
Total........................................... 311,500 3.92 1,224,000/311,500 = 3.92
=======================================================
Company B (Landfill Operator)
Direct Emissions:
Methane from Decomposition.......................... 50,000 B = 3 50,000*3 = 150,000
Heavy Duty Vehicle Fuel Use......................... 200 B = 3 200*3 = 600
Indirect Emissions:
Electricity Consumption............................. 50 A = 4 50*4 = 200
-------------------------------------------------------
Total........................................... 50,250 3.00 150,800/50,250 = 3.00
=======================================================
Company C (Large Federal Defense Contractor)
Direct Emissions:
Vehicle Fuel Use.................................... 500 C = 2 500*2 = 1,000
Stationary Combustion at Manufacturing Facility..... 800 A = 4 800*4 = 3,200
Indirect Emissions:
Electricity in Commercial Offices................... 9,000 B = 3 9,000*3 = 27,000
-------------------------------------------------------
Total........................................... 10,300 3.03 31,200/10,300 = 3.03
----------------------------------------------------------------------------------------------------------------
DOE has modified the guidelines to enable entities that obtain
independent verification to simplify their inventory reports and to
permit entities that certify their use of only A or B methods to forego
the reporting or calculation of a quantity-weighted quality rating.
Finally, DOE has made some clarifying changes to emphasize that prior
year inventories may be modified only to correct significant errors,
and that entities may choose at any time to modify the methods used to
prepare their current and future year inventories. DOE hopes that such
modifications lead to improvements in inventories over time.
2. De Minimis Exclusion From Entity-Wide Emission Inventories
Numerous comments proposed changes to the provision of the interim
final General Guidelines that allows entities to exclude from their
entity-wide emission inventories up to 3 percent of their total
emissions. Many of these commenters recommended that entities be
permitted to exclude up to 5 percent of their total emissions, while
others proposed to permit entities to exclude certain types of sources
entirely, such as motor vehicles that are not an integral part of the
production process or small tracts of undeveloped land. On the other
hand, a number of commenters requested that the de minimis exclusion be
removed from the guidelines, and that all entities be required to
inventory all of their emissions every year. Still others recommended
the use of some kind of ``materiality'' test to determine whether or
not certain emissions could be excluded. After serious consideration of
all of these comments, DOE decided not to make any change in the de
minimis provisions of the General Guidelines. DOE believes that the 3
percent de
[[Page 20793]]
minimis exclusion is appropriate because a larger de minimis exclusion
risks ignoring sources that could affect the assessment of entity-wide
emission reductions. DOE emphasizes that it will be possible for
entities to achieve an overall 3.0 quality rating with limited use of
low cost, D-rated estimation methods for small emission sources. A
major reason for the introduction of the quality rating system is that
it gives entities the ability to complete inventories that are more
comprehensive without incurring the high costs of applying high quality
measurement methods to comparatively small, dispersed sources. With
respect to land holdings, the guidelines do provide for the exclusion
of incidental, forested lands, as long as they are not actively managed
for wood production or otherwise developed.
3. Ratings for Estimation Methods Using Default Values
The interim final Technical Guidelines contain a rating system for
determining the quality of emission inventories reported under the
1605(b) program. Up to four methods are identified and rated for
measuring or estimating the emissions from every source, with the
highest rating being an A (worth 4 points) and the lowest a D (worth 1
point). For each distinct source, the ratings are ordinal--meaning that
the best method received an A rating and the poorest method received a
D. Under the interim final guidelines, this approach results in some
very large disparities between the ``A'' methods of different sources.
For some sources, where field measurement methods are not practical and
estimation methods are not well developed, a method that relies on
default factors is given an ``A'' rating because it is the best
available method. In other cases, such as forest ecosystems, the use of
well-researched default factors rate a ``C'' or ``D'', unless they have
been validated by independent data from the specific site and
management condition. These disparities were the focus of a number of
critical comments.
In response to these comments, the final guidelines have been
modified to restrict ``A'' ratings to methodologies where computations
are based primarily on values indicative of on-site conditions measured
continuously or over multiple periods. In cases where no methodology
qualifies for an A rating, the best method will be rated ``B'' and
given a value of three points. Using this approach, the best methods
for certain agricultural sources warrant only a B.
A related issue concerns the quality ratings given methods that
rely upon default factors that have been widely reviewed and adopted by
a public agency, a standards-setting organization or an industry group.
The draft Technical Guidelines could have made it difficult for
reporters in certain industries to receive a 3.0 quality rating or
above, even though they utilized methods and factors that were
generally accepted within the relevant industry as being the most
practical and effective means of estimating emissions from certain
sources. For example, in many cases, the draft technical guidelines
provided a C rating for widely accepted default factors, even though
source-specific emission measurements would be very costly or
impractical. To correct this problem, the final guidelines raise
certain consensus-based default factors to ``B'' ratings where more
accurate methods are not considered cost-effective and where the
default factors have been established by an industry-wide peer review
process, with public documentation.
4. References to Continuous Emissions Monitoring Systems (CEMS)
A number of commenters pointed out that CEMS are not practical for
many industrial applications. For such applications, mass balance or
default emission factors may be the only practical options. In the oil
and gas exploration and production industry, for example, estimating
emissions by using measured activity data and emission factors
available through government (AP-42, available at: http://www.epa.gov/ttn/chief/ap42/) or industry (API Compendium, available at: http://api-ec.api.org/policy/index.cfm?objectid=C79E99D5-E714-40ED-81C8C32F1492851C&method=display_body&er=1&bitmask=001001004001000000 bitmask=001001004001000000) approved methodologies is the most accurate
method available and warrants a high rating.
If CEMS are used, albeit rarely, for a particular source, direct
measurement is kept in the final guidelines as an A-rated option, while
other methods for this source that use mass balance or default emission
factors methods are also given an ``A'' rating, as long as they are
derived from site-specific measurements.
5. Citations of Protocols and Emission Factors Developed by Other
Organizations
The interim final guidelines include citations to several other
protocols or standards, and include a number of emission factors drawn
from such protocols or standards. Numerous comments noted that some of
the documents and emission factors cited in the guidelines had not been
subsequently updated. Many of these comments recommended that DOE
update these citations and some recommended that DOE's guidelines
direct reporters to use future updates of such protocols or standards,
as they become available.
The final guidelines do include a number of updated references and
emission factors, as recommended by commenters. In addition, they
direct reporters to use the most current methods established by
specified government agencies (EPA, USDA) or independent standards-
setting organizations (IPCC) and direct EIA to periodically update
forms/instructions to reflect such methods/factors. With regard to
methods in other sources, the final guidelines provide that DOE will
review and update, as appropriate, the guidelines periodically and in
response to specific requests.
6. Options for Simplifying Emission Reports
A number of entities expressed concerns regarding the potential
burdens of reporting detailed, entity-wide inventories and a few
suggested options for reducing these burdens. In the final guidelines,
DOE provides for two approaches that will enable entities to reduce the
detail of the reports submitted to DOE. First, if an entity certifies
that it has used only A or B rated emission inventory methods, it need
not calculate or report the quantity-weighted average quality rating of
its emissions inventory. When accepted, EIA will indicate in the
database that the quality rating of the inventory meets or exceeds the
3.0 level. Second, if an entity has its report independently verified,
including the quantity-weighted quality rating of its inventory, it may
report its inventory data at a higher level of aggregation (by
greenhouse gas, rather than by source category).
7. Eliminate Requirements To Report Emissions From Biogenic Sources and
To Report Certain Non-Fuel Uses of Fossil Fuels
The interim final guidelines require the reporting of many uses of
fossil fuels and a determination of whether a non-fuel use of a fossil
fuel involves a sequestering, non-sequestering, or partially
sequestering activity. The interim final guidelines also require the
reporting of certain biogenic emissions, such as the carbon dioxide
emitted by combusting ethanol in vehicles. To reduce the burdens of
reporting, the final guidelines require reporters to
[[Page 20794]]
report only anthropogenic emissions of greenhouse gases. Entities
should not report biogenic emissions or non-emitting uses of fossil
fuels, such as fuels used to create materials used to manufacture
products.
8. Treatment of Agriculture and Forestry
The draft Technical Guidelines would provide extensive new
methodologies for estimating greenhouse gas emissions and carbon
sequestration from the forest and agriculture sectors. A number of
commenters expressed appreciation for the improvements in the draft
guidelines, noting specifically the benefit of the COMET model for
estimating changes in carbon stocks on agricultural soils and new
advances in estimating forest carbon. Several comments proposed
improvements in the technical methods and underlying coefficients and
data. Some commenters expressed concern that the methods proposed were
too complex and detailed. Other commenters maintained that the methods
were not adequate and included significant uncertainties that would
limit their use under a potential future regulatory system.
USDA and DOE reviewed the inventory methods for forestry and
agriculture in light of these comments and made changes where
appropriate to reflect new information. The review noted that
relatively simple inventory methods are available for virtually all of
the sources and sinks in the agriculture and forest sectors. The
availability of methods for all greenhouse gas emission sources and
carbon sinks was important to enable entities to provide comprehensive
entity-wide inventories. The review also noted that alternative methods
are provided for many sources and that these alternative methods vary
from the simple to the complex. The complex methods generally provide
entities with the ability to reduce uncertainties. For some
agricultural sources, the guidelines only provide simple default
methodologies. In the draft guidelines, these methods were given an
``A'' rating. In the final guidelines, these methods are given a ``B''
rating. The explanation for these changes is explained in section J.3.,
above.
a. Sustainable forest management. Provisions of the draft Technical
Guidelines would allow entities to report a default carbon flux value
of ``zero'' for forestlands that are verified through third-party
certification as being sustainably managed. DOE received comments
questioning the credibility of certain sustainable forest certification
systems and the assumption that it is ``highly unlikely'' that carbon
stocks decline in sustainably managed forests. Other comments agreed
with this assumption and recommended that Sec. 300.6(g)(1) be modified
to clearly state that any changes in sequestration for forests managed
under certified sustainable management systems are de minimis and need
not be a part of entity's annual report.
The USDA Forest Service reviewed four existing certification
systems and determined that while there are some differences among the
major certification programs in their goals and technical details, all
of the programs set high standards, have rigorous third-party audit
protocols, are generally viewed as credible by many stakeholder groups,
and can assure (with reasonable confidence) long-term carbon
neutrality. Therefore, the final guidelines specify that any changes in
sequestration for forests managed under certified sustainable
management systems need not be part of an entity's annual report. All
or part of an entity's forest land can be certified as being managed
sustainably. If an entity chooses to use the assumption that
sustainable forest lands are de minimis on part of their lands and
report actual changes in carbon stocks on other lands, the entity
should document that the certification of sustainability applies to the
lands being considered de minimis, independent of the entity's other
lands. Once an entity classifies a portion or all of its lands as
sustainably managed forest, it may not report carbon sequestration on
the lands categorized as sustainably managed in future reports. If a
portion of certified land is sold or loses its certification, these
changes must be reported to EIA and the remaining land must either be
recertified or the entity must report actual changes in carbon stocks
on all the affected land.
DOE received comments urging it to eliminate provisions of the
interim final guidelines that require reporting of carbon stock changes
on forestlands. These comments contend that the sequestration
accounting requirement in Sec. 300.6(f) is complex, costly and
intrusive. The comments further contend that detecting meaningful
periodic change in large forest inventories is a daunting task, both
logistically and statistically, even for entities with sophisticated
commercial timberland inventories.
No changes were made to the guidelines in response to these
comments. The guidelines provide three classes of methods to estimate
changes in carbon stocks from forests. The guidelines provide default
lookup tables, guidance on the use of models, and procedures for
applying sampling techniques. In addition, the guidelines allow land
that has been certified by third parties as being sustainably managed
to be considered de minimis for reporting purposes. These options
provide sufficient flexibility to entities in reporting changes in
carbon stocks on forested land that they own or control, while
maintaining consistency with overall objectives of the program for
comprehensive reporting of greenhouse gas emissions and sinks. DOE
notes that the guidelines do not require entities to continue to
account for changes in the carbon stock that occur on land no longer
owned by the entity, although the entity must ask EIA to remove from
its records any carbon stock increases (or decreases) that were
attributed to such lands in prior year reports.
b. Wood products. DOE received comments regarding the allocation of
carbon embedded in wood products. In particular, commenters noted that
manufacturers should be provided the option to register the carbon
embedded in products and treat it as carbon sequestration. Under the
interim final guidelines, forest landowners are responsible for
reporting carbon emissions from wood products. The forest land owner
can simply assume that the carbon embedded in products, such as
building materials, is emitted when harvested or use one of the methods
provided to estimate rates of emissions from such wood products over
time. Allowing the manufacturer of wood products to treat the
manufacturing process as a sequestration activity would require that
the forest land owner treat the harvesting activity as an emission. The
broader implication of this interim final guideline provision is that
all transfers (sales of wood products) would need to be tracked and
reported by entities as either emissions or sequestration. DOE and USDA
viewed this option as overly complex and one that would require a
significant amount of additional record keeping and reporting. The
final guidelines maintain the original provisions for the reporting of
carbon embedded in wood products.
c. Inclusion of forest sequestration. One commenter recommended
that terrestrial sequestration be removed from the inventory guidelines
for large entities. They asserted that by requiring large entities to
report changes in terrestrial carbon stocks, the guidelines place the
federal government squarely in the middle of private land use and
property rights issues, and establish complex, costly, and intrusive
regulatory burdens for no apparent
[[Page 20795]]
benefits in terms of carbon sequestration. This comment was not
adopted. DOE believes that the proposal would undermine the entire
objective of encouraging comprehensive reporting. It is important to
note that the program is voluntary, not mandatory. Also, the program
places no legal restrictions on landowners regarding carbon sequestered
on their lands, even if that carbon has been reported to the 1605(b)
program.
d. Accelerated reporting of carbon stock changes on permanently
restored land. Normally, entities may include in their annual
assessments of emission reductions only those changes in emissions or
carbon stocks that occurred during the year that is the subject of the
report. Comments recommended, however, that entities be permitted to
accelerate the reporting of carbon stock increases on land that was
being reforested, especially if it was to be permanently restored and
protected. Because of the very long term carbon sequestration and other
benefits associated with such permanent restoration and protection, DOE
has modified the guidelines to permit entities that have undertaken
such a restoration project and established a permanent easement or deed
restriction to protect the land to report, during the next reporting
cycle, carbon stock increases that are equal to 50% of the total carbon
stock increases expected on that land over the next 50 years. The 50%
discounting of the 50-year carbon stock increases closely approximates
the present value of a 50-year stream of annual benefits discounted at
a rate of 3 percent per year. The sequestration occurring on such lands
would still have to be reported as part of the entity's annual
emissions inventory, but would be excluded from all future assessments
of emission reductions.
9. Stationary Source Combustion
Several changes to the ``Stationary Source Combustion'' part of the
inventory guidelines were made in response to comments. Some were
motivated by a desire to simplify the reporting process or render it
more accurate. For example, the draft Technical Guidelines would have
required entities to identify and report emissions from non-fuel use of
fossil fuels. Several commenters felt that the requirement placed too
great a burden given the small amount of potential emissions involved.
While DOE has modified the guidelines to indicate that biogenic
emissions and non-fuel uses of fossil fuels need not be reported, the
final guidelines continue to require the reporting of all emissions for
which measurement or estimation methods are identified. The draft
Technical Guidelines would have required that combined heat and power
(CHP) plants assume an 80% thermal generating efficiency. The final
guidelines follow the World Resources Institutes and World Business
Council for Sustainable Development (WRI/WBCSD) Greenhouse Gas Protocol
of allowing plants to enter their own estimated efficiency values.
Also, the draft Technical Guidelines would not provide for the
registering of avoided emissions associated with the use of coal
combustion products. The final guidelines recognize fly ash use through
an action-specific method.
Some changes were made to make the rating system for methods used
to measure stationary combustion emissions compatible with the new
procedure outlined above. The mass balance approach was raised to an
``A'' status for emissions from hydrogen plants and certain non-CEMS
methods were given the same rating or raised to a ``B'' if based on
regular site-specific measurements and fuel use default values derived
through a consensus process. Some suggested changes, such as the
proposal to treat methane from landfills as a biogenic emission, were
not accepted. Here the wording of the draft Technical Guidelines was
retained because DOE views the emissions of methane from landfills as
anthropogenic. Only the CO2 emissions from the combustion of
landfill methane is treated as biogenic.
One commenter sought clarification on the exclusion from entity-
wide inventories of carbon dioxide emissions from biomass combustion.
Another wanted to ensure that non-combustion biomass oxidation was also
excluded from entity-wide inventories. The DOE has revised the
Technical Guidelines to clearly confirm the exclusion of these biogenic
emission sources.
