GHG Management. GHG Management Overview GHG DEBATE WHAT IS A GHG? NATIONAL

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1 Governing Law and Regulations Mandatory greenhouse gas (GHG) reporting: 40 CFR 98 Applicability: 40 CFR 98.1 and 40 CFR 98.2 Source categories: 40 CFR to Calculating carbon dioxide equivalents (CO 2 e): 40 CFR 98.2 GHG report: 40 CFR 98.3(b), 40 CFR 98.3(c), 40 CFR 98.4(e), and 40 CFR 98.5 Recordkeeping: 40 CFR 98.3(g) Exiting the reporting program: 40 CFR 98.2(i) Voluntary GHG reporting: 10 CFR 300 New Source Review (NSR) and Title V permits for GHG Sources: 40 CFR (b)(48), 40 CFR (b)(49), 40 CFR 52.21(b)(49), 40 CFR 52.21(b)(50), and 40 CFR 70.2 Vehicle GHG emissions standards: 40 CFR 85, 40 CFR 86, 40 CFR 600, 40 CFR 1036, 40 CFR 1037, 40 CFR 1039, 49 CFR 523, 49 CFR 534, and 49 CFR 535 Ozone-depleting substances: 40 CFR to and 40 CFR to Geologic sequestration of carbon dioxide: 40 CFR to and 40 CFR to Regulatory Agencies U.S. Environmental Protection Agency (EPA) Office of Air and Radiation U.S. Department of Energy (DOE) See ADDRESSES & CONTACTS for addresses and telephone numbers. In this section GHG MANAGEMENT OVERVIEW REPORTING GHG EMISSIONS OTHER FEDERAL REGULATIONS GOVERNING GHG EMISSIONS INDUSTRY ACTIONS ADDRESSING GHG EMISSIONS OTHER GOVERNMENT ACTIONS ADDRESSING GHG EMISSIONS GUIDANCE DOCUMENTS TABLES CHECKLISTS Overview GHG DEBATE Although climate change remains a topic surrounded by controversy and debate that is zealously supported on both sides, actions are being taken that necessitate businesses evaluate their overall GHG management strategy. Regardless of whether you are a believer or nonbeliever in the climate change issue, regulations are being developed and implemented to monitor and control GHG emissions, and those taking note of these actions will be able to remain in compliance with any applicable requirements and avoid enforcement actions from regulatory authorities. WHAT IS A GHG? The earth s weather and climate are created by energy from the sun, which heats the earth s surface, and in turn, the earth radiates energy back into space. Atmospheric GHGs trap some of the outgoing energy, retaining heat within the earth s atmosphere, similar to the glass panels of a greenhouse. GHGs include: Carbon dioxide (CO 2 ). Methane (CH 4 ). Nitrous oxide (N 2 O). Hydrofluorocarbons (HFCs). See the national section CFC MANAGEMENT for more information on HFCs. Perfluorocarbons (PFCs). Sulfur hexafluoride (SF 6 ). Each GHG differs in its ability to absorb heat in the atmosphere. For example, HFCs and PFCs are the most heatabsorbent. Methane traps over 21 times more heat per molecule than carbon dioxide, and nitrous oxide absorbs 270 times more heat per molecule than carbon dioxide. The ability of a GHG to absorb heat in the atmosphere is referred to as its global warming potential (GWP). Often, estimates of GHG emissions are converted to units of millions of metric tons of carbon equivalents, which account for each GHG s GWP and allow for the direct comparison of the impacts of emissions and reductions of different GHGs. G CROSS-REFERENCE Air (Regulatory Overview)... A 10.1 Air Emissions Permits... A 11 CFC Management... C 10.3 Energy... E 27 Environmental Impact Statement... E 33 Imports and Exports of Chemicals... I 1 Mobile Sources... M 55 New Source Review... N 13 Penalties/Liabilities... P 10.1 Title V... T 9 Underground Injection Wells... U 1 G 6.25

2 DRIVERS OF GHG MANAGEMENT Whether the reason is compliance, reputation, or economics, understanding the magnitude and sources of your facility s GHG emissions is beneficial. The universe of regulations governing GHG emissions is expanding, both at the federal and state level. An understanding of current facility GHG emissions will facilitate applicability determinations and compliance and, in some instances, may allow actions to be taken to avoid applicability. In addition to regulatory compliance, involvement in GHG management programs may enhance a company s bottom line in ways that are both qualitative and quantitative. For example: Situations may be identified in which the proactive implementation of a program or strategy to reduce GHG emissions could allow the company to gain revenue through the generation and sale of emissions reduction credits or gain a competitive advantage in the event of future regulations. Participation in an industry coalition or EPA program, or initiation of an internal GHG management program, may enhance the company s reputation as a good corporate citizen. The most common source of GHG emissions is energy consumption in the forms of fossil fuel combustion and electricity usage, which equates to a significant cost at most facilities. Therefore, GHG management strategies aimed at improving efficiency, thereby reducing energy consumption, will result in lower operating costs at the facility. G 6.26

3 Reporting GHG Emissions MANDATORY GHG REPORTING Applicability of GHG Reporting Requirements 40 CFR 98.1 and 40 CFR 98.2 The EPA has established a mandatory GHG reporting program for selected facilities that directly emit GHGs and for certain GHG suppliers. GHG reporting and related monitoring and recordkeeping requirements apply to any facility located in the United States that meets any of the following requirements: A facility that contains any of the following source categories: Electricity generation (units that report CO 2 emissions year-round through 40 CFR 75). Adipic acid production. Aluminum production. Ammonia manufacturing. Cement production. HCFC-22 production. HFC-23 destruction processes that are not collocated with an HCFC-22 production facility and that destroy more than 2.14 metric tons of HFC-23 per year. Lime manufacturing. Nitric acid production. Petrochemical production. Petroleum refineries. Phosphoric acid production. Silicon carbide production. Soda ash production. Titanium dioxide production. Municipal solid waste landfills that generate CH 4 in amounts equivalent to 25,000 metric tons of CO 2 e or more per year. Manure management systems with combined CH 4 and N 2 O emissions in amounts equivalent to 25,000 metric tons of CO 2 e or more per year. Beginning in 2011, electrical transmission and distribution equipment uses at facilities where the total nameplate capacity of SF 6 and PFC-containing equipment exceeds 17,280 pounds. Beginning in 