Climate Change: Reporting Guidelines under the MOU presented to American Public Power Association...

Climate Change: Reporting Guidelines under the MOU

presented toAmerican Public Power Association

2006 APPA National ConferenceChicago, IL

June 13, 2006

Daniel E. KleinTwenty-First Strategies, LLC

McLean, VA 22101

[email protected]

mailto:[email protected]

Page 2 21st Strategies

What we’ll cover today

Background on U.S. GHG programs

Climate Vision & Power PartnersSM

Growing pressures for power companies to take action on GHGs

Revised §1605(b) GHG Reporting Guidelines


Addressing Climate and Energy Securityin the Global Climate Change Initiative

On February 14, 2002, President Bush set a goal to reduce U.S. GHG emissions intensity by 2012

GHG “intensity” will be measured in terms of GHG per unit of GDP

This goal is equivalent to ~500 million metric tons of cumulative carbon equivalent reductions from 2002-2012

“My administration is committed to cuttingour nation’s greenhouse gas intensity... by 18 percent over the next 10 years.”

“My administration is committed to cuttingour nation’s greenhouse gas intensity... by 18 percent over the next 10 years.”


Improving GHG intensity is a key component of the U.S. strategy

Over time, improving GHG intensity could:

1. Slow the rate of GHG growth

2. Stabilize GHG emissions

3. Reduce absolute emissions

… depending on the rate of improvement time

emis

sio

ns


So … how is the U.S. doing so far? Goal: 18% reduction in GHG intensity, 2002-12

But BAU forecasts show ~14% improvement (~1.5%/yr) 18% implies average annual rate of ~2.0%/year From 1990-2003, GHG intensity fell ~1.9%/year

GHGs $GDP GHG intensity

/

2003 1.0% 2.7% -1.7% 2004(prel.)

~2.0% 4.2% -2.1%

2005(very prel.)

~0% 3.5% ~-3.5%


Climate VISION Program Launch

Climate VISION – Voluntary Innovative Sector Initiatives: Opportunities Now

A part of the Global Climate Change Initiative (GCCI), launched February 12, 2003

Part of a continuum of short- mid-, and long-term approaches to address climate change

Nature of problem requires development and use of transformational technologies


Climate VISION Private-Sector Partners

Alliance of Automobile Mfgrs.

Aluminum Association

American Chemistry Council

American Forest & Paper Association

American Iron & Steel Institute

American Petroleum Institute

Assoc. of American Railroads

The Business Roundtable

Industrial Minerals Assoc. – N. America

International Magnesium Association

National Lime Association

National MiningAssociation

Portland CementAssociation

Power Partners

Semiconductor Industry Association

Each partner has committed to contribute to President’s GHG intensity goal.


Power PartnersPower PartnersSMSM: : Historical Roots

In 2002, electric power sector created Power PartnersSM

Voluntary partnership with Federal government Designed to deliver results in short, medium & long term

U.S. electric power sector recognized early on as a world leader in voluntary GHG programsPower industry came together in the 1990sSuccessfully undertook voluntary climate initiatives

through the Climate Challenge programFirst major industry to do so281 MMT CO2 of reported reductions in 2002.

But does its reputation for “early action” still hold?


Electric Power Participants inClimate VISION & Climate Leaders

Power PartnersSM Participants American Public Power Association (APPA) Edison Electric Institute (EEI) Electric Power Supply Association (EPSA) Large Public Power Council (LPPC) National Rural Electric Cooperative Association (NRECA) Nuclear Energy Institute (NEI) Tennessee Valley Authority (TVA)

EPA’s Climate Leaders program 86 companies so far (all sectors)

Power companies include AEP, Entergy, We Energies, FPL, PSEG, etc.


Power PartnersSM Goal

Achieve equivalent of 3-5% reduction in GHG intensity by 2012 through credible, verifiable reductions in GHG emissions or offsets

Intensity measured as CO2/MWhCollaborative, industry-wide initiativesIndividual actions that best suit company capabilities,

resources and business strategiesCross-sector programs and outreach

Signed Umbrella MOU with DOEDecember 13, 2004Highlights roles of partners in achieving voluntary

reductions


So … how’s the Electric Power Sector doing so far?

Goal: 3-5% reduction in GHG intensity, 2002-12

CO2 MWh CO2 intensity

/

2003 1.25% 0.6% 0.6% 2004(prel.)

0.89% 2.0% -1.0%

2005(very prel.)

~2.7% 2.0% ~0.7%

So far, not so good ….


Business-as-Usual predicts some improvement,but EPICI target will need more

Generation Intensity (mmtCO2e/bkwh)

0.5400

0.5520

0.5640

0.5760

0.5880

0.6000

0.6120

0.6240

0.6360

0.6480

0.6600

0.6720

0.6840

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

mm

tCO

2e/b

kwh

ModelActual

Updated Model Forecast Data from AEO 2006Historical Data from AER 2004

AEO 2005

AEO 2006

Data compiled by EOP Group.