10. Mobile Sources
One major change in the ``Mobile Sources'' part of the inventory
guidelines was made in response to comments that specific emission
factors were outdated, according to the most recent government or
private industry publications. DOE has updated many of these emission
factors and has revised the guidelines to provide that reporters and
EIA should use to develop their inventories future updates to factors
made by certain government agencies or consensus-based standards
organizations. However, the final guidelines do not provide for the
automatic updating of factors developed by trade groups or other
industry sources, such as the American Petroleum Institute's Compendium
of Greenhouse Gas Emission Methodologies. DOE will consider updates of
such industry-developed values during DOE's planned periodic updates to
the guidelines.
Another suggestion made by commenters was to exclude vehicles
unless they were ``integral to production.'' Several commenters state
that it is overly burdensome for emission inventories to include mobile
source related emissions where mobile sources are not an entity's
dominant greenhouse gas emitting activity. DOE disagrees with the
comment that mobile sources should be excluded. While mobile source
emissions may be a small share for many reporters, they may be large in
absolute terms, and they are a substantial source of emissions for some
entities. Therefore, the final guidelines continue to require
inventories to include all vehicles within the organizational
boundaries defined by the reporting entity, which would normally
include all vehicles that are owned or under the financial control of
the entity. DOE notes that under the final guidelines, entities are
permitted to exclude such emissions as de minimis if they are less than
3% of total emissions.
DOE received comments requesting clarification on the effect on
inventory quality ratings of using default emission factors versus
measured data on heat content, density, or carbon content of fuel data
for mobile source emissions. The draft Technical Guidelines have been
revised to provide such clarification.
11. Industrial Processes
Some of the same issues that arose in the Stationary Source
Combustion and Mobile Sources parts of the guidelines also appeared in
the comments on the Industrial Processes part. Several commenters
pointed out that CEMS methods are not appropriate or practical for many
industrial applications because of cost considerations. After
considering these comments, DOE has dropped CEMS as an ``A'' method for
some industrial sources, and elevated the rating of other methods. The
final guidelines allow direct measurements (for mass balance or default
factors) an ``A'' rating if they are based on site-specific, periodic
measurements. Several comments on this part of the Technical Guidelines
also urged DOE to use the most recent emission factors established by
other government, consensus or industry protocols. These factors have
been updated and the final guidelines provide that values from
[[Page 20796]]
government agency or consensus-based sources will be automatically
updated by EIA, while updates contained in industry-developed protocols
will be considered during DOE's periodic updates to the guidelines.
The National Lime Association (NLA) recommended that the guidelines
adopt its method for estimating CO2 emissions from lime
production. The NLA asserts that its method is more accurate because it
relies on the specific characteristics of the lime produced (calcium
oxide and magnesium oxide content) rather on default values for
different classes of lime. DOE agrees and has adopted the NLA method
for the ``A'' rated method for estimating CO2 emissions from
lime production.
One commenter from the pulp and paper industry requested that a
statement be added to the guidelines indicating that the emissions from
the manufacture of lime in the Kraft pulping process are biogenic and
that emissions from this source should not be included in emission
inventories. The pulp and paper mill module prepared under the auspices
of the Climate Change Working Group of the International Council of
Forest and Paper Associations (ICFPA), which has been adopted by the
WRI/WBCSD Greenhouse Gas Protocol Initiative, states that ``the carbon
released from CaCO3 is biomass carbon that originates in
wood and should not be included in GHG emissions totals.'' \1\ DOE
agrees with this recommendation and has added the appropriate language
to the Industrial Process Emissions part of the Technical Guidelines
(Section 1.E.3.3).
---------------------------------------------------------------------------
\1\ National Council for Air and Stream Improvement, Inc.
(NCASI), Calculation Tools for Estimating Greenhouse Gas Emissions
from Pulp and Paper Mills, The Climate Change Working Group of The
International Council of Forest and Paper Associations, Version 1.1,
July 8, 2005, p. 23.
---------------------------------------------------------------------------
The industry trade group noted the absence of methods for
estimating methane emissions from petrochemical production and DOE has
added these methods to the Industrial Process part of the Technical
Guidelines.
12. Indirect Emissions
The treatment of indirect emissions under the interim final
guidelines was the subject of a number of comments. Some expressed
concern about the mixing of indirect and direct emissions and
reductions. In response to these comments, DOE has modified the
guidelines to emphasize that indirect emissions must be reported
separately from direct emissions in inventories, although they are
added together to determine the total emissions of a reporting entity.
Direct and indirect emissions are often combined in a single emission
reduction calculation formula, but emission factors used for indirect
emissions ensure that there is no double-counting by electricity
generators and users.
Some comments were directed at the emission factors used to
calculate the emissions associated with electricity use. Although some
comments suggested that these emission factors exclude the losses
associated with electricity transmission and distribution (T&D) losses,
the final guidelines continue to include these losses because they
provide a better indication of the total emissions avoided by
reductions in electricity consumption.
Some commenters suggested that the owners of electricity T&D
systems be required to include in their emission inventories the
indirect emissions associated with T&D system losses. Because such
indirect emissions would overlap with the direct emissions of some
entities (that both generate and distribute electricity) and because
T&D system losses are often associated the transmission of power from
one system to another, DOE has decided not to require the indirect
emissions associated with T&D system losses to be included in the
inventories of owners of electricity T&D systems at this time. However,
if an entity chooses to report (or register) the emission reductions
associated with its efforts to reduce such losses, then it must
calculate such reductions based on a system-wide assessment, as
specified in the action-specific method provided for this purpose in
the Technical Guidelines.
13. Geologic Sequestration
Geologic sequestration is still an emerging field with few
generally recognized standards for accounting and monitoring. As a
result, several comments requested that DOE clarify and/or add
information to the interim final guidelines and regularly review work
by other governments and organizations for relevant guidance.
Recognizing that this is a rapidly developing and changing field, DOE
will continue to monitor the development of new accounting standards
for geologic sequestration and, whenever appropriate, revise the
reporting guidelines accordingly. DOE also has clarified the inventory
guidance for geologic sequestration in the final Technical Guidelines.
For example, in response to a request that naturally occurring carbon
dioxide emissions near, but unrelated to, an enhanced oil recovery
field should be excluded from an entity's inventory, DOE added text
specifically stating that entities may exclude emissions of
CO2 that have been demonstrated to be naturally occurring.
Only emissions caused by the entity itself should be addressed in the
inventory.
The monitoring approaches for geologic sequestration in the draft
Technical Guidelines were the subject of a number of comments. One
commenter argued that to avoid excessive monitoring, entities should be
able to use technical, site-specific monitoring approaches developed in
response to rules by relevant regulatory agencies. Accordingly, DOE has
added text to permit other monitoring plans that have been agreed to by
a relevant Federal or state agency, if these plans have specific
provisions for tracking the amount of carbon dioxide being re-released
from the storage site.
Another commenter objected to the requirement that reporters assume
that all stored carbon dioxide will be re-emitted to the atmosphere and
to include all such future emissions in the current inventory year.
According to this commenter, reporters have enough understanding of
reservoir characteristics to generate a reasonable prediction of future
losses.
In October 2005, the Intergovernmental Panel on Climate Change
(IPCC) published its Special Report on Carbon Dioxide Capture and
Storage, which includes a comprehensive discussion of available
monitoring techniques for geologic sequestration. Noting that all
monitoring options recommended by the IPCC are based on site
monitoring, DOE revised the final guidelines to also require site-
specific monitoring to be an element of any acceptable method. For
entities that do not wish to report reductions associated with geologic
sequestration, DOE has retained the requirement that they assume that
all injected carbon dioxide will be reemitted over time and report such
emissions in the current year. However, if an entity wishes to report
reductions associated with geologic sequestration, they must use a
method that includes an active monitoring component, as required in the
final guidelines.
K. Reductions
The interim final guidelines identify five categories of methods
for calculating emission reductions: emissions intensity, absolute
emissions, changes in carbon stocks, avoided emissions and action-
specific methods. They also specify the use of an integrated method--
combining emissions intensity and avoided emissions--by electricity and
other generators of distributed energy that
[[Page 20797]]
were increasing the quantity of energy they had generated and exported
to other entities.
DOE received a large number of comments on its guidelines for
calculating emission reductions, some of which raised broad concerns.
One commenter urged DOE to focus emission reductions calculations on
either emissions intensity or absolute emissions, and to exclude
emission reductions resulting from increases in carbon stock, energy-
related avoided emissions or other action-specific methods until a
comprehensive project accounting framework is established. On the other
hand, a number of other commenters urged DOE to retain and expand the
provisions for recognizing reductions from sequestration, avoided
emissions and additional action-specific methods. While DOE agrees that
most reporters can and should rely primarily on emissions intensity or
absolute emissions methods to assess annual changes in their emissions,
we also see a need for the retention of other emission reduction
calculation methods in order to permit the reporting and registration
of reductions associated with certain special sources and actions.
A few commenters continued to urge DOE to permit the registration
of reductions resulting from stand-alone projects, especially when
undertaken to reduce emissions outside the boundaries of the reporting
entity (offset reductions). Other commenters, however, supported DOE's
emphasis on an assessment of entity-wide emission trends, rather than
on the results of individual projects. While DOE recognizes that
entities are undertaking a wide range of actions that can reduce its
emissions of greenhouse gases, DOE believes that the enhanced program,
to be consistent with the objectives established by the President's
Global Climate Change Initiative of February 2002, should focus on the
net result of such actions on an entity's overall emissions and
sequestration, and its contribution to the goal of reducing the
nation's emissions intensity. Therefore, DOE has not changed the
requirement that large emitters calculate their registered reductions
on the basis of an entity-wide assessment. It has, however, modified
the guidelines to permit the reporting and registration of additional
types of action-specific reductions, and to emphasize that all
reporters have the option to continue to report, but not register, the
emission reductions resulting from a wide array of action-specific
efforts.
1. Selecting Appropriate Reduction Calculation Methods
The interim final guidelines emphasize that entities must choose
among the five categories of reduction calculation methods identified
in the guidelines. Some of the public comments received by DOE
indicated that there was some confusion regarding the degree of choice
available to individual reporters. DOE provides the following guidance
to clarify how it views reporters' selection of calculation methods
under the final guidelines. The appropriate calculation methods a
reporter uses should be determined largely by the characteristics of
the reporting entity and its emission sources and sinks. Most reporters
will find it advantageous, where feasible, to use an emissions
intensity metric as the basic calculation tool for determining the
emission reductions achieved by most or all of the entity. Changes in
absolute emissions may be used as an alternative, as long as the
economic output associated with the emissions is not declining. If
output is flat or increasing, the reductions calculated using the
absolute emissions method should always be equal to or less than the
reductions calculated using an emission intensity method. For all
terrestrial sequestration, entities should assess the annual changes in
carbon stock. Entities that generate electricity, steam, hot or chilled
water for distribution to other entities should use the energy-related
avoided emissions method or the integrated method to assess the
reductions associated with such generation. Finally, entities should
use the action-specific methods only in situations specifically
addressed by the methods provided in Sec. 300.8(h)(5), or situations
where no other methods are applicable.
2. Base Periods and Base Values
The interim final guidelines describe how entities should establish
and use base periods and base values in the process of calculating and
reporting emissions reductions. They also define the circumstances that
might require some entities to adjust their base values or, under
certain circumstances, establish new base periods and base values.
In all cases, the final year of the chosen base period must
immediately precede the first year of reported or registered
reductions. Some commenters suggested that entities be permitted to
establish base periods that ended one or more years prior the first
reduction year. DOE did not adopt this suggested change because it
believes that all reductions should be based on an uninterrupted record
of emissions from the base period onward.
Several commenters expressed concerns about the provisions covering
revisions to base periods, base values, and methods due to boundary
changes, such as acquisitions, divestitures, mergers, and the
outsourcing or insourcing of emissions-producing operations. Some
commenters argued that assigning a different base period for acquired
operations other than that used by the original entity would impose a
significant administrative burden for some reporters. Other commenters
suggested that requiring an entity to adjust its base value to include
the emissions of an acquisition would make that entity responsible for
any changes in the acquisition's emissions that had occurred between
the base period and the year of acquisition.
DOE has retained a degree of flexibility in the final guidelines
regarding whether an entity must recalculate base values and change
base periods. The Technical Guidelines establish some general
principles in section 2.3.3 regarding whether and how base values and
base periods should be adjusted to reflect boundary changes. However, a
reporting entity may incorporate a new acquisition into an existing
base value only if the reporting entity has all of the required
emissions and other data for the established base period. If this
historical data do not exist, the reporting entity must establish a new
base period for the acquired subentity. Whenever base values and base
periods are adjusted, the reporting entity must include a discussion of
the rationale for the adjustment in the report it submits to EIA.
Several stakeholders expressed concern that they will be required
to recalculate reductions and resubmit prior year reports to reflect
boundary changes. DOE has clarified Sec. 300.8(f) of the final rule to
indicate that resubmission of previous years' reports revised to
reflect boundary changes occurring in subsequent years is not required.
In general, the final guidelines provide that previously reported or
registered emission reductions may not be altered unless such an
alteration is necessary to correct a significant reporting error.
One stakeholder proposed providing a grace period of 18 months
before a reporter is required to adjust base values or base periods to
reflect a boundary change to allow time for emissions accounting
systems to be reconfigured. DOE recognizes that such boundary changes
can pose significant problems
[[Page 20798]]
for reporters regarding the integration of emissions accounting systems
and, therefore, it has amended the guidelines (section 300.5(g)) to
provide for a grace period of at least 18 months before such changes
must be reflected in 1605(b) reports. For boundary changes occurring
after May 31 of a particular calendar year, base values would not have
to be adjusted until the report that is submitted for the following
calendar year. For example, for an acquisition made after May 31, 2005,
a reporter would not be required to make any adjustments to its base
value or values until it reports on its 2006 activities.
3. Enabling Reporters To Choose More Stringent Base Values
One commenter requested that DOE allow reporters to establish base
values that are more stringent than those derived from historical
performance. While it is unlikely that many reporters would take
advantage of such flexibility, DOE concedes that using a more stringent
base value could be desirable under some circumstances (e.g., where
another voluntary program establishes an emission reduction target
based on improvements compared to an industry-wide benchmark).
Therefore, DOE has revised the guidelines to permit selection of a more
stringent base value, provided the reporter demonstrates that the base
value is indeed more stringent than that required by the relevant
method specified by the guidelines.
4. Emissions Intensity
In 2002, the President set a goal of reducing U.S. emissions
intensity by 18 percent in 2012, relative to 2002. Establishing methods
for tracking the contribution that individual entities are making to
this national goal is one of the key objectives of the revised
guidelines for the 1605(b) program. Thus, the interim final General
Guidelines and draft Technical Guidelines define a method for
calculating emission reductions based on declines in emissions
intensity.
Most comments were generally supportive of the guidelines for
calculating reductions based on emission intensity, including the
flexibility to use either physical or monetary methods for calculating
reductions. Some commenters, however, opposed the registration of
reductions based on declining emissions intensity because it would
permit entities with rising output to qualify for registered reductions
even though their net, absolute emissions might be increasing. Others
pointed out that since most industries experienced declining emissions
intensity over time, as a result of technological and productivity
improvements, emission reductions derived from declines in emissions
intensity do not necessarily reflect any new efforts to reduce
emissions by the reporting entity. Still others appeared to oppose such
reductions because they implicitly exclude reductions attributable to
declining output. After considering the comments, many of which raised
some valid concerns, DOE has nonetheless concluded that emissions
intensity remains the best approach to measuring emission reductions
because it avoids adverse economic impacts on entities. DOE also has
concluded that the basic methodology set forth in the interim final
guidelines is valid.
5. Absolute Emissions
The interim final guidelines provide a method for calculating
reductions from declines in absolute emissions, as long as the output
associated with these emissions had not declined. The requirement for
output to be level or increasing was the focus of most of the comments
received on these provisions of the guidelines. Some companies stated
that this requirement would prevent them from registering reductions
that were recognized under other reporting programs. Several companies
also raised concerns about the apparent exclusion in the draft
inventory guidelines of emission reductions associated with plants or
other facilities that are closed.
Since a key objective of the revised program is to give special
recognition to reductions that contribute to the national goal defined
by the President, DOE has retained the provision that permits the
registration of reductions calculated using the absolute emissions
method only if the economic output associated with such reductions is
not declining. However, since some plant closings can contribute to
reduced emissions intensity or to declines in absolute emissions, even
if the output of an entity is stable or increasing, DOE has struck the
language in the inventory guidelines that appeared to exclude such
emission reductions from the reductions calculation. In addition, DOE
has modified the guidelines to more clearly permit entities to report
(but not register) absolute emission reductions when output is
declining.
