EPA MANDATORY REPORTING RULE (MRR) A Workshop & Symposium

Transcription

1 1 EPA MANDATORY GREENHOUSE GAS REPORTING RULE (MRR) December 16, 2009 A Workshop & Symposium

2 Workshop & Symposium 2 1. Welcome & Opening Remarks 2. Preparing for a Carbon Constrained World 3. EPA Mandatory Reporting Rule (MRR) 4. Legal Aspects of MRR 5. What does MRR mean to your company? 6. Wrap-up and Close

3 1. Welcome & Opening Remarks 3 Welcome W l to invited it guests Objectivesj Schedule Introduction of Presenters Housekeeping items

4 2. A Carbon Constrained World 4 Why are we here, relative to Carbon? Carbon Emissions & GHG Footprints Regulatory R l Framework Massachusetts v EPA Kyoto to Cap & Trade

5 5 Why are we here Global Carbon Cycle

6 $64MM, $64B, $64T 6 Atmospheric Concentrations Anthropogenic Emissions lion Metric Tons Carbon n) CO 2 Em missions (Bil 0 Source: ORNL, Carbon Dioxide Information Analysis Center

7 7 Wedge Strategies: Ways to reduce BAU

8 Validity: The Christianity Argument. 8 If you are, so what? If you aren t, look out! Therefore, we can t! So we must all!

9 Carbon Emissions & Footprints 9 Carbon Footprint IRS W-2 MRR 1605b = = PAIN SAP vs. Quicken IRP or IMP IRS 1040 QA/QC Plan BAMM Annual Quarterly SAP vs. Quicken Cap & Trade Tax or Refund Cap & Trade REC CCX OTC FERC EPA

10 3. EPA MRR 10 OverviewO i Applicability y Reporting Requirements Timeline Impact to Industry

11 MRR General Overview 11 US Carbon Marketplace is a 2-piece puzzle: 1. Carbon Emission data MRR Carbon dioxide (CO 2 ) Methane (CH 4 ) Nitrous oxide (N 2 O) Hydrofluorocarbons (HFC) Perfluorocarbons (PFC) Slf Sulfur Hexafluoride (SF) 6 2. Management of data - Cap & Trade

12 MRR Applicability 12 Who s in? Who s not? The 4 doors of applicability 1. All in Sources 2. Threshold Sources 3. Stationary Sources 4. Supplier Sources

13 MRR Marble Game All in Sources 2. Threshold Sources 3. Stationary Sources 4. Supplier Sources

14 All in Sources 98.2(a) (1) 14 Electricity generation (40 CFR Part 75) Adipic acid production Aluminum production Ammonia manufacturing Cement production HCFC-22 production HFC-23 destruction processes Lime manufacturing Nitric acid production Pt Petrochemical production Petroleum refineries Phosphoric acid production Silicon carbide production Soda ash production Titanium dioxide production Municipal solid waste landfills (>25k/ton CO 2 e/year) Manure management systems (>25k/ton CO 2 e/year)

15 Threshold Sources 98.2(a) (2) 15 Not All-In + 25k ton/co 2 e/year = Ferroalloy production Glass production Hydrogen production Iron & Steel production Lead production Pl Pulp & Paper manufacturing Zinc production

16 Stationary Sources 98.2(a) (3) 16 Not All-In - Not 25k ton/co 2 e/year + make power, heat or steam at 30MM Btu + 25k ton/co 2 e/year = Stationary internal combustion engines Process heaters Incinerators Boilers

17 Suppliers Sources 98.2(a) (4) 17 Coal-based liquid fuels Petroleum products Natural gas Industrial GHG CO2 Suppliers

18 MRR Time Line 18 October 30, 2009: EPA issued final rule in the Federal Register December 7, 2009: Endangerment Finding signed by EPA December 29, 2009: Final rule is effective January 1, 2010: Affected facilities must begin collecting data January 29, 2010: BAMM Deferment applications due April 1, 2010: End of deferment period for BAMM April 1, 2010: QA/QC Monitoring Plan due May 2010: Expected revisions to MRR to include additional industries - food, coal, WWTP September 2010: Expected Endangerment Findings impact March 31, 2011: GHG report due for 2010 March 31, 2012: GHG report due for 2011