Power PartnersSM

target

Generation Intensity (MMTCO2e/bkWh)


States are getting more involved in ClimateGHG Reporting and Registries Powerplant Carbon Caps of Offsets

Source: Pew Center for Global Climate Change, July 2005 update

Greenhouse Gas InventoriesClimate Action Plans Completed


U.S. Mayors Climate Protection Agreement

Initiated shortly after Kyoto Protocol took effect

Actions urged: Cities should meet or exceed Kyoto targets State & federal governments should meet or beat

Kyoto targets by 2012 Congress should enact cap & trade legislation

Effort has growth rapidly 235 Mayors have signed (as of May 19, 2006) Representing over 45 million citizens Press attention worldwide


Rapid Growth in U.S. Mayors C.P.A.

16-Feb-2005: Kyoto Protocol takes effect

30-Mar-2005: 10 Mayors launch program

13-Jun-2005: U.S. Conf. of Mayors unanimously endorse

8-Dec-2005: Mayor Nickels (Seattle) highlighted at Montreal COP

19-May-2006: 235 Mayors signed, representing over 45 million citizens

16-Feb-2005: Kyoto Protocol takes effect

30-Mar-2005: 10 Mayors launch program

13-Jun-2005: U.S. Conf. of Mayors unanimously endorse

8-Dec-2005: Mayor Nickels (Seattle) highlighted at Montreal COP

19-May-2006: 235 Mayors signed, representing over 45 million citizens


It’s not too late to be proactive: #1

Every challenge containsopportunity as well as danger.

= +

CRISIS = DANGER + OPPORTUNITY



Come gather ’round peopleWherever you roamAnd admit that the watersAround you have grownAnd accept it that soonYou’ll be drenched to the bone.If your time to youIs worth savin’Then you better start swimmin’Or you’ll sink like a stoneFor the times they are a-changin’.

Bob Dylan, 1963

In a future filled with uncertainty, “business-as-usual” won’t cut it.



“If you’re not at the table,you’re on the menu.”

-- Washington D.C. proverb


Power Companies should continue and expand their GHG reduction efforts

Understand your GHG footprint and risks Identify GHG activities already under way Assess options for further GHG reductions

Costs Effectiveness Ancillary impacts

Develop capabilities for GHG reporting Join climate programs?

National? State & local?

Set a GHG target? Absolute level of emissions? GHG emissions intensity?


GHG emissions = $GDP X GHG intensity

Btu/$GDP X GHG/Btu – sequestration

GHG Management Options: An all-in-1 Formula

All options needed to: Maintain economic growth Affordably meet energy demand Address environmental objectives

Improve EnergyEfficiency

Demand Side Supply Side

Renewables Nuclear Fuel Switching

Reduce FuelCarbon Intensity

SequesterCarbon

Capture & Store Enhance Natural

Sinks


Use the Power PartnersUse the Power PartnersSM Resource Guide Resource Guide

1990s Climate Challenge program developed an “Options Workbook” of “best practices”

MOU commits to developing and maintaining a “Power PartnersSM Resource Guide”

At a minimum … Meet Climate Vision commitment Information for utilities, esp. smaller ones Information for general public

… and maybe also … Data collection for measuring intensity? Aid in annual Power Partners

SM reporting to DOE?

Other purposes?


http://uspowerpartners.org/


DOE’s Revised Guidelines for Voluntary Reporting of Greenhouse Gases (§1605(b)

Background – How we got here

Overview of Guidelines

Key steps in Reporting


Background on Revising the §1605(b)GHG Reporting Guidelines

Voluntary Reporting of Greenhouse Gases Program Established by Section 1605(b) of the Energy Policy

Act of 1992 Oct. 1994: Final Guidelines issued First reporting year was 1994, reported by DOE in July

1996 Reporting rules were quite flexible

Scope of the reporting entity Emissions and/or reductions Entity-wide or project-specific

Power sector initially dominated, still majority


Background on Revising the §1605(b)GHG Reporting Guidelines

Concerns grew with the original program “Flexibility” reduced credibility Weak basis for future crediting Emergence of competing reporting standards

Administration plan to “substantially improve the emission reduction registry” Part of Feb. 2002 GCCI “create world-class standards for measuring and

registering emission reductions” “transferable credits to companies that can show real

emission reductions” take into account emerging domestic and int’l

approaches


Will new §1605(b) guidelines help or hinder its purposes?

Feb. 2002:

Announced at a time when fragmentation of registries seemed to threaten.

But is the WRI/WBCSD GHG Protocol becoming the new standard?