2011, electrical transmission and distribution equipment manufacture or refurbishment. Beginning in 2011, geologic sequestration of CO 2. Beginning in 2011, injection of CO 2. Beginning in 2011, underground coal mines liberating 36,500,000 actual cubic feet of CH 4 or more per year. Other source categories as added by the EPA. A facility that contains any of the following source categories and emits 25,000 metric tons of CO 2 e or more per year in combined emissions from stationary fuel combustion units, miscellaneous uses of carbonate, and any of the following and aforementioned applicable source categories: Ferroalloy production. Glass production. Hydrogen production. Iron and steel production. Lead production. Pulp and paper manufacturing. Zinc production. Beginning in 2011, electronics manufacturing. Beginning in 2011, fluorinated gas production. Beginning in 2011, magnesium production. Beginning in 2011, industrial wastewater treatment. Beginning in 2011, industrial waste landfills. Beginning in 2011, petroleum and natural gas systems. Other source categories as added by the EPA. A facility that satisfies all of the following: The facility does not satisfy the aforementioned applicability criteria. The aggregate maximum rated heat input capacity of the stationary fuel combustion units at the facility is 30 million British thermal units per hour (MMBtu/hr) or greater. Stationary fuel combustion units include, but are not limited to, boilers, combustion turbines, engines, incinerators, and process heaters. The facility emits 25,000 metric tons of CO 2 e or more per year in combined emissions from all stationary fuel combustion sources. In addition, GHG reporting and related monitoring and recordkeeping requirements apply to any supplier that provides the following products in any calendar year: Coal-based liquid fuel suppliers, as follows: All producers of coal-to-liquid products Importers of an annual quantity of coal-to-liquid products that is equivalent to 25,000 metric tons of CO 2 e or more Exporters of an annual quantity of coal-to-liquid products that is equivalent to 25,000 metric tons of CO 2 e or more. Petroleum product suppliers, as follows: All petroleum refineries that distill crude oil Importers of an annual quantity of petroleum products and natural gas liquids that is equivalent to 25,000 metric tons of CO 2 e or more Exporters of an annual quantity of petroleum products and natural gas liquids that is equivalent to 25,000 metric tons of CO 2 e or more. Natural gas and natural gas liquids suppliers, as follows: All natural gas fractionators All local natural gas distribution companies that deliver 460,000 thousand standard cubic feet (Mscf) or more of natural gas per year. G 6.27

4 Industrial GHG suppliers, as follows: All producers of industrial GHGs Importers of industrial GHGs with annual bulk imports of N 2 O, fluorinated GHG, and CO 2 that in combination are equivalent to 25,000 metric tons of CO 2 e or more Exporters of industrial GHGs with annual bulk exports of N 2 O, fluorinated GHG, and CO 2 that in combination are equivalent to 25,000 metric tons of CO 2 e or more. CO 2 suppliers, as follows: All producers of CO 2 Importers of CO 2 with annual bulk imports of N 2 O, fluorinated GHG, and CO 2 that in combination are equivalent to 25,000 metric tons of CO 2 e or more Exporters of CO 2 with annual bulk exports of N 2 O, fluorinated GHG, and CO 2 that in combination are equivalent to 25,000 metric tons of CO 2 e or more. Beginning in 2011, importers of fluorinated GHGs contained in precharged equipment or closed-cell foams where the total annual quantity of fluorinated GHGs imported is equivalent to 25,000 metric tons of CO 2 e or more. Beginning in 2011, exporters of fluorinated GHGs contained in precharged equipment or closed-cell foams where the total annual quantity of fluorinated GHGs exported is equivalent to 25,000 metric tons of CO 2 e or more. Other source categories as added by the EPA. In addition, changes have been made to mobile source regulations that require engine and vehicle manufacturers to report GHG emissions during the engine manufacturing and certification process. Exemption. Research and development activities are not considered to be part of any source category regulated under the mandatory GHG reporting requirements. Source Categories Subject to GHG Reporting 40 CFR to EPA has targeted the following source categories for GHG reporting: Stationary fuel combustion sources: 40 CFR to (Subpart C) Electricity generation: 40 CFR to (Subpart D) Adipic acid production: 40 CFR to (Subpart E) Aluminum production: 40 CFR to (Subpart F) Ammonia manufacturing: 40 CFR to (Subpart G) Cement production: 40 CFR to (Subpart H) Electronics manufacturing: 40 CFR to (Subpart I) Ferroalloy production: 40 CFR to (Subpart K) Fluorinated gas production: 40 CFR to (Subpart L) Glass production: 40 CFR to (Subpart N) HCFC-22 production and HFC-23 destruction: 40 CFR to (Subpart O) Hydrogen production: 40 CFR to (Subpart P) Iron and steel production: 40 CFR to (Subpart Q) Lead production: 40 CFR to (Subpart R) Lime manufacturing: 40 CFR to (Subpart S) Magnesium production: 40 CFR to (Subpart T) Miscellaneous uses of carbonate: 40 CFR to (Subpart U) Nitric acid production: 40 CFR to (Subpart V) Petroleum and natural gas systems: 40 CFR to (Subpart W) Petrochemical production: 40 CFR to (Subpart X) Petroleum refineries: 40 CFR to (Subpart Y) Phosphoric acid production: 40 CFR to (Subpart Z) Pulp and paper manufacturing: 40 CFR to (Subpart AA) Silicon carbide production: 40 CFR to (Subpart BB) Soda ash manufacturing: 40 CFR to (Subpart CC) Electrical transmission and distribution equipment use: 40 CFR to (Subpart DD) Titanium dioxide production: 40 CFR to (Subpart EE) Underground coal mines: 40 CFR to (Subpart FF) Zinc production: 40 CFR to (Subpart GG) Municipal solid waste landfills: 40 CFR to (Subpart HH) Industrial wastewater treatment: 40 CFR to (Subpart II) Manure management: 40 CFR to (Subpart JJ) Suppliers of coal-based liquid fuels: 40 CFR to (Subpart LL) Suppliers of petroleum products: 40 CFR to (Subpart MM) Suppliers of natural gas and natural gas liquids: 40 CFR to (Subpart NN) Suppliers of industrial GHGs: 40 CFR to (Subpart OO) Suppliers of CO 2 : 40 CFR to (Subpart PP) Importers and exporters of fluorinated GHGs contained in precharged equipment or closed-cell foams: 40 CFR to (Subpart QQ) Geologic sequestration of CO 2 : 40 CFR to (Subpart RR) Electrical equipment manufacture or refurbishment: 40 CFR to (Subpart SS) Industrial waste landfills: 40 CFR to (Subpart TT) G 6.28

