Western Climate Initiative Drafts Goals to Meet GHG Targets

The Western Climate Initiative (WCI), a regional consortium focused on reducing greenhouse gas (GHG) emissions in the Western part of the United States, Canada, and Mexico, held a Stakeholders Workshop in Salt Lake City, Utah on May 19, 2008 to solicit public comment on recently published draft goals. WCI has an overarching goal to reduce GHG emissions in participating states 15% from 2005 levels by 2020. This article summarizes the draft goals and public comments provided at the recent workshop. The “Partners” in the WCI have agreed to implement rules and regulations in order to achieve the GHG emissions reductions set forth by the WCI. The following states and provinces are considered Partners within the WCI: Arizona; California; New Mexico; Oregon;Washington; Montana; Utah; British Columbia, Canada; Manitoba, Canada; and Quebec, Canada.

The “Observers” in the WCI are active in the rule making process, but have not committed to enforcing the goals of the WCI. The following states and provinces are considered “Observers” within the WCI: Alaska; Colorado; Idaho; Kansas; Nevada; Wyoming; Ontario and Saskatchewan, Canada; and the Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora, and Tamaulipas. Observers may elect to change to Partner status within the WCI when the region is ready to implement the goals required by the WCI.

The WCI is made up of five subcommittees, each chaired by a person representing a Partner jurisdiction. The five subcommittees include: reporting, scope, electricity, allocations, and offsets. Each subcommittee has developed draft goals which were presented at the Workshop as summarized below.

Reporting Subcommittee

The mission of the Reporting subcommittee is to recommend a reporting system that will allow regulators access to emissions data for the regulated sources, and will ensure that emissions are calculated appropriately. The WCI Partners agree that the reporting system should rely on the structure of The Climate Registry (TCR).

The following include the recommendations from the Reporting subcommittee:

• Reporting requirements should apply to all capped sectors initially, and to specific non-capped sectors at a later time.
• Reporting should begin prior to the cap-and-trade induction.
• GHG emissions reporting should be made either to the Partner jurisdictions, or directly through the TCR program framework.

Scope Subcommittee

The Scope subcommittee is responsible for determining what sectors fall under the cap, what emission sources fall under the cap, what GHGs are included under the cap, and the point of regulation where the cap would be enforced.
The following recommendations were proposed by the Scope subcommittee:

• The following sectors should be included in the WCI program: electricity, large stationary combustion sources, industrial process and waste management, and fossil fuel production and processing.
• Transportation fuels should be included, but the WCI needs to do further economic modeling before making a recommendation.
• A carbon tax may be implemented to account for residential and commercial fuel combustion.
• Emission thresholds would be used to determine which facilities are required to participate in the cap-and-trade program.

Electricity Subcommittee

The Electricity subcommittee is responsible for determining how the electricity sector will be regulated. The Electricity subcommittee recommends the following:

• The electricity sector would be regulated where the electricity is generated. Any generator outside of the WCI jurisdiction, that sells electricity within the jurisdiction, may have additional regulatory requirements.
• Consider additional recommendations that reduce leakage of electricity.

Allocations Subcommittee

The Allocations subcommittee recommends the following goals:

• The regional cap will be equal to the sum of the Partner allowance budgets. Each Partner will receive an allowance budget (within the cap) which will be distributed to specific sectors within each partner jurisdiction. Comments are requested on how the allowance budget will be determined for each jurisdiction.
• Each jurisdiction will have the flexibility to issue allowances to each sector.
• Each Partner should auction a specific percentage (to be determined at a later time) of the allowance budget through a regional auction process.
• Each Partner should be able to give credit for early emission reductions; this credit should come from within the cap.
• Banking allowances should be allowed for covered entities, but borrowing should not be allowed.
• The regional cap can be expanded should new Partners decide to join the WCI. The overall regional cap will be adjusted accordingly.

Offsets Subcommittee

The main goal of the offset program is to lower the compliance costs for the cap-and-trade system by offering lower-cost emission reduction options than are available to the sources in the cap-and-trade system.