One entity suggested that DOE permit entities to adjust the base
value used in calculating absolute emission reductions to reflect the
prior year emissions of acquisitions, even if the data available for
the acquired entity does not match the base period used by the
reporting entity. DOE has not accepted the suggestion because it would
lead to base values that were no longer tied to specific base periods.
In such circumstances, an entity should establish a new sub-entity to
account for each acquisition. The new sub-entity could have its own
unique base period and base value.
6. Changes in Carbon Stocks
The draft Technical Guidelines allow entities to register 1/100th
of the base year/base period carbon stocks on preserved forestland plus
any incremental carbon stocks gained in the reporting year. Comments
received on the draft guidelines were critical of this provision,
citing it as arbitrary and stating that only increases (or decreases)
in existing carbon stocks should be eligible for registration; that an
easement in and of itself is not an adequate basis for assessing
avoided emissions; and that the approach is not scientifically valid.
In response to these comments, USDA conducted a further review of
this provision and has determined that preserved forests are not static
with respect to carbon stocks. Vegetation growth and mortality will
occur, and the balance between those two factors will determine whether
the net carbon flow is positive or negative. Preserved forests are
likely to be affected by natural disturbances that affect growth and
mortality rates, and, therefore, carbon stocks can be altered both
positively and negatively by such changes. USDA also concluded that
there is no technical basis for the registration of 1/100th, or any
fraction, of the base period carbon stocks in preserved forests. DOE
has eliminated from the final guidelines the provision providing
special treatment of forest preservation. Entities reporting and
registering forest preservation should follow the methods described in
section 1.I.2 of the Technical Guidelines.
Another commenter expressed concern that DOE had not made a clear
enough distinction between increases in carbon sequestration and
emission reductions achieved through other forestry-related activities.
Detailed methods for calculating changes in carbon storage as well as
methods for calculating emission reductions from other forestry-related
activities are included under individual sections of the Technical
Guidelines. The distinction between these multiple methods of reducing
atmospheric carbon loadings is included in multiple sections of the
General Guidelines and most specifically in Part I of the Technical
Guidelines.
[[Page 20799]]
7. Avoided Emissions
The interim final guidelines provide a method for calculating the
emissions avoided by generating electricity, steam, or hot/chilled
water from non-emitting or low-emitting sources of energy and
distributing these secondary forms of energy to users. To estimate the
quantity of emissions that would be avoided by the distribution of
electricity generated from non-emitting or low-emitting sources, the
draft Technical Guidelines used a ``benchmark'' value based on the
average emissions intensity of the U.S. electricity generating sector,
approximately 0.6 metric tons of CO2 per megawatt hour (MWH)
of power generated.
Numerous comments were received on the avoided emissions method and
the benchmark value for distributed electricity in the draft Technical
Guidelines. Several commenters noted that the national average
intensity of the U.S. electricity generating sector is not necessarily
a good indicator of the emissions avoided by the distribution of non-
emitting or low-emitting generation. They stated that regional averages
of fossil-fired generation are likely to be a better indicator, because
such averages exclude hydro-electric, nuclear and other sources of
power that tend to be fully utilized, regardless of changes in
electricity usage or the availability of other forms of generation. DOE
has decided to change the avoided emissions benchmark for electricity
to the regional fossil-fired averages for the electric sector, but the
final guidelines impose a maximum value of 0.9 metric tons of
CO2 per MWH. State-based regions that approximate
appropriate NERC regions and subregions, together the specific factors
to be used by reporters, will be specified by EIA. This maximum value,
which approximates the average emissions intensity of fossil-fired
electric power generating plants in the United States, will provide an
incentive for all utilities to build new generating capacity at least
as efficient as the most efficient coal-fired generating technologies.
Other commenters expressed concerns regarding assignment of all
reductions associated with avoided emissions to the generator, rather
than to the buyer or ultimate user. DOE has not changed this aspect of
the guidelines, but it has attempted to provide a workable mechanism by
which the generators of avoided emissions can permit registered
reductions to be registered by buyers or users, if they so choose.
Some commenters recommended that DOE expand the concept of avoided
emissions to encompass other areas where conventional fossil-fuels are
being replaced by fuels generated from low-emitting and largely
renewable resources. The interim final guidelines provide an action-
specific method for recognizing the emissions avoided by the productive
use of methane recovered from landfills. The final guidelines provide
additional action-specific methods to recognize the emissions avoided
by the expanded production of methane from anaerobic digestion of waste
at agricultural facilities and wastewater treatment plants. These
methods are described in more detail in the action-specific methods
section that follows. During the development of these guidelines, DOE
also considered the possibility of changing the treatment of ethanol
used in the transportation sector so as to shift the recognition for
the emission reductions that result from increased ethanol supply and
use from vehicle-owners to producers. Recognition of producers might
encourage such companies to participate and report on all of their
emissions, including those associated with ethanol production. While
the guidelines continue to consider the emissions from ethanol
combustion as biogenic and the responsibility of users, DOE may
reconsider the treatment of ethanol in the future.
Several commenters also pointed out that actions taken by an entity
affecting the emissions of one or more other entities are not limited
to the export or import of energy products. These commenters provided
examples such as the reuse of fly ash as a substitute for Portland
cement in concrete, which displaces emissions from the manufacture of
Portland cement, and post-consumer materials recycling, which reduces
emissions associated with the manufacture of materials from virgin
resources. Many of these actions are not conducive to the use of
entity-wide methods to estimate emissions reductions. DOE has modified
the definition of ``avoided emission'' to make it more clearly
applicable to these other types of avoided emissions, and it has
included an action-specific method for estimating reductions associated
with fly ash reuse as a substitute for Portland cement in concrete. DOE
may consider in the future additional action-specific methods for
estimating reductions of indirect emissions from such activities as
manufacturing of energy efficient products and increased recycling of
certain materials.
With respect to the increased manufacturing of energy efficient
products, DOE may seek to develop methods capable of quantifying the
net emission reductions realized by very small emitters as a result of
the efforts of some manufacturers to increase the average efficiency of
their products to levels well above Federally-mandated efficiency
standards. Such very small emitters are very unlikely to participate
directly in the 1605(b) reporting program, so doublecounting of such
emission reductions would not be likely.
For recycled materials, DOE may seek to develop methods capable of
quantifying the net emission reductions that result from increased use
of recycled materials in new products, taking into account the full
life cycle emissions associated with production, recovery, transport
and reprocessing of the affected materials, while also ensuring that
the double registration of reductions associated with increased
recycling is prevented.
8. Action-Specific Methods
The interim final guidelines provide for the use of action-specific
methods under a number of different circumstances. A generic method is
provided that was designed to be used in estimating the reductions that
resulted from a variety of different types of actions, such as fuel
switching or efficiency investments. In addition, several other methods
included in the interim final guidelines are designed to estimate the
reductions resulting from specific types of actions, including landfill
gas recovery, coal mining gas recovery, geologic sequestration, and
transmission and distribution losses. It was DOE's intent in the
interim final guidelines to permit reporters not planning to register
reductions to use action-specific methods wherever they are applicable.
Reporters intending to register reductions, however, are permitted to
use action-specific methods only when none of the other four methods
are applicable. As a result of this limitation, it was expected that
entities registering reductions would generally use action-specific
methods only for sources or activities for which they were specifically
designed. In general, entities were strongly encouraged to report on an
entity-wide basis and use emissions intensity or absolute emission
methods as their primary means of estimating their reductions.
DOE received a large number of comments on these provisions of the
interim final guidelines. Many of these comments urged DOE to expand
the opportunities to register emission reductions estimated using
action-specific (or project-based) methods.
[[Page 20800]]
Several reporters argued that project-based reporting should be an
accepted basis for registered reductions, noting that project reporting
is contemplated by section 1605(b) and much of the greenhouse gas
emissions trading being conducted in the U.S. is project-based. Other
comments urged the addition of action-specific methods capable of
estimating reductions from other types of actions, such as anaerobic
digesters or demand-side management programs.
The final guidelines retain the provisions of the interim final
guidelines that strictly limit the use of action-specific methods as
the basis for registered reductions, while not restricting the use of
other action-specific methods by reporters not interested in
registering reductions. The experience under the existing 1605(b)
reporting program has shown that the relationship between individual
projects and an entity's overall emissions is ambiguous, because so
many factors other than emission reduction projects conducted by the
entity can affect these emissions. DOE believes that allowing
registration of project-based reductions would invite criticism similar
to that directed at the existing 1605(b) program, namely that it allows
entities to ``cherry-pick'' activities that achieve emission reductions
while obscuring the overall emission performance of the organization.
However, DOE recognizes that data on project-level emission reductions
can be useful in disseminating information on effective ways to reduce
emissions of greenhouse gases, and DOE has clarified the final
guidelines to place more emphasis on the two ways that reporters can
highlight individual actions that they believe have contributed to
their improved greenhouse gas emissions profile. First, they can
quantify the effects of specific actions or projects by reporting, but
not registering, reductions using a reporter-defined action-specific
method; and, second, they can provide anecdotal information regarding
emission reduction activities in the summary description of actions
taken to reduce emissions required by Sec. 300.8(i).
Section 300.8(h)(5) of the interim final guidelines states that an
entity-wide reporter may use the action-specific approach to estimate
emission reductions for actions within the entities boundaries only if
it is not possible to measure accurately emission changes based on
changes in emissions intensity, changes in absolute emissions, changes
in carbon storage, or changes in avoided emissions as outlined in
section 300.8, paragraphs (h)(1) through (h)(4). In the draft Technical
Guidelines accompanying the interim final General Guidelines, DOE
identified several specific actions for which it will be difficult to
accurately measure emission reductions using the methods in section
300.8 paragraphs (h)(1) through (h)(4). They are: coalmine methane
recovery, landfill methane recovery, geologic sequestration, and
transmission and distribution improvements.
a. Integrating action-specific emission reductions with other
emission reductions. Comments sought clarification on the integration
of action-specific emission reductions with those measured using
methods set forth in section 300.8, paragraphs (h)(1) through (h)(4) of
the interim final General Guidelines. Entities may add action-specific
reductions to their net entity-wide registered reductions if they meet
all other requirements of these guidelines for registration and
estimate action-specific reductions using methods contained in the
Technical Guidelines. Among the constraints the final Technical
Guidelines place on the use of action-specific reductions are: (1) The
emissions affected by the action may not appear in any other subentity
or entity-wide emission reduction calculation submitted by the
reporter; and (2) emission reductions using this calculation may not be
reported by any other entity on an entity-wide or sub-entity basis.
b. Expanding the range of action-specific reductions. A number of
comments sought expansion of the range of action-specific reductions.
Some commenters cited the language of section 1605(b) that directs the
Secretary of Energy to establish procedures for the accurate voluntary
reporting of information on annual reductions of greenhouse gas
emissions and carbon fixation achieved through any measures, including
fuel switching, forest management practices, tree planting, use of
renewable energy, manufacture or use of vehicles with reduced
greenhouse gas emissions, appliance efficiency, methane recovery,
cogeneration, chlorofluorocarbon capture and replacement, and power
plant heat rate improvement. Elsewhere in this Supplementary
Information (see II. C. above, on the distinction between reporting
under the program and registering reductions), DOE addresses comments
that question DOE's authority under section 1605(b) to establish
separate classes of reporting in the database maintained by EIA. That
discussion is relevant here. DOE reiterates that entities may report
reductions resulting from a broad range of specific actions under the
revised guidelines; it is only registered reductions that limit the use
of action-specific methods to those reductions which cannot be captured
by one of the other emission reduction calculation methods.
Other comments sought to expand the range of action-specific
reductions allowed to be registered. DOE was persuaded that methods for
several of these actions should be added to the guidelines. These
include a method for measuring action-specific reductions from
anaerobic digestion of waste at agricultural facilities or wastewater
treatment plants. DOE views this method as similar to and a logical
extension of methods for estimating reductions from coal mine and
landfill gas recovery. DOE was also persuaded that the volume and
magnitude of reductions attributable to residential and commercial
demand-side management and other programs, and the limited likelihood
that individual residential and small commercial end-users would be
participants in the program, justified a method for electric power
generators and others that implement such programs to register
emissions reductions that can be reliably attributed to those efforts.
However, the final guidelines provide that reporting entities must
certify that the program was directed at residential or other very
small emitters (such as small businesses or other entities that the
reporter estimates typically emit less than 500 metric tons of
CO2 annually). The new action-specific method established in
the Technical Guidelines attempts to ensure that the reductions
reported are only those that can be attributed to the specific effects
of the demand-side management or other program evaluated, and not to
other market or regulatory changes. DOE has also provided a new action-
specific method for calculating reductions associated with increased
use of flyash by concrete mixers.
Several commenters sought inclusion of action-specific methods for
registering reductions from increases in the manufacturing and sale of
energy efficient products such as home appliances and automobiles, and
others requested a method for registering reductions from increased
materials recycling. Although DOE has not adopted these additional
methods, DOE expects in the future to solicit comment on methods for
calculating reductions from energy efficient products and materials
recycling and will then consider incorporating suitable methods in the
Technical Guidelines.
c. Changes to proposed action-specific methods. Several comments
offered alternative methods for calculating
[[Page 20801]]
action-specific reductions from landfill gas recovery and transmission
and distribution improvement. For landfill gas recovery, commenters
recommended methods placing a greater reliance on modeled emissions.
However, DOE did not adopt these recommendations because it is
concerned they would add uncertainty and reduced transparency of
action-specific reductions from this source. Similarly, a request for
quantifying emission reductions for displacing coal or oil with
landfill gas by a landfill gas purchaser was not adopted because those
reductions will be captured in changes in the purchaser's emission
intensity, and inclusion would result in double counting. DOE, however,
has adjusted the method for estimating reductions from transmission and
distribution improvements to emphasize changes in system-wide
transmission and distribution emission intensity.
Comments related to geologic sequestration were also provided,
focusing on monitoring and ownership. One commenter asked whether
available monitoring methods only apply to enhanced oil recovery, or to
all geologic sequestration projects. DOE clarified that the monitoring
methods should be used for all types of geologic sequestration. Another
commenter argued that site-specific monitoring should be required of
all available monitoring options, including those based on estimating
future losses of carbon dioxide after injection has been completed. The
argument is that the data and methodologies for undertaking such
estimates of future losses are insufficient. In October 2005, the IPCC
published a Special Report on Carbon Dioxide Capture and Storage, which
includes a comprehensive discussion of available monitoring techniques
for geologic sequestration. Noting that all monitoring options
recommended by the IPCC are site-specific, DOE has revised the
guidelines to also require site-specific monitoring for all of its
monitoring methods. In addition, DOE has clarified its guidelines to
ensure that entities may not claim offset or other types of reductions
associated with the capture and sale of CO2 unless they have
an agreement with the entity that is permanently sequestering the
CO2, in accord with DOE's Technical Guidelines.
d. Ozone-depleting gases. One commenter argued for inclusion of
ozone depleting gases, such as chlorofluorocarbons (CFCs) and
hydrochlorofluorocarbons (HCFCs), because it would encourage recovery
and destruction of these greenhouse gases. Section 1605(b) expressly
permits reporting of annual reductions of greenhouse gas emissions
achieved through chlorofluorocarbon capture and replacement. While
these gases have radiative forcing properties, they also destroy
stratospheric ozone, which may influence global climate. The IPCC has
not determined definitive global warming potential (GWP) for CFCs and
HCFCs. It has, instead, estimated these gases in broad ranges. For
example, the IPCC Third Assessment Report gives the net 100-year GWP
for CFC-11 as a minimum of -600 and a maximum of 3600.
Because of the development of rated methods for calculating
emissions and emission reductions of ozone depleting substances would
be complex and time-consuming, the final guidelines do not permit the
registration of reductions of these gases. However, DOE has included an
action-specific method for calculating reductions from the destruction
of CFCs that have been captured or replaced, and these reductions may
be reported under the 1605(b) program. DOE may in the future solicit
comment on methods for calculating reductions of other ozone depleting
substances and will consider incorporating suitable methods in the
Technical Guidelines.
9. Estimating Reductions From Energy Generation and Distribution
For electricity generators, the interim final guidelines provide a
single formula that integrates the emissions intensity and avoided
emissions methods. DOE considered this integrated formula to be
necessary to provide the same opportunity for recognition to any
generator of additional electric power, regardless of the
characteristics of that entity's base period generation. Some utilities
objected to the use of the integrated formula and proposed that DOE
permit utilities to base the emission reduction calculations on any
decline in the entity's base period emissions intensity, regardless of
whether the entity had increased its power generation. After careful
consideration of these comments, DOE has decided to retain the
integrated formula. Because the electricity generating sector is both
very diverse and is given special recognition for emissions avoided by
addition of new generation from non-emitting or low-emitting sources,
the integrated formula is necessary to give all generators a roughly
equal opportunity to qualify for registered reductions.