5 Injection of CO 2 : 40 CFR to (Subpart UU) Other source categories as added by the EPA. Regulatory Requirements for GHG Reporting For each source category, EPA has established regulations identifying the following: Applicable definitions Reporting thresholds GHGs that must be reported Methods of calculating applicable GHGs Monitoring and quality assurance/quality control (QA/QC) requirements Procedures for estimating missing data Reporting requirements Recordkeeping requirements Calculating CO 2 e 40 CFR 98.2 To report GHG emissions or determine if GHG emissions from a source trigger the reporting threshold, GHG emissions must be converted to metric tons of CO 2 e. To calculate metric tons of CO 2 e for a given GHG, multiply the mass emissions rate, in metric tons, of the given GHG by the GWP of that particular GHG. Repeat this calculation for each GHG emitted from the source and sum the results to obtain the total metric tons of CO 2 e emitted by the source. Include in the calculation any CO 2 that is captured for transfer off-site; and for the combustion of biomass, exclude CO 2 emissions but include CH 4 and N 2 O. See TABLE 1 in this section for the GWP of various GHGs. For suppliers, the GHGs reported are the quantity that would be emitted from combustion or use of the products supplied. The imported and exported quantities are to be compared separately to the 25,000 metric ton CO 2 e per year threshold. See TABLE 1 in this section for the GWP of various GHGs. In addition, each source category subpart details the specific methods to be used to calculate GHG emissions from the given source category. GHG Emissions Report 40 CFR 98.3(b), 40 CFR 98.3(c), 40 CFR 98.4(e), and 40 CFR 98.5 Certain suppliers and vehicle manufacturers will report GHG emissions at the corporate level. However, for most sources, the reporting is done at the facility level. Reporting schedule. Each applicable facility or supplier must electronically submit an annual GHG report to the EPA by March 31 of each year for GHG emissions during the previous calendar year. Facilities and suppliers should submit their GHG emissions report using EPA s Electronic Greenhouse Gas Reporting Tool (e-ggrt) at Sources that become subject to reporting requirements in the middle of the year must report for the portion of the year beginning with the first month of operation and ending December 31. Report content. The GHG report must contain the following information: Facility name or supplier name (as appropriate) and physical street address, including the city, state, and ZIP code. Year and months covered by the report. Date of submittal. For facilities, report annual emissions of CO 2, CH 4, N 2 O, each fluorinated GHG, and each fluorinated heat transfer fluid as follows: Annual emissions (excluding biogenic CO 2 ) aggregated for all GHGs from all applicable source categories and expressed in metric tons of CO 2 e. For electronics, starting in reporting year 2012 the CO 2 e calculation must include each fluorinated heat transfer fluid whether or not it is also a fluorinated GHG. See 40 CFR for a definition of a fluorinated heat transfer fluid. Annual emissions of biogenic CO 2 aggregated for all applicable source categories. Annual emissions from each applicable source category, expressed in metric tons of each GHG listed as follows: biogenic CO 2 ; CO 2 (excluding biogenic CO 2 ); CH 4 ; N 2 O; each fluorinated GHG (including those not listed in TABLE 1 in this section); and for electronics manufacturing, each fluorinated heat transfer fluid that is not also a fluorinated GHG. Emissions and other data for individual units, processes, activities, and operations as specified in the applicable requirements for a specific source category. An indication whether the reported emissions include emissions from a cogeneration unit located at the facility. For suppliers, report annual quantities of CO 2, CH 4, N 2 O, and each fluorinated GHG emitted from combustion or use of the products supplied, imported, and exported during the year. Calculate and report quantities as follows: Total quantity of GHG aggregated for all GHGs from all applicable supply source categories and expressed in metric tons of CO 2 e. Quantity of each GHG from each applicable supply source category expressed in metric tons of each GHG. For fluorinated GHG, report quantities of all fluorinated GHGs, including those not listed in TABLE 1 in this section. Any other data specified in the applicable requirements for a specific source category. A written explanation if you change emissions calculation methodologies during the reporting period. A brief description of each best available monitoring method used, the parameter measured using the method, and the time period during which the best available monitoring method was used, if applicable. Each data element for which a missing data procedure was used according to the procedures for an applicable source G 6.29

6 category and the total number of hours in the year that a missing data procedure was used for each data element. A signed and dated certification statement provided by the designated representative of the owner or operator that reads as follows: I am authorized to make this submission on behalf of the owners and operators of the facility or supplier, as applicable, for which the submission is made. I certify under penalty of law that I have personally examined, and am familiar with, the statements and information submitted in this document and all its attachments. Based on my inquiry of those individuals with primary responsibility for obtaining the information, I certify that the statements and information are to the best of my knowledge and belief true, accurate, and complete. I am aware that there are significant penalties for submitting false statements and information or omitting required statements and information, including the possibility of fine or imprisonment. The North American Industry Classification System (NAICS) code(s) that applies to the facility or supplier submitting the report, including the primary NAICS code that most accurately describes the facility or supplier s primary