Global warming has been a hot topic for many years; although speculation existed regarding its correlation to human activities. Recent studies demonstrate, however, that human activities likely contribute to global warming, and policymakers from all over the world are proposing programs to slow down the warming trend. The emphasis has been placed on programs that reduce greenhouse gas (GHG) emissions from the combustion of fossil fuels, although other industry sectors may also be affected.
A flurry of activity has been initiated in the Northeastern slates to regulate the power industry, and the federal government is proposing legislation that would regulate a broader sector, including industrial, commercial, and residential sources. As a result, sources that burn fossil fuels may experience additional costs associated with program compliance and reducing emissions. Also, the opportunity may exist for transacting emissions reductions under the offsets portion of currently proposed regulations. Ultimately, industry needs to stay informed of the regulatory activity and attempt to play a role in the rulemaking process. Although most U.S. regulatory activity is in the preliminary stages, it is likely that we will soon see programs based on a cap-and-trade type system that will require an inventory of GHG sources, a system to record GHG emissions, and mandatory reductions in GHG emissions.
Although there is considerable variation in the legislation that is now being developed, most proposed rulemaking contains a cap-and-trade program to reduce GHG emissions. Owners and operators of fossil-fuel burning entities should be prepared to take an active role in the trend to reduce GHG emissions. Recommended actions include:
- Quantifying emissions and emissions reductions
- Developing systems to track and manage energy and GHG data
- Participating in stakeholders' meetings and submitting comments on proposed regulations
- Determining where and how to obtain GHG credits
- Evaluating how to offset reductions and predict when the need will actually emerge for these external projects