The Offset subcommittee recommends the following options for the offset program:

• Development of specific project types/protocols should be made prior to the start of the cap-and-trade program. Priority should be given to offset projects within the WCI jurisdiction, Canada, and Mexico.
• The WCI should use offsets and allowances from other GHG emission trading systems that follow similar criteria for verification.
• Outside offsets and allowances should be limited.

California Global Climate Change Regulation Takes Shape

In an effort to address the issue of global climate change associated with the build-up of greenhouse gas (GHG) emissions in the atmosphere, the California State Legislature adopted Assembly Bill (AB) 32, also called the California Global Warming Solutions Act of 2006. The objective of AB 32 is to reduce GHG emissions in California. GHGs are defined by AB 32 as carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), sulfur hexafluoride (SF₆), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs). AB 32 requires that the California Air Resources Board (CARB) and other local agencies charged with regulating statewide air quality adopt AB 32 rules and regulations, which aim to reduce California GHG emissions to 1990 statewide levels (the historical baseline) by 2020. To meet this goal, AB 32 requires CARB to take the following actions (current status on each item is indicated in italics):

• Publish the list of discrete early action measures that can be adopted and implemented before January 1, 2010. Finalized early action staff report (issued in October 2007) that contains recommendations related to discrete early action measures. Three new regulations are proposed to meet the definition of "discrete early action greenhouse gas reduction measures,” which include the following: a low carbon fuel standard; reduction of HFC-134a emissions from non-professional servicing of motor vehicle air conditioning systems; and improved landfill methane capture. CARB estimates that by 2020, the reductions from those three measures would be approximately 13-26 million tonnes of carbon dioxide equivalent. Currently, CARB staff is working to address multiple sectors of GHG-emitting activities in an effort to identify the comprehensive list of other discrete early action measures.
• Establish a statewide GHG emissions cap for 2020, based on 1990 emissions, by January 1, 2008. The CARB Board approved a 2020 emissions limit of 427 million tonnes of CO₂ equivalent in December 2007. The 2020 emissions limit is equivalent to the 1990 emissions level.
• Adopt mandatory reporting rules for significant sources of GHG emissions by January 1, 2008. On December 6, 2007, CARB approved a regulation for the mandatory reporting of GHG emissions from major sources. CARB staff was directed by the Board to make specified modifications to the proposed regulation which was most recently updated May 15, 2008.

Who is required to report GHG emissions?

• Cement plants in California
• Petroleum refineries in California that emit > 25,000 tonnes of CO₂ in any calendar year after 2007 from stationary combustion and process sources combined
• Hydrogen plants in California that emit > 25,000 tonnes of CO₂ in any calendar year after 2007 from stationary combustion sources and hydrogen production processes
• Electric generating facilities that are located in California or operated by a retail provider and that individually have a nameplate generating capacity > 1 megawatt (MW) that emit > 2,500 tonnes of CO₂ in any calendar year after 2007 from electricity generating activities, including hybrid generating facilities and electric generation facilities under the operational control of other operators subject to the requirements of the reporting rule
• Electricity retail providers ²
• Electricity marketers³
• Cogeneration facilities that are located in California or operated by a retail providers and that individually have a nameplate generating capacity > 1 MW that emit > 2,500 tonnes of CO₂ in any calendar year after 2007 from electricity generating activities including such cogeneration facilities that are within the operational control of other operators subject to the requirements of the reporting rule
• Other facilities in California that emit > 25,000 tonnes of CO₂ from stationary combustion sources in any calendar year after 2007

What should the emissions data report include?⁴

• Direct emissions; electricity transactions information; emissions occurring during routine maintenance, startups, shutdowns, upsets, and downtime
• Indirect energy consumed for electricity, heat, steam, and cooling when required by additional reporting requirements
• Efficiency metrics when required by additional reporting requirements