product/activity/service that is the principal revenue generator for the facility or supplier, and all additional NAICS codes that describe all products/activities/services that are not related to the principal source of revenue. The legal name(s) and physical address(es) of the highestlevel United States parent company(ies) of the facility or supplier and the percentage of ownership interest for each listed parent company as of December 31 of the year for which data are being reported according to the following instructions: If the reporting facility or supplier is entirely owned by a single U.S. company that is not owned by another company, provide that company s legal name and physical address as the U.S. parent company and report 100 percent ownership. If the reporting facility or supplier is entirely owned by a single U.S. company that is, itself, owned by another company (e.g., it is a division or subsidiary of a higher-level company), provide the legal name and physical address of the highest-level company in the ownership hierarchy as the U.S. parent company and report 100 percent ownership. If the reporting facility or supplier is owned by more than one U.S. company, provide the legal names and physical addresses of all the highest-level companies with an ownership interest as the U.S. parent companies, and report the percent ownership of each company. If the reporting facility or supplier is owned by a joint venture or a cooperative, the joint venture or cooperative is its own U.S. parent company. Provide the legal name and physical address of the joint venture or cooperative as the U.S. parent company, and report 100 percent ownership by the joint venture or cooperative. If the reporting facility or supplier is entirely owned by a foreign company, provide the legal name and physical address of the foreign company s highest-level company based in the United States as the U.S. parent company, and report 100 percent ownership. If the reporting facility or supplier is partially owned by a foreign company and partially owned by one or more U.S. companies, provide the legal name and physical address of the foreign company s highest-level company based in the United States, along with the legal names and physical addresses of the other U.S. parent companies, and report the percent ownership of each of these companies. If the reporting facility or supplier is a federally owned facility, report U.S. Government, and do not report physical address or percent ownership. Deferral of reporting certain inputs into emissions calculation equations. Under the Clean Air Act (CAA), all emissions data must be made available to the public and cannot be treated as confidential. However, based on public comment, EPA has learned that certain information input into the GHG emissions calculation equations under various subparts of 40 CFR 98 is considered a trade secret or sensitive business information that may adversely impact competitiveness if publicly available. Therefore, the reporting of certain data elements by certain facilities is deferred as follows, by which time further action may be taken by EPA: The data elements specified in Table A-6 of 40 CFR 98 for calendar years 2010 and 2011 are not required to be reported until March 31, The data elements specified in Table A-7 of 40 CFR 98 for calendar years 2010 through 2013 are not required to be reported until March 31, Recordkeeping for GHG Reporting Sources 40 CFR 98.3(g) An owner or operator that is required to report GHGs must keep the following records, along with those specified in the requirements for the applicable source category, for at least 3 years from the date of submission of the GHG report: A list of all units, operations, processes, and activities for which GHG emissions were calculated. The data used to calculate the GHG emissions for each unit, operation, process, and activity, categorized by fuel or material type. These data include, but are not limited to, the following information: The GHG emissions calculations and methods used Analytical results for the development of site-specific emissions factors The results of all required analyses for high heat value, carbon content, and other required fuel or feedstock parameters Any facility operating data or process information used for the GHG emissions calculations. G 6.30

7 The annual GHG reports. Missing data computations. For each missing data event, also retain a record of the cause of the event and the actions taken to restore malfunctioning monitoring equipment. A written GHG Monitoring Plan that must include at least the following elements: Identification of positions of responsibility (i.e., job titles) for collection of the emissions data Explanation of the processes and methods used to collect the necessary data for the GHG calculations Description of the procedures and methods that are used for quality assurance, maintenance, and repair of all continuous monitoring systems, flowmeters, and other instrumentation used to provide data for the GHGs reported. The results of all required certification and quality assurance tests of continuous monitoring systems, fuel flowmeters, and other instrumentation used to provide data for the GHGs reported. Maintenance records for all continuous monitoring systems, flowmeters, and other instrumentation used to provide data for the GHGs reported. Exiting the GHG Reporting Program 40 CFR 98.2(i) Once a facility or supplier is subject to the requirements of the Mandatory GHG Reporting Rule, the facility or supplier must continue to submit annual GHG emissions reports even if the facility or supplier no longer satisfies the applicability criteria. Facilities or suppliers may exit the mandatory GHG reporting program if any of the following occur and a notification is submitted to EPA announcing the cessation of reporting and the reasons for the reduction in GHG emissions or certifying the closure of GHG-emitting operations: Reported GHG emissions are less than 25,000 metric tons of CO 2 e per year for 5 consecutive years. Reported GHG emissions are less than 15,000 metric tons of CO 2 e per year for 3 consecutive years. Applicable GHG-emitting processes or operations cease to operate. (This does not include temporary or seasonal shutdowns.) Notification must be submitted to EPA no later than March 31 of the year following the completion of