The integrated formula uses the same benchmark value used for the
calculation of avoided emissions from electricity generation. In
response to comments, DOE has decided to change this benchmark to the
regional average emissions intensity of fossil-fired generation. This
decision is described in more detail in the section on avoided
emissions, above.
One commenter asserted that the method for allocating emissions to
thermal and electric streams for combined heat and power (CHP)
generators does not accurately reflect actual thermal efficiencies. The
method included in the interim final guidelines requires reporters to
assume the efficiency of the thermal component of CHP systems to be 80
percent. The final guidelines are more flexible and allow the reporter
to use the actual efficiency of thermal energy generation, if known.
Reporters may use a default value for thermal efficiency of 80 percent
if this value is unknown.
L. Offset Reductions
The interim final guidelines provide a mechanism by which a
reporting entity could register the reductions achieved by another
entity that was willing to forego this recognition. To ensure that this
mechanism for reporting offset reductions did not undermine the
emphasis on entity-wide reporting, the interim final guidelines require
that the other entity complete annual reports that meet all of DOE's
requirements and that these reports be submitted to DOE by the
reporting entity.
A broad range of commenters noted that this mechanism was simply
not practical for use in a number of situations, such as:
When multiple entities are supporting the offset
reductions achieved by a single entity (such as a group of utilities
supporting reforestation projects on the land of single public agency,
or when a number of different electric power users seek recognition for
the offset reduction reductions created by a single renewable or
nuclear power generator).
When a reporting entity supports the offset reductions
achieved by a large number of very small emitters, such as a utility
that supports a demand-side management program that provides incentives
for the purchase of energy efficient lights by homeowners.
To address these problems, DOE has made a few modifications to the
offset reduction provisions of the guidelines. The final guidelines now
provide an action-specific method to enable utilities to register the
reductions that can be attributed specifically to the effects of
utility-sponsored demand-side management programs. The guidelines also
permit more than one entity to be the recipient of offset reductions
from a
[[Page 20802]]
single other entity. The assignment of registered reductions to
multiple reporting entities, as offset reductions, can only be done at
the time they are initially reported to EIA. In addition, DOE has made
it clear that the guidelines permit other Federal agencies or even
smaller operational units, such as a wildlife refuge, to generate
registered reductions that are reported by other entities as offsets.
M. Certification and Verification
Most comments supported the need for reporting entities to certify
the accuracy of their reports, although there were different views on
which representatives of an entity should be required to provide such
certifications and the nature of these certifications. Similarly, there
was widespread support for DOE's decision to encourage, but not
require, independent verification of reports, and a number of specific
comments addressed how DOE should define such an independent
verification.
1. Certification
Section 300.10 of the interim final General Guidelines states that
all reports must be certified by the head of household, chief executive
officer, agency head, or an officer or employee of the entity who is
responsible for reporting the entity's compliance with environmental
regulations. DOE received comments calling for a higher level of
corporate certification and others calling for more flexibility in the
identity of a certifier. DOE believes that it has properly addressed
the need for a high level of certification while granting sufficient
flexibility to participating entities.
More narrow comments sought a definition of ``reasonable steps,''
in Sec. 300.10(c)(1) of the interim final General Guidelines, that a
reporter must have taken to ensure emissions, emission reductions and/
or sequestration are not double-counted, and asked that certification
requirements on third parties that are redundant with those for
reporting entities be removed to limit reporter burden. DOE has revised
the final guidelines language to address these concerns by explaining
what it considers to be ``reasonable steps'' and by eliminating certain
redundant certification requirements.
Several commenters expressed concerns that the certification
requirements would discourage farmers, ranchers, and small woodland
owners from participating in the 1605(b) program. DOE has included
provisions for aggregators and offsets (described above) that should
mitigate these concerns.
2. Independent Verification
Section 300.11 of the interim final General Guidelines states that
reporting entities are encouraged to have their annual reports reviewed
by independent and qualified auditors and then defines the
characteristics required for an auditor to be viewed by DOE as both
independent and qualified. That section also enumerates the expected
scope of an independent verification.
DOE received a substantial number of comments on independent
verification. Some comments expressed the view that independent
verification is necessary for data credibility, and, therefore, should
be required rather than encouraged. Other comments argued against
requiring independent verification. DOE recognizes the value of
independent verification but remains sensitive to the cost and burden
it may impose on prospective program participants. DOE seeks in the
final guidelines to encourage independent verification, while limiting
reporter burden, by permitting reporting entities to register
reductions without reporting and rating emissions estimates at the
individual source or sink level if they receive independent
verification that the quantity-weighted average of methods used for
preparing their emissions inventory meet or exceed 3.0. Further, DOE
has extended the July 1 annual reporting deadline to September 1 for
independently verified reports.
Other comments sought inclusion of additional detail on the
processes and procedures that verifiers must follow when undertaking an
independent verification, and expressed a desire for consistency with
existing standards. DOE wishes to provide greater flexibility than
could be obtained through the adoption of a single existing standard,
but it also wishes its guidelines to be generally consistent with
current domestic and international practices. Accordingly, the final
guidelines direct independent verifiers to refer to such sources as the
California Climate Action Registry Certification Protocol, the Climate
Leaders Inventory Management Plan Checklist and the draft ISO 14064.3
standard when completing a verification.
DOE received comments suggesting that a separate and distinct set
of rules for ``accrediting'' verifiers should be prepared by DOE. DOE
believes this approach is too prescriptive and deterministic for a
rapidly developing and evolving field of expertise. Moreover, DOE
recognizes that many potential reporters may seek independent
verification of data submitted to other domestic and international
programs, in addition to the Voluntary Reporting of Greenhouse Gases
Program, and does not wish to preclude verifiers accepted by other
programs from performing an independent verification under these
guidelines. Consistent with that approach, DOE has not created a new
set of rules for accrediting independent verifiers; instead, the final
guidelines incorporate and reference elements of the California Climate
Action Registry requirements and the draft ISO 14064.3 guidance.
N. Reporting and Record Keeping
Section 300.9 of the interim final General Guidelines requires
entities intending to register reductions to maintain adequate
supporting records for at least three years to enable verification of
all information reported. A number of comments voiced concern that the
three-year requirement was not long enough to support the transition to
a future regulatory program. The comments sought a five-year or longer
recordkeeping requirement. Meanwhile, other comments noted the
potential burden of even a three-year recordkeeping requirement. It was
not DOE's intent to envisage the existence or design of a future
regulatory regime, but rather to ensure that reports submitted to this
program be verifiable for a number of years subsequent to submission.
In addition, DOE believes many entities are likely to retain records
beyond the period required by DOE guidelines in anticipation that there
may be a regulatory program in the future. Thus, DOE was not persuaded
to extend the overall recordkeeping requirement. However, several of
the comments pointed out that such verification would require base
period data that may pre-date the three year recordkeeping requirement.
In response, DOE has extended the recordkeeping requirement for base
period data to the duration of an entity's participation in the
program.
O. Report Review and Acceptance Process
Section 300.12 of the interim final General Guidelines states that
EIA will review all reports to ensure that they are consistent with the
General Guidelines and Technical Guidelines. Subject to the
availability of adequate resources, EIA intends to notify reporters of
the acceptance or rejection of any report within six months of receipt
and sooner if feasible. If EIA does not accept a report or if it
determines that emission reductions intended for registration do
[[Page 20803]]
not qualify, the report will be returned with an explanation of its
inadequacies. The reporting entity may resubmit a modified report for
further consideration at any time.
Comments indicated concern that the EIA review process would not be
sufficiently rigorous in the absence of independent verification. More
generally, comments sought inclusion of more detail on the review
process to be undertaken by EIA. In response to these comments, DOE has
included additional language on the specifics of EIA's review process.
P. Publication of General Guidelines in the Code of Federal Regulations
Several commenters claim that by publishing the General Guidelines
as a rule for codification in the Code of Federal Regulations, DOE
exceeded its authority under section 1605(b) to issue voluntary
guidelines for reporting. In their view, the use of mandatory words in
the General Guidelines is inconsistent with a voluntary program.
DOE addressed the question of publication in the Code of Federal
Regulations in the preamble to the notice of interim final guidelines
published on March 24, 2005 (70 FR 15176). In addition to giving
reasons favoring codification, DOE related that the Director of the
Federal Register had written a letter in response to a request from an
interested person that stated his conclusion that it is proper for DOE
to include the revised General Guidelines in the Code of Federal
Regulations. DOE has placed the Director's letter in the administrative
record for this rulemaking.
DOE rejects the comments contending that mandatory language may not
be used in the revised guidelines, for two reasons. First, the revised
guidelines are largely procedural rules, and procedural rules usually
are stated in mandatory terms. Second, the requirements in the revised
guidelines do not alter the voluntary nature of the 1605(b) program.
Entities, in their sole discretion, may decide to report under the
Voluntary Reporting of Greenhouse Gases Program. Those who do decide to
report may, again in their sole discretion, decide to seek the greater
credibility that would be associated with registering their emissions
and reductions. Their participation is voluntary, but if they decide to
report or register their emissions and reductions, then they must abide
by any requirements in the revised guidelines. This is entirely
consistent with section 1605(b).
IV. Regulatory Review and Procedural Requirements
A. Review Under Executive Order 12866
Today's action has been determined to be ``a significant regulatory
action'' under Executive Order 12866, ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Accordingly, this action was
subject to review under that Executive Order by the Office of
Information and Regulatory Affairs of the Office of Management and
Budget (OMB).
Because of new requirements associated with the revised General
Guidelines and the Technical Guidelines, it is anticipated that the
costs for participants to report and register reductions are likely to
increase. The anticipated benefits of the new requirements include
enhanced data quality associated with reported and registered
reductions. The magnitude of these effects has not been assessed.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking'' (67 FR 53461, August 16, 2002), DOE published
procedures and policies to ensure that the potential impacts of its
draft rules on small entities are properly considered during the
rulemaking process (68 FR 7990, February 19, 2003), and has made them
available on the Office of General Counsel's Web site: http://www.gc.doe.gov.
DOE has reviewed today's revised General Guidelines for the
Voluntary Greenhouse Gas Reporting Program under the provisions of the
Regulatory Flexibility Act and the procedures and policies published on
February 19, 2003. The Guidelines establish procedures and guidance for
the accurate voluntary reporting of information on greenhouse gas
emissions and reductions. Participation in the reporting program is
voluntary, and the Department anticipates that small entities will
weigh the benefits and costs when deciding to participate. To minimize
the burden on small entities that choose to participate, the guidelines
exempt ``small emitters'' (usually small businesses or organizations)
from requirements for an entity-wide inventory and an entity-wide
assessment of emission reductions. These exemptions mean that small
emitters can participate at a significantly lower cost than otherwise.
On the basis of the foregoing, DOE certifies that these guidelines will
not have a significant economic impact on a substantial number of small
entities. Accordingly, DOE has not prepared a regulatory flexibility
analysis for this rulemaking.
C. Review Under the Paperwork Reduction Act
EIA previously obtained Paperwork Reduction Act clearance by the
Office of Management and Budget (OMB) for forms used in the current
Voluntary Reporting of Greenhouse Gases program (OMB Control No. 1905-
0194). EIA is preparing new forms and associated instructions to
implement the revised guidelines for the program, and it will publish a
separate notice in the Federal Register requesting public comment on
the proposed collection of information in accordance with 44 U.S.C.
3506(c)(2)(A). After considering the public comments, EIA will submit
the new forms, instructions, and related guidelines to OMB for approval
pursuant to 44 U.S.C. 3507(a)(1).
D. Review Under the National Environmental Policy Act
DOE has concluded that these revised General Guidelines fall into a
class of actions that will not individually or cumulatively have a
significant impact on the human environment, as determined by DOE's
regulations implementing the National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.). This action deals with the procedures and
guidance for entities that wish to voluntarily report their greenhouse
gas emissions and their reduction and sequestration of such emissions
to EIA. Because the guidelines relate to agency procedures, they are
covered under the Categorical Exclusion in paragraph A6 to subpart D,
10 CFR part 1021. Accordingly, neither an environmental assessment nor
an environmental impact statement is required.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism'' (64 FR 43255, August 4, 1999)
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the
[[Page 20804]]
States and carefully assess the necessity for such actions. The
Executive Order also requires agencies to have an accountable process
to ensure meaningful and timely input by State and local officials in
the development of regulatory policies that have federalism
implications. On March 14, 2000, DOE published a statement of policy
describing the intergovernmental consultation process it will follow in
the development of such regulations (65 FR 13735). DOE has examined
today's action and has determined that it does not preempt State law
and does not have a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. No further action is required by Executive Order 13132.
F. Review Under the Treasury and General Government Appropriations Act,
2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed
today's final rule under the OMB and DOE guidelines and has concluded
that it is consistent with applicable policies in those guidelines.
One organization commented on DOE's interim final and draft
Technical Guidelines and sought clarification on whether and how DOE
and EIA information quality guidelines apply to information submitted
under section 1605(b). The organization criticized the interim final
guidelines for failing to address issues that it thought would arise
when third parties challenge the quality of publicly disseminated
emissions reduction data voluntarily submitted to DOE by business and
industry stakeholders. In this commenter's view, third party challenges
will require EIA to request substantiation of the validity of the
reported data and possibly lead to disclosure of confidential business
information or trade secrets. This, it argued, could cause business and
industry stakeholders to be reluctant to take part in the voluntary
reporting program or, at least, add to the cost of doing business. This
commenter also felt the perceived value of registered reductions would
be called into question if, as a result of data quality challenges, the
underlying data were viewed as unreliable.
As requested, DOE clarifies here the application of DOE and EIA
information quality guidelines to information submitted under section
1605(b). Agency information quality guidelines apply to information
disseminated by DOE based on the voluntary reports of greenhouse gas
emissions information reported to EIA under section 1605(b) of the
Energy Policy Act of 1992. When EIA disseminates information reported
under section 1605, the public has the opportunity to utilize DOE's
established administrative mechanisms to seek and obtain, where
appropriate, timely correction of information maintained and
disseminated by EIA that does not comply with applicable information
quality guidelines. As set forth in DOE's Information Quality
Guidelines, requests for correction must: (1) Specifically identify the
information in question and the document(s) containing the information;
(2) explain with specificity the reasons why the information is
inconsistent with the applicable quality standards in the OMB, DOE, or
EIA guidelines; (3) present substitute information, if any, with an
explanation showing that such information is consistent with the
applicable quality standards in the OMB, DOE, or EIA guidelines; and
(4) justify the necessity for, and the form of, the requested
correction.
While DOE and EIA seek to ensure the transparency and accuracy of
1605(b) information by specifying the methods that must be used to
calculate emission reductions that are to be registered and by
requiring certain information about the entity that produced the
emissions, section 1605(b)(2) requires self-certification by reporting
entities and does not authorize or direct EIA to verify the accuracy of
information in reports. In addition, section 1605(b)(3) provides that
trade secret and commercial or financial information that is privileged
or confidential shall be protected as provided in 5 U.S.C. 552(b)(4).
If a member of the public seeking correction submits information that
calls into question the accuracy of information in a particular 1605(b)
report, then EIA may ask the person who submitted the report to respond
to the issues raised and, if appropriate, submit corrected 1605(b)
information.
G. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform'' (61 FR 4729, February 7, 1996), imposes on
Federal agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. Section 3(b) of Executive
Order 12988 specifically requires that Executive agencies make every
reasonable effort to ensure that the regulation: (1) Clearly specifies
the preemptive effect, if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any guidelines issued by the
Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, these revised guidelines meet the relevant standards
of Executive Order 12988.
H. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to assess the effects of a Federal
regulatory action on state, local, and tribal governments, and the
private sector. The Department has determined that today's action does
not impose a Federal mandate on state, local or tribal governments or
on the private sector.
I. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
These revised guidelines would not have any impact on the autonomy or
integrity of the family as an institution. Accordingly, DOE has
concluded that it is not necessary to prepare a Family Policymaking
Assessment.
J. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May
[[Page 20805]]
22, 2001) requires Federal agencies to prepare and submit to the OMB, a
Statement of Energy Effects for any proposed significant energy action.
A ``significant energy action'' is defined as any action by an agency
that promulgated or is expected to lead to promulgation of a final
rule, and that: (1) Is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use. Today's regulatory
action would not have a significant adverse effect on the supply,
distribution, or use of energy and is therefore not a significant
energy action. Accordingly, DOE has not prepared a Statement of Energy
Effects.
K. Congressional Review
As required by 5 U.S.C. 801, DOE will report to Congress the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
List of Subjects in 10 CFR Part 300
Administrative practice and procedure, Energy, Gases, Incorporation
by reference, Reporting and recordkeeping requirements.