19 MRR Reporting Requirements 19 Data & Recordkeeping requirements January 29, 2010 April 1, 2010 Deferment due for Best Available Monitoring Methods (BAMM) QA/QC or Monitoring Plan March 31, 2011 GHG report due for 2010

20 MRR Reporting Requirements 20 Data & Recording keeping: A list of all units, operations, processes, and activities The data used to calculate the GHG emissions The GHG emissions calculations and methods used (Tier 1-4) Analytical results of site-specific emissions factors Analyses for high heat value (HHV), carbon content, and other parameters Any facility operating data or process information used The annual GHG reports Retained record for any missing data Certification & QA/QC data of instrumentation Maintenance & Calibration records of instrumentation

21 MRR Reporting Requirements 21 January 29, 2010: BAMM Deferment Request: Written request Specific monitoring instrumentation Locations where installed or planned ID of rule requirements where instrumentation is needed Description as to why instrumentation is not obtained and installed before April 1, 2010

22 MRR Reporting Requirements 22 April 1, 2010: GHG Monitoring or QA/QC Plan: Identification of responsibilities (i.e., job titles) for data collection Explanation of processes and methods used for data collection Describes QA/QC procedures, maintenance, and repair of all CEMS Existing corporate documents (e.g., standard operating procedures) Revise the Plan to reflect changes in processes, etc Upon request make available for audit

23 MRR Reporting Requirements 23 March 31, 2011: GHG Report:

24 MRR Impact to Industry 24 80% Industry is EPA s EPAs guess Tax refund? 100% Cost & Time: in-house vs. consultant Every year from now on Disclaimer: solely as assistance, information provided is unintentional, may not be relied upon, does not constitute a submission.

25 4. Legal Aspects of MRR 25 Compliance C v. Non-Compliance Legal g Nuances Proposed GHG Legislation GHG Litigation

26 Regulatory Framework The MRR was promulgated under EPA s Clean Air Act authority The MRR does not regulate GHG emissions, but is likely a precursor to such regulations EPA endangerment finding

27 Compliance vs. Noncompliance EPA verification (i.e., auditing) methods CAA penalties are up to $37,500 per day per violation Criminal penalties Other ramifications Image Accountability Disclosure

28 Nuances of MRR MRR does not preempt existing i reporting requirements Burden on facility to document emissions i may need to continuously monitor even though not required to report Facilities that fail to monitor or report... are subject to EPA enforcemente e Electronic reporting CBI

29 Nuances, continued Designated Representative will be EPA s single POC. DR may be a non-employee. Designating i a representative does not shift accountability for compliance away from owners/operators Data reported will be made available to the public

30 Legal - Compliance 30 ComplianceC Non-Compliancep Audit

31 Where Are We Headed? Characterized by uncertainty and political i l infighting Result = potential liability / risk Parallel tracts: International Treaty Statutory Provision Regulatory

32 KYOTO PROTOCOL A protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aimed at combating global warming. The UNFCCC is an international environmental treaty with the goal of achieving "stabilization of greenhouse gas concentrations in the atmosphere to prevent danger us anthropogenic interference with the climate system. Under the Protocol, countries commit to a reduction of four greenhouse gases (GHG) by 5.2% from the 1990 level. Emission limits do not include emissions by international aviation and shipping, but are in addition to the industrial gases, chlorofluorocarbons, or CFCs, which are dealt with under the 1987 Montreal Protocol on Substance that Deplete the Ozone Layer. The Protocol was initially adopted on 11 December 1997 in Kyoto, Japan and became effective on February 16, countries have signed or ratified the protocol. The United States is not a signatory of UNFCCC.