the aforementioned criteria. Reporting must resume if annual emissions at applicable facilities or suppliers increase to 25,000 metric tons of CO 2 e or more at any time in the future, or if previously shutdown GHG-emitting processes or operations resume operation. VOLUNTARY GHG REPORTING 10 CFR 300 Note: The U.S. Energy Information Administration s Voluntary GHG Reporting program has been suspended due to budgetary issues. Entities may still submit data, but it will not be reviewed or processed at this time. The data will be retained and reviewed if the program resumes normal operations. Initially established under the Energy Policy Act of 1992, DOE has revised the Guidelines for Voluntary GHG Reporting. The new guidelines were effective June 1, Why Participate in Voluntary GHG Reporting? Several reasons for preparing and submitting GHG reports are to: Have tangible evidence of the results of your entity s commitment to reduce GHG emissions. Establish an official record of your entity s GHG emissions and reductions. Provide the impetus for initiating a GHG emissions monitoring and management program at your entity. Document reductions for use under any future incentivebased or mandatory climate change programs. Reporting vs. Registering Any entity may submit a report of GHG emissions. However, entities wishing to receive credits for voluntary reductions that will be preserved for use under any future incentive-based or mandatory climate change programs must register GHG emissions and reductions. All reports submitted will be reviewed to verify that they have been prepared in accordance with the Guidelines for Voluntary GHG Reporting, but emitters intending to register emissions reductions must adhere to more stringent reporting requirements. GHG Reporting Entity Under the guidelines, a reporting entity must be composed of one or more legally distinct businesses, institutions, organizations, or households that are located, at least in part, in the United States and whose operations affect U.S. emissions of GHG. All organizations that wish to report GHG emissions to the registry must define their reporting entity. In other words, the organization must state at what organizational level they wish to aggregate GHG emissions. For entities that intend to register reductions, DOE strongly encourages defining the entity at the highest level of aggregation (i.e., the corporate level rather than site level). Each entity must submit an Entity Statement to DOE s Energy Information Administration (EIA) for its chosen start year. The content of the statement will vary depending on which of the following categories the reporting entity belongs to: Large emitters that intend to register emissions reductions. Any entity that intends to register emissions reductions can choose to participate as a large emitter. Small emitters that intend to register emissions reductions. Only entities that have demonstrated that their annual emissions are less than or equal to 10,000 metric tons of CO 2 e may participate as small emitters. Demonstration of such emissions is accomplished by submitting either an estimate of its emissions G 6.31

8 during its chosen start year or an estimate of its average annual emissions over a continuous period not to exceed 4 years of time ending in its chosen start year, provided the operations and boundaries of the entity have not changed significantly during that period. An annual certification must be submitted thereafter, confirming that the entity remains a small emitter. Emitters that intend to report but not register emissions reductions. GHG Emissions Inventories An emissions inventory must provide a full accounting of an entity s emissions for a particular year, including direct emissions of all six GHGs; indirect emissions from the consumption of purchased electricity, steam, and hot or chilled water; and all sequestration or other changes in carbon stocks. See CARBON SEQUESTRATION under Other Federal Regulations Governing GHG Emissions in this section for more information on sequestration and carbon stocks. Large emitters must submit an entitywide inventory to be eligible to register reductions, but small emitters are eligible to register emissions reductions associated with specific activities without also reporting an entitywide inventory of the total emissions. Each entity reporting GHG emissions must rate the emissions measurement and estimation methods used for each source of GHG based on accuracy, reliability, verifiability, and practicality. Each method is rated and assigned a point value, and the weighted average must be greater than 3.0 in order for the emissions reductions to be registered for that year. See TABLE 2 in this section for emissions measurement and estimation rating methods. There may be small emissions from certain sources that are very costly or unfeasible to measure or reliably estimate annually. A reporting entity must identify such sources but may exclude GHG emissions and sequestration if the total quantities excluded represent less than or equal to 3 percent of the total annual CO 2 emissions of the entity. Each entity that excludes from its annual reports any de minimis emissions must reevaluate the emissions after any significant increase in emissions, or every 5 years, whichever occurs sooner. Any non-u.s. emissions must be separately reported within the emissions inventory and clearly distinguished from emissions originating in the United States. Emissions and sequestration should be reported in terms of the mass of each gas, using metric units, and must be converted into CO 2 e units using the GWPs for each gas. In addition to the emissions inventory provisions under the Guidelines for Voluntary GHG Reporting, the International Standards Organization (ISO) is developing standards for the consistent quantification and reporting of GHG emissions and GHG reductions. Verification of emissions inventories. Entities are encouraged to have their annual reports reviewed and verified by independent and qualified auditors who have been accredited by an independent and nationally recognized accreditation program. In order to be accredited, members of a verification team must have the proper education, training, and/or professional experience to perform the necessary verification tasks and must be able to refer to literature on methods of evaluating the type of data being compiled in these emissions statements. 