General reporting requirements

• Stationary sources
  • Shall report CO₂, N₂O, CH₄, SF₆, HFC, and PFC emissions from stationary combustion, process, and fugitive sources
  • Each GHG shall be calculated and reported separately for each fuel type used and for each process unit, as applicable. Monitor and report fuel consumption for the facility and for each process unit or group of units where fuel is metered separately.
  • Shall report CO₂ from combustion of biomass-derived fuels
• Mobile sources
  May report CO₂, N₂O, and CH₄ emissions from mobile combustion
• Indirect sources
  Shall report consumption of purchased or acquired electricity, heat, cooling or steam when required
• De minimis sources
  May elect to designate 1 or more sources that collectively generate no more than 3% of the facility’s total CO₂e emissions, but in no case more than 20,000 tonnes CO₂e. Alternative estimation methods can be used.
• Fuel analytical data capture
  Shall make every effort to obtain fuel analytical data capture of 100% for each report year when required to estimate emissions

Additional proposed reporting requirements for specific types of facilities

• Cement plants
  Total emissions, process emissions, stationary combustion emissions, fugitive emissions, indirect energy use, efficiency metrics
• Electric generating facilities, retail providers, and marketers
  • Electric generating facilities – fuel consumption by fuel type, average high heat value by fuel type, average carbon content by fuel type, stationary combustion emissions, process CO₂ emissions from acid gas scrubbers or reagent, fugitive CH₄ emissions from coal storage, fugitive emissions of HFC related to operating cooling units, fugitive emissions from geothermal facilities, fugitive emissions of SF₆ from equipment at the facility, and for facilities in California, wholesale sales (MWh) exported directly out-of-state
  • Retail providers and marketers – detailed reports of electricity transactions including region of origin and region of destination for electricity, fugitive emissions of SF₆ related to transmission & distribution systems, greenhouse gas emissions for power imported and exported
• Cogeneration facilities
  Electricity sold wholesale, electricity sold or provided directly to end-users, thermal energy sold or provided to end-user, distributed emissions to thermal energy production, distributed emissions to electricity generation, distributed emissions to manufactured product outputs, indirect electricity usage
• Petroleum refineries
  CO₂ emissions by fuel type from stationary combustion, CH₄ and N₂O emissions from stationary combustion, fuel and feedstock consumption, hydrogen production plant emissions, process emissions, fugitive emissions, flaring emissions, indirect energy purchases
• Hydrogen plants
  Fuel and feedstock consumption, hydrogen production, CH₄ and N₂O emissions from stationary combustion, fugitive emissions, flaring emissions, quantity of CO₂ and CO sold as transferred carbon dioxide and carbon monoxide, process vent emissions, sulfur recovery process emissions, indirect energy purchases
• General stationary combustion
  Combustion emissions (CO₂ , CH₄ and N₂O), fuel consumption by fuel type, average carbon content by fuel type, average annual high heat value, indirect energy use

CARB staff anticipates that the revised version of the mandatory reporting regulation, with Board directed changes, will be available soon. Visit the CARB Web site at www.arb.ca.gov to check the status of the revised regulation. For more information on California’s AB 32 and other climate change regulations affecting different regions of the U.S., contact Robin Langdon rlangdon@trinityconsultants.com.

¹The revised version of the mandatory reporting regulation, with Board directed changes, was released on May 15, 2008. ²An entity that provides electricity to retail end-users in California and is an electric corporation, electric service provider, public owned electric utility, community choice aggregator, or the Western Area Power Administration. Appropriate definitions are located in the Public Utilities Code, Sections 218 and 331 and the Public Resources Code, Section 9604. ³A purchasing/selling entity (that is not a retail provider) at the first point of delivery in California for electric power imported to California or the last point of receipt for power exported from California.
⁴The information listed is a portion of what the emissions data report shall include.