33 WAXMAN-MARKEY BILL American Clean Energy and Security Act of 2009 H.R ("ACES" or "Waxman-Markey"), passed by House on June 26, 2009 Would create Cap and Trade Program The legislation would set a limit (the cap) on total emissions over the period and would require regulated entities to hold rights, or allowances, to emit greenhouse gases. After allowances were initially distributed, entities would be free to buy and sell them (the trade part of the program). Reducing emissions to the level required by the cap would be accomplished mainly by stemming demand for carbon-based based energy by increasing its price. Other aspects of the bill, include federal efforts to speed the development of new technologies and to increase energy efficiency by specifying standards or subsidizing energy-saving investments.

34 KERRY-BOXER BILL S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER ACT, introduced by Senators Kerry y( (D-MA) and Boxer (D-CA) In contrast to the House, where Waxman-Markey was the sole climate change bill to receive full consideration; The Senate is debating several bills, which may be combined in some way if all reach the floor. The largest and most comprehensive bill is S ("Kerry-Boxer" or "CEJAPA"), but each of the other bills contain important provisions. Additionally, because of partisan circumstances in the Committee on Environment and Public Works, the Committee reported Kerry-Boxer to the floor without consideration of amendments by the Senators on the Committee. The Bill purports to transition to clean energy by ensuring that all of America s energy sources (coal, nuclear energy, petroleum, solar and wind) are as clean and efficient i as possible without t damaging U.S. short-term t competitiveness. The Bill will provide for investing in all of these sources of power as well transmission and distribution systems.

35 OTHER SENATE PROVISIONS The bill sets ambitious goals to reduce carbon pollution. It targets a reduction of 20 percent by 2020 and 80 percent by 2050 from 2005 levels, the minimum alleged necessary to avert a climate disaster. The bill purports to accomplish these goals through a pollution reduction and investment system that covers less than 2% of American businesses and keeps American industry competitive during the transition to a new energy economy. Other Senate Bills: S., CARBON LIMITS AND ENERGY FOR AMERICA'S RENEWAL ACT, introduced by Senators Cantwell (D-WA) and Collins (R-ME) S. 2835, INTERNATIONAL CLIMATE CHANGE INVESTMENT ACT, introduced by Senator Kerry (D-MA), with 4 co-sponsors S. 2729, CLEAN ENERGY PARTNERSHIPS ACT, introduced by Senator Stabenow (D-MI), with 7 co-sponsors S. 1462, AMERICAN CLEAN ENERGY LEADERSHIP ACT OF 2009 ("ACELA") (ACELA), introduced by Senator Bingaman (D-NM

36 PARALLEL REGULATORY EFFORT CLIMATE REGULATION California Waiver Cars and Trucks Endangerment Finding Ethanol Blend Gasoline Executive Order GHG Reporting Rule PSD Interpretive Memo Reconsideration Renewable Fuel Standard Program Tailoring Rule - Revised PSD Threshold Underground Injection Control for Geologic Sequestration

37 Legal GHG Litigation 37 Statutory t t Claims Compelling Government Action Stopping Government Action Regulating l Private Conduct/Industry d t Lawsuits Common Law Claims

38 5. What does MRR mean to you? 38 Web-based Wbb d Compliance Tool Public Disclosure Due Diligence Options beyond MRR

39 MRR effect Compliance tool 39 See S PPT from EPA on demo of compliance tool use

40 EPA Web-based based Applicability Tool Use it and document your use Combine with engineering g analysis and results to prepare sufficient administrative record of determination of applicability EPA disclaimers i

41 MRR effect Public Disclosure 41 Sunshine S Law compliance SEC compliance XL note NYC note

42 MRR effect Options beyond MRR 42 Change the Paradigm New Thinking NIMBY v NUMBY CCS Carbon Offsets Others?

43 6. Wrap-up & Close 43 Questions, Comments, Concerns Further discussions beyond today Thank you for your time