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: The content of entity statements, annual reports, and the supporting records maintained by the entity The representation in entity statements of any significant changes in entity boundaries, products, or processes The procedures and methods used to collect emissions and output data and to calculate emissions reductions Relevant personnel training and management systems Relevant QA/QC procedures Submission of GHG Data and Recordkeeping For Reporting Sources Emissions inventories should be submitted to EIA as soon as possible for the preceding calendar year, but no later than July 1. Supporting records for all reported data must be maintained for at least 3 years following the reporting year to allow for verification of all the reported information. The records should include: The content of entity statements, including the identification of the specific facilities, buildings, land, and other operations, or emissions sources covered by the entity s reports and the legal, equity, operational, and other bases for their inclusion Information on the identification and assessment of changes in entity boundaries, processes, or products that might have to be reported Any agreements or relevant communications with other entities or third parties regarding the reporting of emissions or emissions reductions associated with sources, the ownership or operational control of which is shared Information on the methods used to measure or estimate emissions and the data collection and management systems used to gather and prepare these data for inclusion in reports Information on the methods used to calculate emissions reductions, including the basis for: 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 emissions reductions The selection and modification of all base years, base periods, and baselines used in the calculation of emissions reductions Any baseline adjustments made to reflect acquisitions, divestitures, or other changes Any models or other estimation methods used Any internal or independent verification procedures undertaken G 6.32

9 Certification of GHG Emissions Reports Whether reporting or registering reductions, all submitted reports must include a certification statement signed by a certifying official of the reporting entity. The statement must certify that: The information reported is accurate and complete. The information reported has been compiled in accordance with the regulations. The information reported is consistent with information submitted in prior years, if any, or any inconsistencies with prior years information are documented and explained in the entity statement. Registering. In addition to the aforementioned, the certification statement of an entity registering reductions must also certify that: The entity took reasonable steps to ensure that direct emissions, emissions reductions, and/or sequestration reported are neither double counted nor reported by any other entity. Any emissions reductions reported or registered by the entity that were achieved by another entity are included in the entity s report only if: The other entity does not intend to report or register these reductions directly. A written agreement exists with each other entity providing that the reporting entity is the entity entitled to report or register these emissions reductions. The information reported on the other entity would meet the regulatory requirements if the entity were reporting directly to DOE. None of the emissions, emissions reductions, or sequestration reported were produced by shifting emissions to other entities or to nonreporting parts of the entity. None of any reported changes in avoided emissions associated with the sale of electricity, steam, hot or chilled water generated from nonemitting 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 before its acquisition. The entity maintains records documenting the analysis and calculations supporting the data reported. The entity has, or has not, obtained independent verification of the report. MORE G 6.33

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11 Other Federal Regulations Governing GHG Emissions PERMITTING GHG EMISSIONS NSR 40 CFR (b)(48), 40 CFR (b)(49), 40 CFR 52.21(b)(49), 40 CFR 52.21(b)(50), and 40 CFR 70.2 GHGs are considered regulated pollutants and must be considered when permitting major sources of air pollutants under NSR, specifically, the Prevention of Significant Deterioration (PSD) program and/or Title V. EPA has established separate permitting thresholds for GHG emissions under the PSD and Title V permitting programs. To assist sources with permitting sources of GHG emissions, EPA has prepared a guidance document titled PSD and Title V Permitting Guidance for Greenhouse Gases. For access to the guidance document, go to PERMITTING GHG EMISSIONS under Guidance Documents in this section. In addition, EPA is providing resources to identify control technology options to mitigate GHG emissions. See the national sections NEW SOURCE REVIEW and TITLE V for more information on permitting for sources of GHG emissions. VEHICLE GHG EMISSIONS STANDARDS 40 CFR The EPA and the National Highway Traffic Safety Administration (NHTSA) have developed standards to improve fuel economy and limit GHG emissions from light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles for model years 2012 through Under the standards, the applicable vehicles must meet a fleetwide CO 2 emissions standard, which will include multifuel vehicles, alternative-fuel vehicles, hybrid electric vehicles, plug-in hybrid electric vehicles, electric vehicles, and fuel cell vehicles. These standards allow automobile manufacturers to build a single light-duty fleet with a full range of vehicle choices that satisfies all requirements of both the national program and California standards, which have been adopted by many states. The EPA and the NHTSA have developed standards for the 2017 model year and beyond. The NHTSA has established fuel economy standards for model year 2017 to 2021, and will be issuing future standards for model years 2022 to The EPA has finalized GHG emissions standards for model years 2017 to These standards apply to passenger cars, lightduty trucks, and medium-duty passenger vehicles and will continue to allow automobile