Issued in Washington, DC, on April 13, 2006.
Karen A. Harbert,
Assistant Secretary for Policy and International Affairs.
0
Accordingly, the interim final rule published at 70 FR 15169 on March
24, 2005, which added a new Subchapter B to Title 10 of the Code of
Federal Regulations, is adopted as a final rule with changes.
Subchapter B consisting of part 300 is revised to read as follows:
Subchapter B--Climate Change
PART 300--VOLUNTARY GREENHOUSE GAS REPORTING PROGRAM: GENERAL
GUIDELINES
Sec.
300.1 General.
300.2 Definitions.
300.3 Guidance for defining and naming the reporting entity.
300.4 Selecting organizational boundaries.
300.5 Submission of an entity statement.
300.6 Emissions inventories.
300.7 Net emission reductions.
300.8 Calculating emission reductions.
300.9 Reporting and recordkeeping requirements.
300.10 Certification of reports.
300.11 Independent verification.
300.12 Acceptance of reports and registration of entity emission
reductions.
300.13 Incorporation by reference.
Authority: 42 U.S.C. 7101, et seq., and 42 U.S.C. 13385(b).
Sec. 300.1 General.
(a) Purpose. The General Guidelines in this part and the Technical
Guidelines incorporated by reference in Sec. 300.13 govern the
Voluntary Reporting of Greenhouse Gases Program authorized by section
1605(b) of the Energy Policy Act of 1992 (42 U.S.C. 13385(b)). The
purpose of the guidelines is to establish the procedures and
requirements for filing voluntary reports, and to encourage
corporations, government agencies, non-profit organizations, households
and other private and public entities to submit annual reports of their
greenhouse gas emissions, emission reductions, and sequestration
activities that are complete, reliable and consistent. Over time, it is
anticipated that these reports will provide a reliable record of the
contributions reporting entities have made toward reducing their
greenhouse gas emissions.
(b) Reporting under the program. (1) Each reporting entity, whether
or not it intends to register emissions as described in paragraph (c)
of this section, must:
(i) File an entity statement that meets the appropriate
requirements in Sec. 300.5(d) through (f) of this part;
(ii) Use appropriate emission inventory and emission reduction
calculation methods specified in the Technical Guidelines (incorporated
by reference, see Sec. 300.13), and calculate and report the weighted
average quality rating of any emission inventories it reports;
(iii) Comply with the record keeping requirements in Sec. 300.9 of
this part; and
(iv) Comply with the certification requirements in Sec. 300.10 of
this part;
(2) Each reporting entity, whether or not it intends to register
emissions as described in paragraph (c) of this section, may report
offset reductions achieved by other entities outside their boundaries
as long as such reductions are reported separately and calculated in
accordance with methods specified in the Technical Guidelines. The
third-party entity that achieved these reductions must agree to their
being reported as offset reductions, and must also meet all of the
requirements of reporting that would apply if the third-party entity
reported directly under the 1605(b) program.
(3) An entity that intends to register emissions and emission
reductions must meet the additional requirements referenced in
paragraph (c) of this section.
(4) An entity that does not intend to register emissions and
emission reductions may choose to report its emissions and/or emission
reductions on an entity-wide basis or for selected elements of the
entity, selected gases or selected sources.
(5) An entity that does not intend to register emissions may report
emission inventories for any year back to 1990 and may report emission
reductions for any year back to 1991, relative to a base period of one
to four years, ending no earlier than 1990.
(c) Registration requirements. Entities that seek to register
reductions must meet the additional requirements in this paragraph;
although these requirements differ depending on whether the entity is a
large or small emitter.
(1) To be eligible for registration, a reduction must have been
achieved after 2002, unless the entity has committed under the Climate
Leaders or Climate VISION programs to reduce its entity-wide emissions
relative to a base period that ends earlier 2002, but no earlier than
2000.
(2) A large emitter must submit an entity-wide emission inventory
that meets or exceeds the minimum quality requirements specified in
Sec. 300.6(b) and the Technical Guidelines (incorporated by reference,
see Sec. 300.13). Registered reductions of a large emitter must be
based on an entity-wide assessment of net emission reductions,
determined in accordance with Sec. 300.8 and the Technical Guidelines.
(3) A small emitter must also submit an emission inventory that
meets minimum quality requirements specified in Sec. 300.6(b) and the
Technical Guidelines (incorporated by reference, see Sec. 300.13) and
base its registered reductions on an assessment of annual changes in
net emissions. A small emitter, however, may restrict its inventory and
assessment to a single type of activity, such as forest management,
building operations or agricultural tillage.
(4) Reporting entities may, under certain conditions, register
reductions achieved by other entities:
(i) Reporting entities that have met the requirements for
registering their own reductions may also register offset reductions
achieved by other entities if:
(A) They have an agreement with the third-party entities to do so
and these
[[Page 20806]]
third-party entities have met all of the requirements for registration;
or
(B) They were the result of qualified demand management or other
programs and are calculated in accordance with the action-specific
method identified in Sec. 300.8(h)(5).
(ii) Small emitters that serve as an aggregator may register offset
reductions achieved by non-reporting entities without reporting on
their own emissions, as long as they have an agreement with the third-
party entities to do so and these third-party entities have met all of
the requirements for registration.
(d) Forms. Annual reports of greenhouse gas emissions, emission
reductions, and sequestration must be made on forms or software made
available by the Energy Information Administration of the Department of
Energy (EIA).
(e) Status of reports under previous guidelines. EIA continues to
maintain in its Voluntary Reporting of Greenhouse Gases database all
reports received pursuant to DOE's October 1994 guidelines. Those
guidelines are available from EIA at http://www.eia.doe.gov/oiaf/1605/guidelns.html.
(f) Periodic review and updating of General and Technical
Guidelines. DOE intends periodically to review the General Guidelines
and the Technical Guidelines (incorporated by reference, see Sec.
300.13) to determine whether any changes are warranted; DOE anticipates
these reviews will occur approximately once every three years. These
reviews will consider any new developments in climate science or
policy, the participation rates of large and small emitters in the
1605(b) program, the general quality of the data submitted by different
participants, and any changes to other emissions reporting protocols.
Possible changes may include, but are not limited to:
(1) The addition of greenhouse gases that have been demonstrated to
have significant, quantifiable climate forcing effects when released to
the atmosphere in significant quantities;
(2) Changes to the minimum, quantity-weighted quality rating for
emission inventories;
(3) Updates to emission inventory methods, emission factors and
other provisions that are contained in industry protocols or standards.
The review may also consider updates to any government-developed and
consensus-based emission factors for which automatic updating is not
provided in the Technical Guidelines;
(4) Modifications to the benchmarks or emission conversion factors
used to calculate avoided and indirect emissions; and
(5) Changes in the minimum requirements for registered emission
reductions.
Sec. 300.2 Definitions.
This section provides definitions for commonly used terms in this
part.
Activity of a small emitter means, with respect to a small emitter,
any single category of anthropogenic production, consumption or other
action that releases emissions or results in sequestration, the annual
changes of which can be assessed generally by using a single
calculation method.
Aggregator means an entity that reports to the 1605(b) program on
behalf of non-reporting entities. An aggregator may be a large or small
emitter, such as a trade association, non-profit organization or public
agency.
Anthropogenic means greenhouse gas emissions and removals that are
a direct result of human activities or are the result of natural
processes that have been affected by human activities.
Avoided emissions means the greenhouse gas emission reductions that
occur outside the organizational boundary of the reporting entity as a
direct consequence of changes in the entity's activity, including but
not necessarily limited to the emission reductions associated with
increases in the generation and sale of electricity, steam, hot water
or chilled water produced from energy sources that emit fewer
greenhouse gases per unit than other competing sources of these forms
of distributed energy.
Base period means a period of 1-4 years used to derive the average
annual base emissions, emissions intensity or other values from which
emission reductions are calculated.
Base value means the value from which emission reductions are
calculated for an entity or subentity. The value may be annual
emissions, emissions intensity, kilowatt-hours generated, or other
value specified in the 1605(b) guidelines. It is usually derived from
actual emissions and/or activity data derived from the base period.
Biogenic emissions mean emissions that are naturally occurring and
are not significantly affected by human actions or activity.
Boundary means the actual or virtual line that encompasses all the
emissions and carbon stocks that are to be quantified and reported in
an entity's greenhouse gas inventory, including de minimis emissions.
Entities may use financial control or another classification method
based on ownership or control as the means of determining which sources
or carbon stocks fall within this organizational boundary.
Carbon dioxide equivalent means the amount of carbon dioxide by
weight emitted into the atmosphere that would produce the same
estimated radiative forcing as a given weight of another radiatively
active gas. Carbon dioxide equivalents are computed by multiplying the
weight of the gas being measured by its estimated global warming
potential.
Carbon stocks mean the quantity of carbon stored in biological and
physical systems including: trees, products of harvested trees,
agricultural crops, plants, wood and paper products and other
terrestrial biosphere sinks, soils, oceans, and sedimentary and
geological sinks.
Climate Leaders means the EPA sponsored industry-government
partnership that works with individual companies to develop long-term
comprehensive climate change strategies. Certain Climate Leaders
Partners have, working with EPA, set a corporate-wide greenhouse gas
reduction goal and have inventoried their emissions to measure progress
towards their goal.
Climate VISION means the public-private partnership initiated
pursuant to a Presidential directive issued in 2002 that aims to
contribute to the President's goal of reducing greenhouse gas intensity
through voluntary frameworks with industry. Climate VISION partners
have signed an agreement with DOE to implement various climate-related
actions to reduce greenhouse gas emissions.
De minimis emissions means emissions from one or more sources and
of one or more greenhouse gases that, in aggregate, are less than or
equal to 3 percent of the total annual carbon dioxide (CO2)
equivalent emissions of a reporting entity.
Department or DOE means the U.S. Department of Energy.
Direct emissions are emissions from sources within the
organizational boundaries of an entity.
Distributed energy means electrical or thermal energy generated by
an entity that is sold or otherwise exported outside of the entity's
boundaries for use by another entity.
EIA means the Energy Information Administration within the U.S.
Department of Energy.
Emissions means the direct release of greenhouse gases to the
atmosphere from any anthropogenic (human induced) source and certain
indirect
[[Page 20807]]
emissions (releases) specified in this part.
Emissions intensity means emissions per unit of output, where
output is defined as the quantity of physical output, or a non-physical
indicator of an entity's or subentity's productive activity.
Entity means the whole or part of any business, institution,
organization, government agency or corporation, or household that:
(1) Is recognized under any U.S. Federal, State or local law that
applies to it;
(2) Is located and operates, at least in part, in the United
States; and
(3) The emissions of such operations are released, at least in
part, in the United States.
First reduction year means the first year for which an entity
intends to register emission reductions; it is the year that
immediately follows the start year.
Fugitive emissions means uncontrolled releases to the atmosphere of
greenhouse gases from the processing, transmission, and/or
transportation of fossil fuels or other materials, such as HFC leaks
from refrigeration, SF6 from electrical power distributors, and methane
from solid waste landfills, among others, that are not emitted via an
exhaust pipe(s) or stack(s).
Greenhouse gases means the gases that may be reported to the
Department of Energy under this program. They are:
(1) Carbon dioxide (CO2)
(2) Methane (CH4)
(3) Nitrous oxide (N2O)
(4) HydrofluorocarbonsHFC-23 [trifluoromethane-(CHF3]HFC-32
[trifluoromethane-CH2F2],
CH2CF3, CH3F,
CHF2CF3, CH2FCF3,
CH3FCF3, CHF2CH2F,
CF3CH3, CH2FCH2F,
CH3CHF2, CH3CH2F,
CF3CHFCF3,
CH2FCF3CF3,
CHF2CHFCF3,
CF3CH2CF3,
CH2FCF2CHF2,
CHF2CH2CF3,
CF3CH2CF2CH3,
CH3 CHFCHFCF2)
(5) Perfluorocarbons (perfluoromethane-CF4, perfluoroethane-
C2F6, C3F8,
C4F10, c-C4F8,
C5F12, C6F14)
(6) Sulfur hexafluoride (SF6)
(7) Chlorofluorocarbons (CFC-11 [trichlorofluoromethane-
CCl3F], CCl2F2, CClF3,
CCl2FCClF2, CClF2CClF2,
ClF3CClF2,)
(8) Other gases or particles that have been demonstrated to have
significant, quantifiable climate forcing effects when released to the
atmosphere in significant quantities and for which DOE has established
or approved methods for estimating emissions and reductions. (Note: As
provided in Sec. 300.6(i), chlorofluorcarbons and other gases with
quantifiable climate forcing effects may be reported to the 1605(b)
program if DOE has established an appropriate emission inventory or
emission reduction calculation method, but reductions of these gases
may not be registered.)
Incidental lands are entity landholdings that are a minor component
of an entity's operations and are not actively managed for production
of goods and services, including:
(1) Transmission, pipeline, or transportation right of ways that
are not managed for timber production;
(2) Land surrounding commercial enterprises or facilities; and
(3) Land where carbon stock changes are determined by natural
factors.
Indirect emissions means greenhouse gas emissions from stationary
or mobile sources outside the organizational boundary that occur as a
direct consequence of an entity's activity, including but not
necessarily limited to the emissions associated with the generation of
electricity, steam and hot/chilled water used by the entity.
Large emitter means an entity whose annual emissions are more than
10,000 metric tons of CO2 equivalent, as determined in
accordance with Sec. 300.5(c).
Net emission reductions means the sum of all annual changes in
emissions, eligible avoided emissions and sequestration of the
greenhouse gases specifically identified in Sec. 300.6(i), and
determined to be in conformance with Sec. Sec. 300.7 and 300.8 of this
part.
Offset means an emission reduction that is included in a 1605(b)
report and meets the requirements of this part, but is achieved by an
entity other than the reporting entity. Offset reductions must not be
reported or registered by any other entity and must appear as a
separate and distinct component of an entity's report. Offsets are not
integrated into the reporting entity's emissions or net emission
reductions.
Registration means the reporting of emission reductions that the
EIA has determined meet the qualifications for registered emission
reductions set forth in the guidelines.
Reporting entity means an entity that has submitted a report under
the 1605(b) program that has been accepted by the Energy Information
Administration.
Reporting year means the year that is the subject of a report to
DOE.
Sequestration means the process by which CO2 is removed
from the atmosphere, either through biologic processes or physical
processes.
Simplified Emission Inventory Tool (SEIT) is a computer-based
method, to be developed and made readily accessible by EIA, for
translating common physical indicators into an estimate of greenhouse
gas emissions.
Sink means an identifiable discrete location, set of locations, or
area in which CO2 or some other greenhouse gas is
sequestered.
Small emitter means an entity whose annual emissions are less than
or equal to 10,000 metric tons of CO2 equivalent, as
determined in accordance with Sec. 300.5(c), and that chooses to be
treated as a small emitter under the guidelines.
Source means any land, facility, process, vehicle or activity that
releases a greenhouse gas.
Start year means the year upon which the initial entity statement
is based and the last year of the initial base period(s).
Subentity means a component of any entity, such as a discrete
business line, facility, plant, vehicle fleet, or energy using system,
which has associated with it emissions of greenhouse gases that can be
distinguished from the emissions of all other components of the same
entity and, when summed with the emissions of all other subentities,
equal the entity's total emissions.
Total emissions means the total annual contribution of the
greenhouse gases (as defined in this section) to the atmosphere by an
entity, including both direct and indirect entity-wide emissions.
United States or U.S. means the 50 States, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, and any other territory
of the United States.
Sec. 300.3 Guidance for defining and naming the reporting entity.
(a) A reporting entity must be composed of one or more businesses,
public or private institutions or organizations, households, or other
entities having operations that annually release emissions, at least in
part, in the United States. Entities may be defined by, as appropriate,
a certificate of incorporation, corporate charter, corporate filings,
tax identification number, or other legal basis of identification
recognized under any Federal, State or local law or regulation. If a
reporting entity is composed of more than one entity, all of the
entities included must be responsible to the same management hierarchy
and all entities that have the same management hierarchy must be
included in the reporting entity.
(b) All reporting entities are strongly encouraged to define
themselves at the
[[Page 20808]]
highest level of aggregation. To achieve this objective, DOE suggests
the use of a corporate-level definition of the entity, based on filings
with the Securities and Exchange Commission or institutional charters.