The Climate Registry – Final General Reporting Protocol and Current Activities

The Climate Registry (TCR), a voluntary registry for reporting organizational greenhouse gas (GHG) emissions and reductions, issued its final General Reporting Protocol (GRP) in May 2008 (see Managing Environmental Performance, Dec. 2007 for a discussion of the draft protocol). This protocol was drawn from several internationally-accepted GHG reporting protocols such as:

• World Resources Institute and World Business Council for Sustainable Development (WRI/WBCSD) GHG Protocol
• California Climate Action Registry (CCAR) General Reporting Protocol
• US EPA Climate Leaders Greenhouse Gas Inventory Guidance

Following the finalization of the general reporting guidelines, TCR plans to develop industry-specific protocols. TCR recently issued a Request For Proposal (RFP) for assistance with developing its first industry-specific protocol for the electric power generation, transmission, and distribution sector.

It is important to note that TCR changed its de minimis level to emissions that are less than or equal to five (5) percent of the entity’s total emissions (the draft protocol had a de minimis level of three percent). The higher de minimis level is consistent with the sister protocol for the California Climate Action Registry (CCAR). TCR also allows the use of alternative, simplified methods to estimate these de minimis emissions. (The remaining 95% of a facility’s emissions must be reported using the methodologies contained in Part III and Appendix E of the GRP). Once estimated, emissions that qualify as de minimis must be included in the annual emissions report. All emission calculations must be reported to CRIS by June 30 of every reporting year covering previous calendar year emissions, followed by verification by December 15.

Verification is the process where by the emissions inventory is checked for accuracy and completeness and must be performed annually by an approved independent third-party to ensure accuracy, quality, and integrity of the data. TCR will employ a five-year verification cycle where the data reported in the first year in the cycle will undergo full verification, whereas in subsequent years in the cycle, a streamlined verification may be allowed. The General Verification Protocol (GVP) was also issued in May 2008 to provide the approved verification parties with precise guidance to conduct a standardized verification audit. While this document was written primarily for verifiers, reporters may very well find the document helpful in their development of accurate emission inventories.

TCR has made a strong entrance into the voluntary reporting market with participation of 248 Founding Reporters, organizations that demonstrated leadership by joining TCR before May 1, 2008. As of June 10, 2008, there are a total of 255 Registry Reporters (corporate, non-profit, and governmental entities).

TCR’s mission is to provide support to existing voluntary as well as mandatory reporting efforts. Some member states and provinces are establishing or have already adopted and are implementing mandatory reporting requirements. TCR strives to create consistency among the various state and regional initiatives through its Mandatory Reporting Committee. This committee was created to investigate options for how TCR will provide ongoing support for these current initiatives as well as future federal requirements. The committee planned a meeting in June 2008 to discuss the path forward for providing this support to mandatory reporting programs. Trinity will continue to track development of the registry and related regulatory drivers, and to use this knowledge and previous experience to assist industry with deriving effective GHG strategies. For more information, contact Katherine Blue at kblue@trinityconsultants.com .

Offsetting Carbon Emissions with Farm-Friendly Technology

To minimize the environmental impact of a recent internal training event, Trinity Consultants purchased carbon offsets to “offset” the carbon emissions from the associated air travel.

To start the process, staff reviewed several carbon calculators. Staff selected the carbon calculator on nativeenergy.com and secured the carbon offsets by working with Native Energy, an organization dedicated to supporting new clean and renewable sources of energy that reduce global warming pollution and create sustainable economies. Native Energy’s carbon calculator assumes that shorter haul flights are more fuel and carbon intensive, and the calculator applies an RFI (radiative forcing index) of 2 to the direct CO₂ emissions from air travel. Native Energy also undertakes significant effort to learn about the projects where the carbon reductions are generated. The carbon offsets for the training event came from an anaerobic digester at a dairy farm in Pennsylvania. The digester began operating in February 2007 and provides surplus clean, renewable energy that is sold back to the local grid. The methane digester avoids emissions of carbon dioxide and methane in three ways:

• It replaces local grid-based electricity with renewable energy
• It eliminates the burning of fuel (propane and oil) used to heat and power the farm
• It avoids methane emissions from manure that otherwise would be stored in a lagoon by “digesting” the slurry to generate electricity

• Financial additionality – the revenues from the offset purchases contribute a critical portion of the overall project funding.
• Technical additionality – the technology is not considered business as usual on U.S. dairy farms.