manufacturers to build a single light-duty fleet with a full range of vehicle choices. For more information on vehicle emissions standards, see the national section MOBILE SOURCES. FUEL ECONOMY LABELS EPA and NHTSA are also revising fuel economy labels that appear on new vehicles, beginning with 2012 models. The updated label will provide new information to consumers about the fuel economy and consumption, fuel costs, and tailpipe emissions, including GHG emissions, associated with the operation of new vehicles. The labels will appear on all new vehicles, including advanced technology vehicles, such as electric vehicles and plug-in hybrid electric vehicles. HEAVY-DUTY VEHICLE GHG EMISSIONS STANDARDS 40 CFR 85, 40 CFR 86, 40 CFR 600, 40 CFR 1036, 40 CFR 1037, 40 CFR 1039, 49 CFR 523, 49 CFR 534, and 49 CFR 535 EPA and NHTSA have adopted joint regulations, collectively known as the Heavy-Duty National Program, establishing GHG emissions limits and fuel economy standards for on-road heavyduty vehicles. The new regulations establish CO 2 emissions and fuel economy standards for both engines and complete vehicles within the following categories, as follows: Combination tractors, commonly referred to as semitrucks, meaning the power unit portion of a tractor trailer Vocational vehicles, such as delivery trucks, refuse trucks, various types of buses, emergency vehicles, motor homes, tow trucks, and others Heavy-duty pickup trucks and vans with a gross vehicle weight rating at or above 8,500 lb and the engines that power them EPA has also established standards to control HFC leakage from air-conditioning systems in pickups, vans, and combination tractors, and although emissions of N 2 O and CH 4 are low, EPA established standards for these GHGs from all heavy-duty engines, pickups, and vans. For more information on heavy-duty vehicle emissions standards, see the national section MOBILE SOURCES. OZONE-DEPLETING SUBSTANCES 40 CFR to and 40 CFR to In addition to being a regulated GHG, HFCs are also used as alternatives to ozone-depleting substances, most notably as motor vehicle refrigerants. As such, certain HFCs are subject to requirements under the regulations for ozonedepleting substances and the requirements for heavy-duty vehicles. See the national section CFC MANAGEMENT and HEAVY-DUTY VEHICLE GHG EMISSIONS STANDARDS in this section for more information. CARBON SEQUESTRATION Sequestration is the removal of atmospheric CO 2 through either biologic processes (also known as terrestrial sequestration) or physical processes (also known as geologic sequestration), including capture, long-term separation, isolation, or removal of GHGs from the atmosphere, such as through cropping practices, forest and forest products management, or injection into an underground reservoir. G 6.35

12 Terrestrial Sequestration of CO 2 Terrestrial carbon sequestration is the process by which CO 2 is removed from the atmosphere; absorbed by trees, plants, and crops through photosynthesis; and stored as carbon in biomass (tree trunks, branches, foliage, and roots) and soils. The term sinks is also used to describe agricultural and forestry lands that absorb more CO 2 than they release, but agricultural and forestry lands can also release CO 2 and other GHGs to the atmosphere. Individual terrestrial sequestration options include: Tree planting Forest management activities that enhance tree growth over time Forest preservation Conservation tillage practices on agricultural lands Grazing land management Geologic Sequestration of CO 2 40 CFR to and 40 CFR to Geologic sequestration, also commonly referred to as carbon capture and storage (CCS), involves separating and capturing CO 2 from an industrial or energy-related source, transporting it to a storage location, and injecting it deep underground for long-term isolation from the atmosphere. Separation and capture of CO 2. Several technologies exist for CO 2 separation and capture, but they are in various stages of development and implementation. As a result, they are being used in a limited number of facilities, and additional research is needed to improve the efficiency and cost. Transportation of CO 2. After the CO 2 is captured from the source and compressed, it can be geologically sequestered on-site or transported to a separate injection site. CO 2 can be transported as a liquid in ships or road or rail tankers, but pipelines are the most efficient and cost-effective approach for transporting large volumes of CO 2. In the United States, there is a network of CO 2 pipelines that supply CO 2 from natural reservoirs to oil and gas fields, where it is used to enhance oil recovery. These same pipelines can carry CO 2 captured from industrial facilities. Injection of CO 2. Once a suitable geologic formation has been identified through detailed site characterization, CO 2 is injected into the formation at high pressure to depths generally greater than 2,625 feet. Below this depth, the pressurized CO 2 remains supercritical and behaves like a liquid, taking up less space. Once underground, the CO 2 occupies pore spaces in the surrounding rock, like water in a sponge. Saline water that already resides in the pore space will compress under pressure and/or move to allow room for the CO 2. Over time, the CO 2 dissolves in the water, and chemical reactions between the dissolved CO 2 and rock can create solid carbonate minerals, more permanently trapping the CO 2. There is the potential for CO 2 to migrate from the geologic formation to shallower depths or back to the atmosphere, but such migration can be limited by proper site characterization and selection. Regulation of CO 2 sequestration. To ensure the protection of underground drinking water sources from CO 2 injection activities, EPA is regulating geologic sequestration of CO 2 under the Safe Drinking Water Act, specifically under the regulations for underground injection wells. The regulations identify Class VI wells as those used for injection of CO 2 into underground subsurface rock formations for long-term storage, or geologic sequestration, and establish specific criteria for Class VI wells, including requirements for: Extensive site characterization Well construction Comprehensive monitoring and testing Recordkeeping and reporting Closure Financial responsibility For more information on geologic sequestration of CO 2, see the national section UNDERGROUND INJECTION WELLS. CCS Task Force. In February 2010, President Obama established the Carbon Capture and Storage Interagency Task Force. The task force is charged with developing a comprehensive and coordinated federal strategy to speed the development and deployment of clean coal technologies. The strategy must include a proposed plan to overcome the barriers to the widespread, cost-effective deployment of CCS within 10 years, with a goal of bringing 5 to 10 commercial demonstration projects online by G 6.36