While reporting at the highest level of aggregation is encouraged, DOE
recognizes that certain businesses and institutions may conclude that
reporting at some lower level is desirable. Federal agencies are
encouraged to report at the agency or departmental level, but distinct
organizational units (such as a Department of the Interior Fish and
Wildlife Service National Wildlife Refuge) may report directly if
authorized by their department or agency. Once an entity has determined
the level of corporate or institutional management at which it will
report (e.g., the holding company, subsidiary, regulated stationary
source, state government, agency, refuge, etc.), the entity must
include all elements of the organization encompassed by that management
level and exclude any organizations that are managed separately. For
example, if two subsidiaries of a parent company are to be covered by a
single report, then all subsidiaries of that parent company must also
be included. Similarly, if a company decides to report on the U.S. and
Canadian subsidiaries of its North American operations unit, it must
also report on any other subsidiaries of its North American unit, such
as a Mexican subsidiary.
(c) A name for the defined entity must be specified by all
reporters. For entities that intend to register reductions, this should
be the name commonly used to represent the activities being reported,
as long as it is not also used to refer to substantial activities not
covered by the entity's reports. While DOE believes entities should be
given considerable flexibility in defining themselves at an appropriate
level of aggregation, it is essential that the name assigned to an
entity that intends to register reductions corresponds closely to the
scope of the operations and emissions covered by its report. If, for
example, an individual plant or operating unit is reporting as an
entity, it should be given a name that corresponds to the specific
plant or unit, and not to the responsible subsidiary or corporate
entity. In order to distinguish a parent company from its subsidiaries,
the name of the parent company generally should not be incorporated
into the name of the reporting subsidiary, but if it is, the name of
the parent company usually should be secondary.
Sec. 300.4 Selecting organizational boundaries.
(a) Each reporting entity must disclose in its entity statement the
approach used to establish its organizational boundaries, which should
be consistent with the following guidelines:
(1) In general, entities should use financial control as the
primary basis for determining their organizational boundaries, with
financial control meaning the ability to direct the financial and
operating policies of all elements of the entity with a view to gaining
economic or other benefits from its activities over a period of many
years. This approach should ensure that all sources, including those
controlled by subsidiaries, that are wholly or largely owned by the
entity are covered by its reports. Sources that are under long-term
lease of the entity may, depending on the provisions of such leases,
also be considered to be under the entity's financial control. Sources
that are temporarily leased or operated by an entity generally would
not be considered to be under its financial control.
(2) Entities may establish organizational boundaries using
approaches other than financial control, such as equity share or
operational control, but must disclose how the use of these other
approaches results in organizational boundaries that differ from those
resulting from using the financial control approach.
(3) Emissions from facilities or vehicles that are partially-owned
or leased may be included at the entity's discretion, provided that the
entity has taken reasonable steps to assure that doing so does not
result in the double counting of emissions, sequestration or emission
reductions. Emissions reductions or sequestration associated with land,
facilities or other sources not owned or leased by an entity may not be
included in the entity's reports under the program unless the entity
has long-term control over the emissions or sequestration of the source
and the owner of the source has agreed that the emissions or
sequestration may be included in the entity's report.
(4) If the scope of a defined entity extends beyond the United
States, the reporting entity should use the same approach to
determining its organizational boundaries in the U.S. and outside the
U.S.
(b) Each reporting entity must keep separate reports on emissions
or emission reductions that occur within its defined boundaries and
those that occur outside its defined boundaries. Entities must also
keep separate reports on emissions and emission reductions that occur
outside the United States and those that occur within the United
States.
(c) An entity that intends to register its entity-wide emissions
reductions must document and maintain its organizational boundary for
accounting and reporting purposes.
Sec. 300.5 Submission of an entity statement.
(a) Determining the type of reporting entity. The entity statement
requirements vary by type of reporting entity. For the purposes of
these guidelines, there are three types of entities:
(1) Large emitters that intend to register emission reductions;
(2) Small emitters that intend to register emission reductions; and
(3) Emitters that intend to report, but not register emission
reductions.
(b) Choosing a start year. The first entity statement describes the
make-up, operations and boundaries of the entity, as they existed in
the start year.
(1) For all entities, it is the year immediately preceding the
first year for which the entity intends to register emission reductions
and the last year of the initial base period(s).
(2) For entities intending to register emission reductions, the
start year may be no earlier than 2002, unless the entity has made a
commitment to reduce its entity-wide emissions under the Climate
Leaders or Climate VISION program. An entity that has made such a
commitment may establish a start year derived from the base period of
the commitment, as long as it is no earlier than 2000.
(i) For a large emitter, the start year is the first year for which
the entity submits a complete emissions inventory under the 1605(b)
program.
(ii) The entity's emissions in its start year or its average annual
emissions over a period of up to four years ending in the start year
determine whether it qualifies to begin reporting as a small emitter.
(3) For entities not intending to register reductions, the start
year may be no earlier than 1990.
(c) Determining and maintaining large or small emitter reporting
status. (1) Any entity that intends to register emission reductions can
choose to participate as a large emitter, but only an entity that has
demonstrated that its annual emissions are less than or equal to 10,000
metric tons of CO2 equivalent may participate as a small
emitter. To demonstrate that its annual emissions are less than or
equal to 10,000 metric tons of CO2 equivalent, an entity
must submit either an estimate of its emissions during its chosen start
year or
[[Page 20809]]
an estimate of its average annual emissions over a continuous period
not to exceed four years of time ending in its chosen start year, as
long as the operations and boundaries of the entity have not changed
significantly during that period.
(2) An entity must estimate its total emissions using methods
specified in Chapter 1 of the Technical Guidelines (incorporated by
reference, see Sec. 300.13) or by using the Simplified Emission
Inventory Tool (SEIT) provided by EIA and also discussed in Chapter 1.
The results of this estimate must be reported to EIA. [Note: emission
estimates developed using SEIT may not be used to prepare, in whole or
part, entity-wide emission inventories required for the registration of
reductions.]
(3) After starting to report, each small emitter must annually
certify that the emissions-related operations and boundaries of the
entity have not changed significantly since the previous report. A new
estimate of total emissions must be submitted after any significant
increase in emissions, any change in the operations or boundaries of
the small emitter, or every five years, whichever occurs first. Small
emitters with estimated annual emissions of over 9,000 metric tons of
CO2 equivalent should re-estimate and submit their emissions
annually. If an entity determines that it must report as a large
emitter, then it must continue to report as a large emitter in all
future years in order to ensure a consistent time series of reports.
Once a small emitter becomes a large emitter, it must begin reporting
in conformity with the reporting requirements for large emitters.
(d) Entity statements for large emitters intending to register
reductions. When a large emitter intending to register emission
reductions first reports under these guidelines, it must provide the
following information in its entity statement:
(1) The name to be used to identify the participating entity;
(2) The legal basis of the named entity;
(3) The criteria used to determine:
(i) The organizational boundaries of the entity, if other than
financial control; and
(ii) The sources of emissions included or excluded from the
entity's reports, such as sources excluded as de minimis emissions;
(4) The names of any parent or holding companies the activities of
which will not be covered comprehensively by the entity's reports;
(5) The names of any large subsidiaries or organizational units
covered comprehensively by the entity's reports. All subsidiaries of
the entity must be covered by the entity's reports, but only large
subsidiaries must be specifically identified in the entity statement;
(6) A list of each country where operations occur, if the entity is
including any non-U.S. operations in its report;
(7) A description of the entity and its primary U.S. economic
activities, such as electricity generation, product manufacturing,
service provider or freight transport; for each country listed under
paragraph (d)(6) of this section, the large emitter should describe the
economic activity in that country.
(8) A description of the types of emission sources or sinks to be
covered in the entity's emission inventories, such as fossil fuel power
plants, manufacturing facilities, commercial office buildings or heavy-
duty vehicles;
(9) The names of other entities that substantially share the
ownership or operational control of sources that represent a
significant part of the reporting entity's emission inventories, and a
certification that, to the best of the certifier's knowledge, the
direct greenhouse gas emissions and sequestration in the entity's
report are not included in reports filed by any of these other entities
to the 1605(b) program; and
(10) Identification of the start year.
(e) Entity statements for small emitters intending to register
reductions. When a small emitter intending to register emission
reductions first reports under these guidelines, it must provide the
following information in its entity statement:
(1) The name to be used to identify the participating entity;
(2) The legal basis of the named entity;
(3) An identification of the entity's control over the activities
covered by the entity's reports, if other than financial control;
(4) The names of any parent or holding companies the activities of
which will not be covered comprehensively by the entity's reports;
(5) An identification or description of the primary economic
activities of the entity, such as agricultural production, forest
management or household operation; if any of the economic activities
covered by the entity's reports occur outside the U.S., a listing of
each country in which such activities occur;
(6) An identification or description of the specific activity (or
activities) and the emissions, avoided emissions or sequestration
covered by the entity's report, such as landfill gas recovery or forest
sequestration;
(7) A certification that, to the best of the certifier's knowledge,
the direct greenhouse gas emissions and sequestration in the entity's
report are not included in reports filed by any other entities
reporting to the 1605(b) program; and
(8) Identification of the start year.
(f) Entity statements for reporting entities not registering
reductions. When a participant not intending to register emission
reductions first reports under this part, it must, at a minimum,
provide the following information in its entity statement:
(1) The name to be used to identify the reporting entity;
(2) The legal basis of the entity;
(3) An identification of the entity's control over the activities
covered by the entity's reports, if other than financial control;
(4) A description of the entity and its primary economic
activities, such as electricity generation, product manufacturing,
service provider, freight transport, agricultural production, forest
management or household operation; if any of the economic activities
covered by the entity's reports occur outside the United States, a
listing of each country in which such activities occur; and
(5) A description of the types of emission sources or sinks, such
as fossil fuel power plants, manufacturing facilities, commercial
office buildings or heavy-duty vehicles, covered in the entity's
reports of emissions or emission reductions.
(g) Changing entity statements. (1) Reporting entities are required
to annually review and, if necessary, update their entity statements.
(2) From time to time, a reporting entity may choose to change the
scope of activities included within the entity's reports or the level
at which the entity wishes to report. A reporting entity may also
choose to change its organizational boundaries, its base period, or
other elements of its entity statement. For example, companies buy and
sell business units, or equity share arrangements may change. In
general, DOE encourages changes in the scope of reporting that expand
the coverage of an entity's report and discourages changes that reduce
the coverage of such reports unless they are caused by divestitures or
plant closures. Any such changes should be reported in amendments to
the entity statement, and major changes may warrant or require changes
in the base values used to calculate emission reductions and, in some
cases, the entity's base periods. Changes in the scope of reporting
made on or before May 31 of a given calendar year must be reflected in
the report submitted
[[Page 20810]]
covering emissions and reductions for the following calendar year.
Reporting entities may choose to postpone incorporating changes in the
scope of reporting made after May 31 until submitting the report
covering emissions and reductions for the year after the following
calendar year. However, in no case should there be an interruption in
the annual reports of entities registering emission reductions. Chapter
2 of the Technical Guidelines (incorporated by reference, see Sec.
300.13) provides more specific guidance on how such changes should be
reflected in entity statements, reports, and emission reduction
calculations.
(h) Documenting changes in amended entity statements. A reporting
entity's entity statement in subsequent reports should focus primarily
on changes since the previous report. Specifically, the subsequent
entity statement should report the following information:
(1) For significant changes in the reporting entity's scope or
organizational boundaries, the entity should document:
(i) The acquisition or divestiture of discrete business units,
subsidiaries, facilities, and plants;
(ii) The closure or opening of significant facilities;
(iii) The transfer of economic activity to or from specific
subentities covered by the entity's reports, such as the transfer of
operations to non-U.S. subsidiaries;
(iv) Significant changes in land holdings (applies to entities
reporting on greenhouse gas emissions or sequestration related to land
use, land use change, or forestry);
(v) Whether the reporting entity is reporting at a higher level of
aggregation than it did in the previous report, and if so, a listing of
the subsidiary entities that are now aggregated under a revised
conglomerated entity, including a listing of any non-U.S. operations to
be added and the specific countries in which these operations are
located; and
(vi) Changes in its activities or operations (e.g., changes in
output, contractual arrangements, equipment and processes, outsourcing
or insourcing of significant activities) that are likely to have a
significant effect on emissions, together with an explanation of how it
believes the changes in economic activity influenced its reported
emissions or sequestrations.
Sec. 300.6 Emissions inventories.
(a) General. The objective of an emission inventory is to provide a
full accounting of an entity's emissions for a particular year,
including direct emissions of the first six categories of gases listed
in the definition of ``greenhouse gases'' in Sec. 300.2, indirect
emissions specified in paragraph (e) of this section, and all
sequestration or other changes in carbon stocks. An emission inventory
must be prepared in accordance with Chapter 1 of the Technical
Guidelines (incorporated by reference, see Sec. 300.13). An inventory
does not include avoided emissions or any offset reductions, and is not
subsequently adjusted to reflect future acquisitions, divestitures or
other changes to the reporting entity (although a reporting entity
often makes these types of adjustments when calculating emission
reductions under the guidelines). Entity-wide inventories are a
prerequisite for the registration of emission reductions by entities
with average annual emissions of more than 10,000 metric tons of
CO2 equivalent. Entities that have average annual emissions
of less than or equal to 10,000 metric tons of CO2
equivalent are eligible to register emission reductions associated with
specific activities without also reporting an inventory of the total
emissions, but such entities should inventory and report the emissions
associated with the specific activity(ies) they do cover in their
reports.
(b) Quality requirements for emission inventories. The Technical
Guidelines (incorporated by reference, see Sec. 300.13) usually
identify more than one acceptable method of measuring or estimating
greenhouse gas emissions. Each acceptable method is rated A, B, C or D,
with A methods usually corresponding to the highest quality method
available and D methods representing the lowest quality method that may
be used. Each letter is assigned a numerical rating reflecting its
relative quality, 4 for A methods, 3 for B methods, 2 for C methods and
1 for D methods. Entities that intend to register emission reductions
must use emission inventory methods that result in a quantity-weighted
average quality rating of at least 3.0.
(1) Entities may at any time choose to modify the measurement or
estimation methods that they use for their current or future year
emission inventories. Such modifications would enable entities to
gradually improve the quality of the ratings over time, but prior year
inventories may be modified only to correct significant errors.
(2) Entities that have had their emission quantities and the
quantity-weighted quality rating of their emissions inventory
independently verified may report their emissions and average quality
ratings by greenhouse gas, indirect emissions and sequestration, rather
than by source or sink category.
(3) Entities that certify that they have used only A or B methods,
may forego indicating in their reports the quality ratings of the
methods used and may forego calculating the quantity-weighted average
quality of their emission inventories.
(c) Using estimation methods not included in the Technical
Guidelines. An entity may obtain DOE approval for the use of an
estimation method not included in the Technical Guidelines
(incorporated by reference, see Sec. 300.13) if the method covers
sources not described in the Technical Guidelines, or if the method
provides more accurate results for the entity's specific circumstances
than the methods described in the Technical Guidelines. If an entity
wishes to propose the use of a method that is not described in the
Technical Guidelines, the entity must provide a written description of
the method, an explanation of how the method is implemented (including
data requirements), empirical evidence of the method's validity and
accuracy, and a suggested rating for the method to DOE's Office of
Policy and International Affairs (with a copy to EIA). DOE reserves the
right to deny the request, or to assign its own rating to the method.
By submitting this information, the entity grants permission to DOE to
incorporate the method in a future revision of the Technical
Guidelines.
(d) Direct emissions inventories. Direct greenhouse gas emissions
that must be reported are the emissions resulting from stationary or
mobile sources within the organizational boundaries of an entity,
including but not limited to emissions resulting from combustion of
fossil fuels, process emissions, and fugitive emissions. Process
emissions (e.g., PFC emissions from aluminum production) must be
reported along with fugitive emissions (e.g., leakage of greenhouse
gases from equipment).
(e) Inventories of indirect emissions associated with purchased
energy. (1) To provide a clear incentive for the users of electricity
and other forms of purchased energy to reduce demand, an entity must
include the indirect emissions from the consumption of purchased
electricity, steam, and hot or chilled water in the entity's inventory
as indirect emissions. To avoid double counting among entities, the
entity must report all indirect emissions separately from its direct
emissions. Entities should use the methods for quantifying indirect
emissions specified in the Technical Guidelines (incorporated by
reference, see Sec. 300.13).
[[Page 20811]]
(2) Entities may choose to report other forms of indirect
emissions, such as emissions associated with employee commuting,
materials consumed or products produced, although such other indirect
emissions may not be included in the entity's emission inventory and
may not be the basis for registered emission reductions. All such
reports of other forms of indirect emissions must be distinct from
reports of indirect emissions associated with purchased energy and must
be based on emission measurement or estimation methods identified in
the Technical Guidelines (incorporated by reference, see Sec. 300.13)
or approved by DOE.