Will §1605(b) be a uniter or a divider? What is L/T fate of §1605(b)?

“These improvements will enhance measurement accuracy, reliability and verifiability, working with and taking into account emerging domestic and international approaches.”

“These improvements will enhance measurement accuracy, reliability and verifiability, working with and taking into account emerging domestic and international approaches.”


Overview of new §1605(b) Guidelines

All reporting entities must: Define themselves and their organizational

boundaries Use the measurement and calculation methods

contained in the guidelines Maintain records and certify accuracy of reports

All reporters are encouraged to: Report at the highest level Meet the requirements for registering reductions Have reports independently verified


Entity-wide Emissions Inventory

Calculate Reductions at any level: project;

facility; pre-2002, etc.

Calculate Net Reductions Across U.S. Entity:

Changes in Emissions;Changes in Carbon Stocks;

Avoided emissions

All Reporters: Require Legal Basis for Entity; ‘Encourage’ Highest Level

Registered Emission Reductions

“Reporting Only” Entities

Inventory of Emissions for

Selected Activities

Reported Reductions

Large EmittersSmall Emitters

Calculate Net Reductions for

Reported Activities, e.g., DSM

PotentialOffsets

Framework of Revised §1605(b) Program

Same for non-U.S. operations (optional)

Offset Reductions (if any)

Measure emissions at any level/year


Overview of §1605(b) Guidelines: Registered Reductions

Qualifying reporters will be credited with registered reductions

U.S., non-U.S. and offset reductions to be calculated separately

Registered reductions gauge entity’s contribution to Presidential goal of reducing U.S. emissions intensity 18% by 2012

Registered reductions may be transferred to other entities using private agreements [but no changes to DOE records]

To retain reductions from sequestration, entities must continue to report


Small emitters that intend to register must: Emit less than 10,000 metric tons of CO2 equivalent

per year Report all emissions and reductions for at least one

activity, e.g. livestock operations or forested land Report annually Certify that activities being reported do not cause an

increase in emissions elsewhere under the entities’ control

Overview of Guidelines: Small Emitters (<10,000 metric tons CO2e per year)


Overview of Guidelines: Large Emitters (>10,000 metric tons CO2e per year)

Large emitters that intend to register must: Submit comprehensive, high-quality emissions

inventories Determine reductions based on entity-wide

assessments of changes relative to base period Ensure offset reductions are calculated according to

entity rules and are subject of agreement with other entities

Report annually


Basic Elements of the Revised §1605(b) Guidelines

1) Defining and naming the entity, and setting organizational boundaries

2) Determining Start Year, Base Period and First Reduction Year

3) Entity Statements4) Emissions Inventories5) Emission Reductions6) Other reporting requirements, including record keeping,

certification, and verification7) Offsets, non-U.S. emissions, aggregators, other gases

and sources


Key Addresses for Revised §1605(b)

All documents and guideline development background can be found at:

http://www.pi.energy.gov/enhancingGHGregistry/

Information on EIA implementation of program and revised guidelines can be found at:

http://www.eia.doe.gov/oiaf/1605/aboutcurrent.html/


Questions?

Dan Klein

Twenty-First Strategies, LLC

6595 Terri Knoll Ct.

McLean, VA 22101

703-893-8333

[email protected]


Basic Elements of the

Revised §1605(b) Guidelines

Appendix


Basic Elements of the Revised §1605(b) Guidelines

1) Defining and naming the entity, and setting organizational boundaries

2) Determining Start Year, Base Period and First Reduction Year

3) Entity Statements4) Emissions Inventories5) Emission Reductions6) Other reporting requirements, including record keeping,

certification, and verification7) Offsets, non-U.S. emissions, aggregators, other gases

and sources


Emissions Inventory - The Emissions Rating System

Reporters must “rate” their emissions measurement and

estimation methods The ratings are ordinal, with four levels, A, B, C & D

(valued 4, 3, 2, 1) An “A” rated method = best method available (e.g. direct

measurement) A “D” rated method = least rigorous method (e.g.

estimated activity data) The weighted average rating must be at least 3.0 to

register reductions (i.e., a “B” average”) Reporters must calculate an inventory weighted average

rating for each year


Emissions Inventory - Measuring Emissions

When choosing measurement or estimation methods, entities should consider: Rating

Cost and feasibility of available methods

Accuracy

Size of the source

Variability and performance over time, and

Ancillary Benefits


Emissions Inventory – Potential Sources of Emissions and Sequestration

Stationary source combustion Indirect emissions from purchased electricity, steam,

hot and chilled water Mobile source combustion Industrial process emissions Mining, oil, and gas production emissions Waste treatment and handling Non-fuel use of fossil fuels Other indirect emissions Forestry sources and sinks Agricultural sources and sinks Engineered sequestration

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