13 Industry Actions Addressing GHG Emissions BUSINESS BENEFITS OF GHG MANAGEMENT In many cases, industry has taken the initiative to implement management programs that result in significant cost reductions and decreases in GHG emissions. Eight Ways to Make the Business Case for Reducing GHGs, by Marc Karell and published on Enviro.blr.com, outlines the following reasons a climate change program will benefit the bottom line of any firm: Making the monetary case. Reducing GHG emissions most commonly occurs by reducing fossil-fuel combustion and electric usage. Given the high price of fuel and electricity these days, such projects will also result in significant cost savings. A comprehensive energy audit can identify lowhanging fruit and determine potential projects for reducing GHG emissions and their likely savings and payback time. In addition, reducing GHG emissions can result in credits that your firm can sell on the market for revenue. Create new products and sell more. Climate change offers possibilities to firms that are open to new ideas. Developing, marketing, and introducing new products or retooling existing products to take advantage of the growing interest in GHG emissions contributes to a firm s bottom line. Impress customers and suppliers. There is a growing movement among the firms you deal with (mainly retailers) to understand the carbon life cycle of your products. Some companies are now requiring their suppliers to implement minimum energy usage or other GHG minimizing practices as a condition to purchasing their products. By implementing a GHG management program, you will show your customers and suppliers that you are aware of the situation and are already minimizing GHG emissions, putting your product in a better position compared with your competitors. Raise employee morale. Companies are being challenged more and more these days to keep good employees from leaving and to raise company morale. Many firms have developed programs that involve employees and share successes through internal newsletters. Firms have reported that their employees, in some cases, have a new zeal and devotion to the workplace once they have invested in GHG management and sustainability programs and believe that the firm is dedicated to a greater good. In addition, a firm implementing building upgrades to meet Leadership in Energy and Environmental Design (LEED) standards will likely see an increase in productivity and reduction in sick days, which is good for both the company bottom line and employee satisfaction. Fast-tracking future projects. GHG management programs with distinct, measurable goals can help defuse conflicts with advocacy groups and build trust. Such trust can help to reduce the time necessary to approve expansion projects, saving the firm much money and time in permitting the proposed facilities and enabling them to build and operate sooner than otherwise. Improving efficiency. A program with GHG emissions reduction targets can improve operational efficiency throughout a firm s business, spanning the handling of raw materials, the actual manufacturing process, and the delivery of the product to the customers. Improving efficiency improves profit margins and decreases emissions of other compounds, allowing growth without tripping major air-permitting requirements and related onerous environmental regulations. Evaluating climate risks. Historically, companies have determined what impacts their operations have on the environment, such as air emissions and wastewater. With climate change, for the first time, we are concerned with the reverse how the environment will impact business should some of projected effects of climate change manifest themselves. For example, if your firm operates a critical manufacturing plant on an island in the Caribbean, how would your bottom line be impacted by the greater risk of another Hurricane Katrina knocking it out? What if you don t even own that plant, but depend on a raw material it produces? What if a critical crop needed to make your product will need to be shifted to other parts of the world because the soil in the existing locations can no longer grow it? What would be the long-term effects of hotter weather, more tropical diseases, and long-term water shortage on people s standards of living and consumer confidence in your products? A climate change risk program can delve deeper into questions like these and allow your firm to be prepared early and make the proper investments to minimize risk and even turn risk into opportunities. Improving your image. A growing number of people use environmental image to promote consumer confidence in the products they buy. Your company can use this approach to demonstrate that it is forward-thinking. There are several voluntary registries to demonstrate that your company has achieved certifiable GHG emissions reductions both for the public record and to apply in advance to any future rules. Such a program can be a positive part of your annual or other stakeholder reports and be a headline entry on your website. INDUSTRY COALITIONS TO ADDRESS GHG EMISSIONS USCAP The U.S. Climate Action Partnership (USCAP) is a coalition of businesses and environmental organizations that are calling on the federal government to implement strong legislation to significantly reduce GHG emissions nationwide. The organization has published principles and recommendations for the development of climate change legislation. Among the recommendations of USCAP s A Call for Action are: Requiring actions, such as the following, to be fast-tracked while the cap-and-trade program is being developed and implemented: Establishment of a GHG inventory and registry Credits for early action Aggressive technology research and development Policies to discourage new investment in high-emitting facilities G 6.37