(f) Entity-level inventories of changes in terrestrial carbon
stocks. Annual changes in managed terrestrial carbon stocks should be
comprehensively assessed and reported across the entity, and the net
emissions resulting from such changes included in the entity's
emissions inventory. Entities should use the methods for estimating
changes in managed terrestrial carbon stocks specified in the Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(g) Treatment of de minimis emissions and sequestration. (1)
Although the goal of the entity-wide reporting requirement is to
provide an accurate and comprehensive estimate of total emissions,
there may be small emissions from certain sources that are unduly
costly or otherwise difficult to measure or reliably estimate annually.
An entity may exclude particular sources of emissions or sequestration
if the total quantities excluded represent less than or equal to 3
percent of the total annual CO2 equivalent emissions of the
entity. The entity must identify the types of emissions excluded and
provide an estimate of the annual quantity of such emissions using
methods specified in the Technical Guidelines (incorporated by
reference, see Sec. 300.13) or by using the Simplified Emissions
Inventory Tool (SEIT). The results of this estimate of the entity's
total excluded annual emissions must be reported to DOE together with
the entity's initial entity statement.
(2) After starting to report, each reporting entity that excludes
from its annual reports any de minimis emissions must re-estimate the
quantity of excluded emissions after any significant increase in such
emissions, or every five years, whichever occurs sooner.
(h) Separate reporting of domestic and international emissions.
Non-U.S. emissions included in an entity's emission inventory must be
separately reported and clearly distinguished from emissions
originating in the U.S. Entities must identify any country-specific
factors used in the preparation of such reports.
(i) Covered gases. Entity-wide emissions inventories must include
the emissions of the first six categories of named gases listed in the
definition of ``greenhouse gases'' in Sec. 300.2. Entities may report
chlorofluorocarbons and other greenhouse gases with quantifiable
climate forcing effects as long as DOE has established a method for
doing so, but such gases must be reported separately and emission
reductions, if any, associated with such other gases are not eligible
for registration.
(j) Units for reporting. Emissions and sequestration should be
reported in terms of the mass (not volume) of each gas, using metric
units (e.g., metric tons of methane). Entity-wide and subentity
summations of emissions and reductions from multiple sources must be
converted into CO2 equivalent units using the global warming
potentials for each gas in the International Panel on Climate Change's
Third Assessment (or most recent) Report, as specified in the Technical
Guidelines (incorporated by reference, see Sec. 300.13). Entities
should specify the units used (e.g., kilograms, or metric tons).
Entities may need to use the standard conversion factors specified in
the Technical Guidelines to convert existing data into the common units
required in the entity-level report. Emissions from the consumption of
purchased electricity must be calculated by region (from the list
provided by DOE in the Technical Guidelines) or country, if outside the
United States. Consumption of purchased steam or chilled/hot water must
be reported according to the type of system and fuel used to generate
it (from the list provided by DOE in the Technical Guidelines).
Entities must convert purchased energy to CO2 equivalents
using the conversion factors in the Technical Guidelines. Entities
should also provide the physical quantities of each type of purchased
energy covered by their reports.
Sec. 300.7 Net emission reductions.
(a) Entities that intend to register emission reductions achieved
must comply with the requirements of this section. Entities may
voluntarily follow these procedures if they want to demonstrate the
achievement of net, entity-wide reductions for years prior to the
earliest year permitted for registration. Only large emitters must
follow the requirements of paragraph (b) of this section, but small
emitters may do so voluntarily. Only entities that qualify as small
emitters may use the special procedures in paragraph (c) of this
section. Entities seeking to register emission reductions achieved by
other entities (offsets) must certify that these emission reductions
were calculated in a manner consistent with the requirements of
paragraph (d) of this section and use the emission reduction
calculation methods identified in Sec. 300.8. All entities seeking to
register emission reductions must comply with the requirements of
paragraph (e) of this section. Only reductions in the emissions of the
first six categories of gases listed in the definition of ``greenhouse
gases'' in Sec. 300.2 are eligible for registration.
(b) Assessing net emission reductions for large emitters. (1)
Entity-wide reporting is a prerequisite for registering emission
reductions by entities with average annual emissions of more than
10,000 metric tons of CO2 equivalent. Net annual entity-wide
emission reductions must be based, to the maximum extent practicable,
on a full assessment and sum total of all changes in an entity's
emissions, eligible avoided emissions and sequestration relative to the
entity's established base period(s). This assessment must include all
entity emissions, including the emissions associated with any non-U.S.
operations covered by the entity statement, although the reductions
achieved by non-U.S. operations must be separately totaled prior to
being integrated with the net emission reductions achieved by U.S.
operations. It must include the annual changes in the total emissions
of the entity, including the total emissions of each of the subentities
identified in its entity statement. All changes in emissions, avoided
emissions, and sequestration must be determined using methods that are
consistent with the guidelines described in Sec. 300.8 of this part.
(2) If it is not practicable to assess the changes in net emissions
resulting from certain entity activities using at least one of the
methods described in Sec. 300.8 of this part, the entity may exclude
them from its estimate of net emission reductions. The entity must
identify as one or more distinct subentities the sources of emissions
excluded for this reason and describe the reasons why it was not
practicable to assess the changes that had occurred. DOE believes that
few emission sources will be excluded for this reason, but has
identified at least two situations where such an exclusion would be
warranted. For example, it is likely to be impossible to assess the
emission changes associated with a new manufacturing plant that
produces a product for which
[[Page 20812]]
the entity has no historical record of emissions or emissions intensity
(emissions per unit of product output). However, once the new plant has
been operational for at least a full year, a base period and base
value(s) for the new plant could be established and its emission
changes assessed in the following year. Until the emission changes of
this new subentity can be assessed, it should be identified in the
entity's report as a subentity for which no assessment of emission
changes is practicable. The other example involves a subentity that has
reduced its output below the levels of its base period. In such a case,
the subentity could not use the absolute emissions method and may also
be unable to identify an effective intensity metric or other method.
(3) In calculating its net annual emission reductions, an entity
should exclude any emissions or sequestration that have been excluded
from the entity's inventory. The entity should also exclude all de
minimis and biogenic emissions that are excluded from the entity's
inventory of greenhouse gas emissions from its assessments of emission
changes.
(c) Assessing emission reductions for entities with small
emissions. (1) Entities with average annual emissions of less than or
equal to 10,000 metric tons of CO2 equivalent are not
required to inventory their total emissions or assess all changes in
their emissions, eligible avoided emissions and sequestration to
qualify for registered reductions. These entities may register emission
reductions that have occurred since 2002 and that are associated with
one or more specific activities, as long as they:
(i) Perform a complete assessment of the annual emissions and
sequestration associated with each of the activities upon which they
report, using methods that meet the same quality requirements
applicable to entity-wide emission inventories; and
(ii) Determine the changes in the emissions, eligible avoided
emissions or sequestration associated with each of these activities.
(2) An entity reporting as a small emitter must report on one or
more specific activities and is encouraged, but not required to report
on all activities occurring within the entity boundary. Examples of
small emitter activities include: vehicle operations; product
manufacturing processes; building operations or a distinct part
thereof, such as lighting; livestock operations; crop management; and
power generation. For example, a farmer managing several woodlots and
also producing a wheat crop may report emission reductions associated
with managing an individual woodlot. However, the farmer must also
assess and report the net sequestration resulting from managing all the
woodlots within the entity's boundary. The small emitter is not
required to report on emissions or reductions associated with growing
the wheat crop.
(3) A small emitter must certify that the reductions reported were
not caused by actions likely to cause increases in emissions elsewhere
within the entity's operations. This certification should be based on
an assessment of the likely direct and indirect effects of the actions
taken to reduce greenhouse gas emissions.
(d) Net emission reductions achieved by other entities (offset
reductions or emission reductions submitted by aggregators). A
reporting entity or aggregator under certain conditions may report or
register all or some of the net emission reductions achieved by
entities that choose not to report under the section 1605(b) program.
In all cases, an agreement must exist between the reporting entity or
aggregator and the other entity that specifies the quantity of the
emission reductions (or increases) achieved by the other entity that
may be reported or registered as an offset reduction by the reporting
entity or aggregator. A large emitter that is reporting on behalf of
other entities must meet all of the requirements applicable to large
emitters, including submission of an entity statement, an emissions
inventory, and an entity-wide assessment of emission reductions. If an
aggregator is a small emitter, it may choose to report only on the
activities, emissions and emission reductions of the entities on behalf
of which it is reporting and not to report on any of its own activities
or emission reductions. The reporting entity or aggregator must include
in its report all of the information on the other entity, including an
entity statement, an emissions inventory (when required), and an
assessment of emission reductions that would be required if the other
entity were directly reporting to EIA. The net emissions reductions (or
increases) of each other entity will be evaluated separately by EIA to
determine whether they are eligible for registration in accordance with
the guidelines of this part. Those registered reductions (or increases)
assigned by the other entity, by agreement, to a reporting entity or
aggregator will be included in EIA's summary of all registered offset
reductions for that entity or aggregator. If the agreement between the
reporting entity and other entity is discontinued, for any reason, the
reporting entity must inform EIA and must identify any emission
reductions previously reported that could be attributable to an
increase in the carbon stocks of the other entity. Such reductions will
be removed by EIA from the records of the reporting entity's offset
reductions.
(e) Net emission reductions to be reported by other entities as
offset reductions. Entities must identify in their report the quantity
of any net emission reductions covered by the report, if any, that
another entity will report as an offset reduction, including the name
of the other entity;
(f) Adjusting for year-to-year increases in net emissions. (1)
Normally, net annual emission reductions for an entity are calculated
by summing the net annual changes in emissions, eligible avoided
emissions and sequestration, as determined using the calculation
methods identified in Sec. 300.8 and according to the procedures
described in paragraph (b) of this section for large emitters,
paragraph (c) for small emitters of this section for small emitters,
and paragraph (d) of this section for offsets. However, if the entity
experienced a net increase in emissions for one or more years, these
increases must be reported and taken into account in calculating any
future year reductions. If the entity subsequently achieves net annual
emission reductions, the net increases experienced in the preceding
year(s) must be more than offset by these reductions before the entity
can once again register emission reductions. For example, if an entity
achieved a net emission reduction of 5,000 metric tons of
CO2 equivalent in its first year, a net increase of 2,000
metric tons in its second year, and a net reduction of 3,000 metric
tons in its third year, it would be able to register a 5,000 metric ton
reduction in its first year, no reduction in its second year, and a
1,000 metric ton reduction in its third year (3,000-2,000). The entity
must file full reports for each of these three years. Its report for
the second year would indicate the net increase in emissions and this
increase would be noted in EIA's summary of the entity's report for
that year and for any future year, until the emissions increase was
entirely offset by subsequent emission reductions. If this same entity
achieved a net reduction of only 1,000 metric tons in its third year,
it would not be able to register additional reductions until it had, in
some future year, offset more than its second year increase of 2,000
metric tons.
(2) [Reserved]
[[Page 20813]]
Sec. 300.8 Calculating emission reductions.
(a) Choosing appropriate emission reduction calculation methods.
(1) An entity must choose the method or methods it will use to
calculate emission reductions from the list provided in paragraph (h)
of this section. Each of the calculation methods has special
characteristics that make it applicable to only certain types of
emissions and activities. An entity should select the appropriate
calculation method based on several factors, including:
(i) How the entity's subentities are defined;
(ii) How the reporter will gather and report emissions data; and
(iii) The availability of other types of data that might be needed,
such as production or output data.
(2) For some entities, a single calculation method will be
sufficient, but many entities may need to apply more than one method
because discrete components of the entity require different calculation
methods. In such a case, the entity will need to select a method for
each subentity (or discrete component of the entity with identifiable
emission or reductions). The emissions and output measure (generally a
physical measure) of each subentity must be clearly distinguished and
reported separately. Guidance on the selection and specification of
calculation methods is provided in Chapter 2 of the Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(b) Identifying subentities for calculating reductions. If more
than one calculation method is to be used, an entity must specify the
portion of the entity (the subentity) to which each method will be
applied. Each subentity must be clearly identified. From time to time,
it may be necessary to modify existing or create new subentities. The
entity must provide to EIA a full description of such changes, together
with an explanation of why they were required.
(c) Choosing a base period for calculating reductions. In general,
the base period used in calculating emission reductions is the single
year or up to four-year period average immediately preceding the first
year of calculated emission reductions.
(d) Establishing base values. To calculate emission reductions, an
entity must establish a base value against which to compare reporting
year performance. The minimum requirements for base values for each
type of calculation method are specified in Chapter 2 of the Technical
Guidelines (incorporated by reference, see Sec. 300.13). In most
cases, an historic base value, derived from emissions or other data
gathered during the base period, is the minimum requirement specified.
Entities may, however, choose to establish base values that are more
stringent than the base values derived from the methods specified in
Chapter 2 of the Technical Guidelines as long as their report indicates
the rationale for the alternative base value and demonstrates that it
would result in a smaller quantity of emission reductions.
(e) Emission reduction and subentity statements. For each
subentity, an entity must submit to EIA the following information:
(1) An identification and description of the method used to
calculate emission reductions, including:
(i) The type of calculation method;
(ii) The measure of output used (if any); and
(iii) The method-specific base period for which any required base
value will be calculated.
(2) The base period used in calculating reductions. When an entity
starts to report, the base period used in calculating reductions must
end in the start year. However, over time the reporting entity may find
it necessary to revise or establish new base periods and base values in
response to significant changes in processes or output of the
subentity.
(3) A description of the subentity and its primary economic
activity or activities, such as electricity generation, product
manufacturing, service provider, freight transport, or household
operation; and
(4) A description of the emission sources or sinks covered, such as
fossil fuel power plants, manufacturing facilities, commercial office
buildings or heavy-duty vehicles.
(f) Changes in calculation methods, base periods and base values.
When significant changes occur in the composition or output of
reporting entities, a reporting entity may need to change previously
specified calculation methods, base periods or base values. A reporting
entity should make such changes only if necessary and it should fully
document the reasons for any changes. The Technical Guidelines
(incorporated by reference, see Sec. 300.13) describe when such
changes should be made and what information on such changes must be
provided to DOE. In general, such changes should not result in any
alterations to previously reported or registered emission reductions. A
reporting entity may alter previously reported or registered emission
reductions only if necessary to correct significant errors.
(g) Continuous reporting. To ensure that the summation of entity
annual reports accurately represents net, multi-year emission
reductions, an entity must submit a report every year, beginning with
the first reduction year. An entity may use a specific base period to
determine emission reductions in a given future year only if the entity
has submitted qualified reports for each intervening year. If an
interruption occurs in the annual reports of an entity, the entity must
subsequently report on all missing years prior to qualifying for the
registration of additional emission reductions.
(h) Calculation methods. An entity must calculate any change in
emissions, avoided emissions or sequestration using one or more of the
methods described in this paragraph and in the Technical Guidelines
(incorporated by reference, see Sec. 300.13).
(1) Changes in emissions intensity. An entity may use emissions
intensity as a basis for determining emission reductions as long as the
entity selects a measure of output that is:
(i) A reasonable indicator of the output produced by the entity;
(ii) A reliable indicator of changes in the entity's activities;
(iii) Related to emissions levels; and
(iv) Any appropriate adjustments for acquisitions, divestitures,
insourcing, outsourcing, or changes in products have been made, as
described in the Technical Guidelines (incorporated by reference, see
Sec. 300.13).
(2) Changes in absolute emissions. An entity may use changes in the
absolute (actual) emissions (direct and/or indirect) as a basis for
determining net emission reductions as long as the entity makes only
those adjustments required by the Technical Guidelines (incorporated by
reference, see Sec. 300.13). An entity intending to register emission
reductions may use this method only if the entity demonstrates in its
report that any reductions derived from such changes were not achieved
as a result of reductions in the output of the entity, and certifies
that emission reductions are not the result of major shifts in the
types of products or services produced. Entities may report, but not
register, such reductions even if the output associated with such
emissions is declining.
(3) Changes in carbon storage (for actions within entity
boundaries). An entity may use changes in carbon storage as a basis for
determining net emission reductions as long as the entity uses
estimation and measurement methods that comply with the Technical
Guidelines (incorporated by reference, see Sec. 300.13), and has
included an
[[Page 20814]]
assessment of the net changes in all sinks in its inventory.
(4) Changes in avoided emissions (for actions within entity
boundaries). An entity may use changes in avoided emissions to
determine its emission reductions. Avoided emissions eligible to be
included in the calculation of net emission reductions that qualify for
registration include those associated with the sale of electricity,
steam, hot water or chilled water generated from non-emitting or low-
emitting sources as a basis for determining net emission reductions as
long as:
(i) The measurement and calculation methods used comply with the
Technical Guidelines (incorporated by reference, see Sec. 300.13);
(ii) The entity certifies that any increased sales were not
attributable to the acquisition of a generating facility that had been
previously operated, unless the entity's base period includes
generation values from the acquired facility's operation prior to its
acquisition; and
(iii) Generators of distributed energy that have net emissions in
their base period and intend to report reductions resulting from
changes in eligible avoided emissions, use a method specified in the
Technical Guidelines (incorporated by reference, see Sec. 300.13) that
integrates the calculation of reductions resulting from both changes in
emissions intensity and changes in avoided emissions.
