On March 10, 2009, EPA proposed federal greenhouse gas (GHG) reporting requirements as authorized by the FY08 Omnibus Appropriations Act (H.R. 2794; Public Law 110-161), signed Dec. 26, 2007. EPA developed the rule to collect comprehensive GHG emissions data that can be used to inform EPA and government agencies for future policy decisions. EPA’s rulemaking approach used screening criteria to identify affected emissions source categories, including: 1) whether a source category could be covered under the Clean Air Act, 2) the ability to measure GHG emissions from the source category, and 3) the administrative burden (i.e., number of sources versus coverage of emissions). As a result, EPA developed draft reporting methodologies for sectors and facilities.
Unlike most voluntary reporting registries which rely on corporate-level reporting, EPA is proposing primarily facility-level reporting with some exceptions (e.g., fuel importers, vehicle and engine manufacturers). The reporting threshold will be 25,000 metric tons of CO2e/yr or capacity-based thresholds for different sector types (based on actual emissions), where feasible. A facility meeting the reporting threshold must report emissions from all sources in the source category list provided in the rule.
The proposed methodologies for calculating GHG emissions include direct measurement for facilities that already collect GHG emissions data (e.g., those covered by the Acid Rain program) and facility-specific calculations for other source categories. Two exceptions include vehicle/engine manufacturers that would use existing certification and test protocols, and industrial gas suppliers that would directly report gas produced, imported, and exported. Facilities will only have to report emissions of source categories if there are methods provided in the rule (e.g., an emission calculation methodology for
calculating CH4 emissions from coal piles is not provided). For small facilities, EPA has eased the burden of determining applicability by excluding any facility that has an aggregate maximum rated heat input capacity of the stationary fuel combustion units of less than 30 mmBtu/hr and no other emission sources within their boundary. EPA worked closely with other regulatory agencies, non-governmental organizations (NGOs), and trade groups to ensure that calculation methodologies are consistent with existing programs to the extent possible.
As proposed, reporting would be required annually, with the first reports due on March 31, 2011 for calendar year 2010 emissions, except for vehicle and engine manufactures who will begin reporting for model year 2011. Facilities already reporting quarterly for existing mandatory reporting programs (e.g., Acid Rain program) will continue to report quarterly. The proposed rule would require reporting of annual emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other fluorinated greenhouse gases. As proposed, third-party verification is not required. Like most EPA regulatory programs, reporters will self-certify. EPA, and possibly other regulatory agencies, will act as the verifier of data.
EPA expects this program to account for 85-90% of all U.S. GHG emissions, comprising approximately 13,000 facilities. EPA will hold two public hearings and accept public comments for 60 days from the date the rule is published in the Federal Register. As the proposal heads toward promulgation, Trinity recommends the following strategies for potentially affected facilities:
- Monitor developments with EPA’sproposed rule and consider commenting on the rule
- Develop or refine your enterprise-wide and facility-level GHG emissions inventories whereby you’ll assess your vulnerability to various scenarios and be prepared for mandatory reporting.
- Evaluate the potential exposure that your organization will have as carbon develops a cost (through a cap-and-trade scheme) and the cost of potential reductions. Consider several different $/ton pricing scenarios for carbon.