(5) Action-specific emission reductions (for actions within entity
boundaries). A number of source- or situation-specific methods are
provided in the Technical Guidelines and these methods must be used to
assess the annual changes in emissions for the specific sources or
situation addressed by these methods. In addition, a generic action-
specific method is identified in the Technical Guidelines. An entity
intending to register reductions may use the generic action-specific
approach only if it is not possible to measure accurately emission
changes by using one of the methods identified in paragraphs (h)(1)
through (h)(4) of this section. Entities that intend to register
reductions and that use the generic action-specific approach must
explain why it is not possible to use any of these other methods. An
entity not intending to register reductions may use the generic action-
specific method to determine emission reductions, as long as the entity
demonstrates that the estimate is based on analysis that:
(i) Uses output, utilization and other factors that are consistent,
to the maximum extent practicable, with the action's actual performance
in the year for which reductions are being reported;
(ii) Excludes any emission reductions that might have resulted from
reduced output or were caused by actions likely to be associated with
increases in emissions elsewhere within the entity's operations; and
(iii) Uses methods that are in compliance with the Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(i) Summary description of actions taken to reduce emissions. Each
reported emission reduction must be accompanied by an identification of
the types of actions that were the likely cause of the reductions
achieved. Entities are also encouraged to include in their reports
information on the benefits and costs of the actions taken to reduce
greenhouse gas emissions, such as the expected rates of return, life
cycle costs or benefit to cost ratios, using appropriate discount
rates.
(j) Emission reductions associated with plant closings, voluntary
actions and government (including non-U.S. regulatory regimes)
requirements. (1) Each report of emission reductions must indicate
whether the reported emission reductions were the result, in whole or
in part, of plant closings, voluntary actions, or government
requirements. EIA will presume that reductions that were not the result
of plant closings or government requirements are the result of
voluntary actions.
(2) If emission reductions were, in whole or in part, the direct
result of plant closings that caused a decline in output, the report
must identify the reductions as such; these reductions do not qualify
for registration. EIA will presume that reductions calculated using the
emissions intensity method do not result from a decline in output.
(3) If the reductions were associated, in whole or part, with U.S.
or non-U.S. government requirements, the report should identify the
government requirement involved and the effect these requirements had
on the reported emission reductions. If, as a result of the reduction,
a non-U.S. government issued to the reporting entity a credit or other
financial benefit or regulatory relief, the report should identify the
government requirement involved and describe the specific form of
benefit or relief provided.
(k) Determining the entity responsible for emission reductions. The
entity that EIA will presume to be responsible for emission reduction,
avoided emission or sequestered carbon is the entity with financial
control of the facility, land or vehicle which generated the reported
emissions, generated the energy that was sold so as to avoid other
emissions, or was the place where the sequestration action occurred. If
control is shared, reporting of the associated emission reductions
should be determined by agreement between the entities involved so as
to avoid double-counting; this agreement must be reflected in the
entity statement and in any report of emission reductions. EIA will
presume that an entity is not responsible for any emission reductions
associated with a facility, property or vehicle excluded from its
entity statement.
Sec. 300.9 Reporting and recordkeeping requirements.
(a) Starting to report under the guidelines. An entity may report
emissions and sequestration on an annual basis beginning in any year,
but no earlier than the base period of 1987-1990 specified in the
Energy Policy Act of 1992. To be recognized under these guidelines, all
reports must conform to the measurement methods established by the
Technical Guidelines (incorporated by reference, see Sec. 300.13).
(b) Revisions to reports submitted under the guidelines. (1) Once
EIA has accepted a report under this part, it may be revised by the
reporting entity only under the circumstances specified in this
paragraph and related provisions of the Technical Guidelines
(incorporated by reference, see Sec. 300.13). In general:
(i) Revised reports may be submitted to correct errors that have a
significant effect on previously estimated emissions or emission
reductions; and
(ii) Emission inventories may be revised in order to create a
consistent time series based on improvements in the emission estimation
or measurement techniques used.
(2) Reporting entities must provide the corrected or improved data
to EIA, together with an explanation of the significance of the change
and its justification.
(3) If a change in calculation methods (for inventories or
reductions) is made for a particular year, the reporting entity must,
if feasible, revise its base value to assure methodological consistency
with the reporting year value.
(c) Definition and deadline for annual reports. Entities must
report emissions on a calendar year basis, from January 1 to December
31. To be included in the earliest possible EIA annual report of
greenhouse gas emissions reported under this part, entity reports that
have not been independently verified must be submitted to DOE no later
than July 1 for emissions occurring during the previous calendar year.
Reports that have been independently verified must
[[Page 20815]]
be submitted by September 1 for emissions occurring during the previous
year.
(d) Recordkeeping. Entities intending to register reductions must
maintain adequate supporting records of base period data for the
duration of their participation in the 1605(b) program. Supporting
records for all reporting year data must be maintained for at least
three years subsequent to the relevant reporting year to enable
verification of all information reported. The records should document
the basis for the entity's report to EIA, including:
(1) The content of entity statements, including the identification
of the specific facilities, buildings, land holding and other
operations or emission sources covered by the entity's reports and the
legal, equity, operational and other bases for their inclusion;
(2) Information on the identification and assessment of changes in
entity boundaries, processes or products that might have to be reported
to EIA;
(3) Any agreements or relevant communications with other entities
or third parties regarding the reporting of emissions or emission
reductions associated with sources the ownership or operational control
of which is shared;
(4) Information on the methods used to measure or estimate
emissions, and the data collection and management systems used to
gather and prepare this data for inclusion in reports;
(5) Information on the methods used to calculate emission
reductions, including the basis for:
(i) The selection of the specific output measures used, and the
data collection and management systems used to gather and prepare
output data for use in the calculation of emission reductions;
(ii) The selection and modification of all base years, base periods
and baselines used in the calculation of emission reductions;
(iii) Any baseline adjustments made to reflect acquisitions,
divestitures or other changes;
(iv) Any models or other estimation methods used; and
(v) Any internal or independent verification procedures undertaken.
(e) Confidentiality. DOE will protect trade secret and commercial
or financial information that is privileged or confidential as provided
in 5 U.S.C. 552(b)(4). An entity must clearly indicate in its 1605(b)
report the information for which it requests confidentiality. DOE will
handle requests for confidentiality of information submitted in 1605(b)
reports in accordance with the process established in DOE's Freedom of
Information regulations at 10 CFR Sec. 1004.11.
Sec. 300.10 Certification of reports.
(a) General requirement and certifying official: All reports
submitted to EIA must include a certification statement, as provided in
paragraph (b) of this section, signed by a certifying official of the
reporting entity. A household report may be certified by one of its
members. All other reports must be certified by the chief executive
officer, agency head, or an officer or employee of the entity who is
responsible for reporting the entity's compliance with environmental
regulations.
(b) Certification statement requirements. All entities, whether
reporting or registering reductions, must certify the following:
(1) The information reported is accurate and complete;
(2) The information reported has been compiled in accordance with
this part; and
(3) The information reported is consistent with information
submitted in prior years, if any, or any inconsistencies with prior
year's information are documented and explained in the entity
statement.
(c) Additional requirements for registering. The certification
statement of an entity registering reductions must also certify that:
(1) The entity took reasonable steps to ensure that direct
emissions, emission reductions, and/or sequestration reported are
neither double counted nor reported by any other entity. Reasonable
steps include telephone, fax, letter, or e-mail communications to
ensure that another entity does not intend to report the same
emissions, emission reductions, and/or sequestration to DOE. Direct
communications of this kind with participants in demand-side management
or other programs directed at very small emitters are not required;
(2) Any emission reductions reported or registered by the entity
that were achieved by another entity (other than a very small emitter
that participated in a demand-side management or other program) are
included in the entity's report only if:
(i) The other entity does not intend to report or register theses
reductions directly;
(ii) There exists a written agreement with each other entity
providing that the reporting entity is the entity entitled to report or
register these emission reductions; and
(iii) The information reported on the other entity would meet the
requirements of this part if the entity were reporting directly to DOE;
(3) None of the emissions, emission reductions, or sequestration
reported were produced by shifting emissions to other entities or to
non-reporting parts of the entity;
(4) None of any reported changes in avoided emissions associated
with the sale of electricity, steam, hot or chilled water generated
from non-emitting or low-emitting sources are attributable to the
acquisition of a generating facility that has been previously operated,
unless the entity's base period includes generation values from the
acquiring facility's operation prior to its acquisition;
(5) The entity maintains records documenting the analysis and
calculations underpinning the data reported on this form and records
documenting the analysis and calculations underpinning the base values
used in calculating annual reductions are maintained in accordance with
Sec. 300.9(d) of this part; and
(6) The entity has, or has not, obtained independent verification
of the report, as described in Sec. 300.11.
Sec. 300.11 Independent verification.
(a) General. Entities are encouraged to have their annual reports
reviewed by independent and qualified auditors, as described in
paragraphs (b), (c), and (f) of this section.
(b) Qualifications of verifiers. (1) DOE envisions that independent
verification will be performed by professional verifiers (i.e.,
individuals or companies that provide verification or ``attestation''
services). EIA will consider a report to the program to be
independently verified if:
(i) The lead individual verifier and other members of the
verification team are accredited by one or more independent and
nationally-recognized accreditation programs, described in paragraph
(c) of this section, for the types of professionals needed to determine
compliance with DOE's 1605(b) guidelines;
(ii) The lead verifier has experience managing an auditing or
verification process, including the recruitment and allocation of other
individual verifiers, and has been empowered to make decisions relevant
to the provision of a verification statement; and
(iii) All members of a verification team have education, training
and/or professional experience that matches the tasks performed by the
individual verifiers, as deemed necessary by the verifier accreditation
program.
(2) As further guidance, all members of the verification team
should be familiar with:
[[Page 20816]]
(i) The subject matter covered by the scope of the verification;
(ii) The requirements of this part;
(iii) Greenhouse gas emission and emission reduction
quantification;
(iv) Data and information auditing sampling methods; and
(v) Risk assessment and methodologies and materiality analysis
procedures outlined by other domestic and international standards.
(3) An individual verifier should have a professional degree or
accreditation in engineering (environmental, industrial, chemical),
accounting, economics, or a related field, supplemented by specific
training and/or experience in emissions reporting and accounting, and
should have his or her qualifications and continuing education
periodically reviewed by an accreditation program. The skills required
for verification are often cross-disciplinary. For example, an
individual verifier reviewing a coal electric utility should be
knowledgeable about mass balance calculations, fuel purchasing
accounting, flows and stocks of coals, coal-fired boiler operation, and
issues of entity definition.
(4) Companies that provide verification services must use
professionals that possess the necessary skills and proficiency levels
for the types of entities for which they provide verification services.
Continuing training may be required to ensure all individuals have up-
to-date knowledge regarding the tasks they perform.
(c) Qualifications of organizations accrediting verifiers.
Organizations that accredit individual verifiers must be nationally
recognized certification programs. They may include, but are not
limited to the: American Institute of Certified Public Accountants;
American National Standards Institute's Registrar Accreditation Board
program for Environmental Management System auditors (ANSI-RAB-EMS);
Board of Environmental, Health and Safety Auditor Certification:
California Climate Action Registry; Clean Development Mechanism
Executive Board; and the United Kingdom Accreditation Scheme.
(d) Scope of verification. (1) As part of any independent
verification, qualified verifiers must use their expertise and
professional judgment to verify for accuracy, completeness and
consistency with DOE's guidelines of:
(i) The content of entity statements, annual reports and the
supporting records maintained by the entity;
(ii) The representation in entity statements (or lack thereof) of
any significant changes in entity boundaries, products, or processes;
(iii) The procedures and methods used to collect emissions and
output data, and calculate emission reductions (for entities with
widely dispersed operations, this process should include on-site
reviews of a sample of the facilities);
(iv) Relevant personnel training and management systems; and
(v) Relevant quality assurance/quality control procedures.
(2) DOE expects qualified verifiers to refer to the growing body of
literature on methods of evaluating the elements listed in paragraph
(d)(1) of this section, such as the California Climate Action Registry
Certification Protocol, the Climate Leaders Inventory Management Plan
Checklist, and the draft ISO 14064.3 Protocol for Validation,
Verification and Certification.
(e) Verification statement. Both the verifier and, if relevant, an
officer of the company providing the verification service must sign the
verification statement. The verification statement shall attest to the
following:
(1) The verifier has examined all components listed in paragraph
(d) of this section;
(2) The information reported in the verified entity report and this
verification statement is accurate and complete;
(3) The information reported by the entity has been compiled in
accordance with this part;
(4) The information reported on the entity report is consistent
with information submitted in prior years, if any, or any
inconsistencies with prior year's information are documented and
explained in the entity statement;
(5) The verifier used due diligence to assure that direct
emissions, emission reductions, and/or sequestration reported are not
reported by any other entity;
(6) Any emissions, emission reductions, or sequestration that were
achieved by a third-party entity are included in this report only if
there exists a written agreement with each third party indicating that
they have agreed that the reporting entity should be recognized as the
entity entitled to report these emissions, emission reductions, or
sequestration;
(7) None of the emissions, emission reductions, or sequestration
reported was produced by shifting emissions to other entities or to
non-reporting parts of the entity;
(8) No reported changes in avoided emissions associated with the
sale of electricity, steam, hot or chilled water generated from non-
emitting or low-emitting sources are attributable to the acquisition of
a generating facility that has been previously operated, unless the
base year generation values are derived from records of the facility's
operation prior to its acquisition;
(9) The verifying entity has procedures in place for the
maintenance of records that are sufficient to document the analysis and
calculations underpinning this verification. The verifying entity shall
maintain such records related to base period data submitted by the
reporting entity for the duration of the reporting entity's
participation in the 1605(b) program and records related to all other
verified data for a period of no less than three years; and
(10) The independent verifier is not owned in whole or part by the
reporting entity, nor provides any ongoing operational or support
services to the entity, except services consistent with independent
financial accounting or independent certification of compliance with
government or private standards.
(f) Qualifying as an independent verifier. An independent verifier
may not be owned in whole or part by the reporting entity, nor may it
provide any ongoing operational or support services to the entity,
except services consistent with independent financial accounting or
independent certification of compliance with government or private
standards.
Sec. 300.12 Acceptance of reports and registration of entity emission
reductions.
(a) Acceptance of reports. EIA will review all reports to ensure
they are consistent with this part and with the Technical Guidelines
(incorporated by reference, see Sec. 300.13). EIA will also review all
reports for completeness, internal consistency, arithmetic accuracy and
plausibility. Subject to the availability of adequate resources, EIA
intends to notify entities of the acceptance or rejection of any report
within six months of its receipt.
(b) Registration of emission reductions. EIA will review each
accepted report to determine if emission reductions were calculated
using an acceptable base period (usually ending no earlier than 2002),
and to confirm that the report complies with the other provisions of
this part. EIA will also review its records to verify that the
reporting entity has submitted accepted annual reports for each year
between the establishment of its base period and the year covered by
the current report. EIA will notify the entity that reductions meeting
these requirements have been credited to the entity as ``registered
reductions'' which can be held by the reporting entity for use
(including transfer to other entities) in the event a future program
that recognizes such reductions is enacted into law.
[[Page 20817]]
(c) Rejection of reports. If EIA does not accept a report or if it
determines that emission reductions intended for registration do not
qualify, EIA will return the report to the sender with an explanation
of its inadequacies. The reporting entity may resubmit a modified
report for further consideration at any time.
(d) EIA database and summary reports. The Administrator of EIA will
establish a publicly accessible database composed of all reports that
meet the definitional, measurement, calculation, and certification
requirements of these guidelines. EIA will maintain separate subtotals
of direct emissions, indirect emissions and carbon fluxes. A portion of
the database will provide summary information on the emissions and
registered emission reductions of each reporting entity.
Sec. 300.13 Incorporation by reference.
The Technical Guidelines for the Voluntary Reporting of Greenhouse
Gases Program (March 2006), referred to throughout this part as the
``Technical Guidelines,'' have been approved for incorporation by
reference by the Director of the Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy of the Technical
Guidelines from the Office of Policy and International Affairs, U.S.
Department of Energy, 1000 Independence Ave., SW., Washington, DC
20585, or by visiting the following Web site: http://www.policy.energy.gov/enhancingGHGregistry/technicalguidelines/. The
Technical Guidelines also are available for inspection at the National
Archives and Record Administration (NARA). For more information on the
availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
[FR Doc. 06-3745 Filed 4-20-06; 8:45 am]
BILLING CODE 6450-01-P