EPA’s SmartWay Transport Partnership Drives Down Emissions from the Transportation Industry

Over the past decade, the U.S. Environmental Protection Agency (EPA) has launched several programs intended to assist industry with environmental sustainability initiatives. One such example is EPA’s SmartWay Transport Partnership. The Partnership is a voluntary program designed to increase energy efficiency within the transportation industry and subsequently reduce emissions of carbon dioxide, nitrogen oxides, particulate matter, and greenhouse gases (GHGs). The program is based on the establishment of partnerships between companies that ship products and the truck and rail companies that deliver them. EPA expects this initiative to result in fuel savings of up to 150 million barrels of oil annually nationwide. With today’s skyrocketing fuel prices, the fuel savings component of this program provides a strong incentive for companies to get involved. Additionally, the program provides a mechanism for fleet owners/operators to measure and document their environmental performance which could be beneficial should pending climate change legislation extend to commercial transportation fleets. Additionally, GHG reductions are becoming valuable assets for companies to quantify and register with a growing number of climate registries.

Partnership Commitments

There are two basic types of SmartWay Partners: freight carriers and shippers. In order to join the partnership, a freight carrier must first evaluate its baseline environmental performance. EPA has developed a software tool for this analysis, the Fleet Logistics Energy and Environmental Tracking (FLEET) performance model. Inputs to the FLEET model include the total number of trucks in the fleet, annual fuel consumption, and annual mileage accumulated. The model calculates several parameters in terms of carbon dioxide, nitrogen oxide, and particulate matter emissions to evaluate a company’s environmental performance. Results include total tons of emissions, tons of emissions per truck, grams of emissions per mile, grams of emissions per ton-mile, and other custom metrics defined by the company. This data is submitted to EPA for evaluation. Upon review, EPA may accept the freight carrier for Partner status in the program.

Upon its acceptance to the program, a freight carrier company commits to improving its baseline performance within three years through the implementation of various emission reduction strategies. Documentation includes the signed SmartWay Transport Partnership agreement, an Action Plan submitted to EPA outlining how the company plans to achieve environmental improvement, and the annual reporting of the company’s progress. In addition to calculating the freight carrier company’s baseline performance, the FLEET model assists in developing the required Action Plan. The model includes screens that prompt the user to provide data on projected fleet growth and proposed emissions reduction strategies. Based on this input, the model estimates fuel efficiency and emissions reductions over the next three years, thereby assisting the freight carrier company in deciding which policies, strategies and technologies to implement in order to meet their goals.

Emissions Reductions Recommendations

EPA advocates numerous technologies for freight carriers to meet their SmartWay emission reduction goals. These technologies focus on the reduction of truck idling and fuel consumption to reduce emissions. For instance, Auxiliary Power Units (APU) that mount externally on the truck cab are small combustion engine/generator units that provide electricity to power truck cab auxiliary units (heating, AC, etc.) while the main engine is shut off. Also, single wide-based tires reduce the weight of a truck thereby improving fuel economy from 2-5% over standard dual tires according to EPA’s SmartWay Transport Partnership Web site (www.epa.gov/smartway). Automatic tire inflation (ATI) systems monitor and continually adjust the level of pressurized air in truck tires to improve fuel economy and extend tire life. Aerodynamic truck design reduces drag thereby reducing fuel consumption. According to EPA, a streamlined truck profile can improve fuel economy by as much as 15% over traditional designs. Further, streamlining trailers and minimizing the gap between tractors and trailers improve aerodynamics with corresponding improvements in fuel economy. Finally, emissions may be reduced by installing add-on emissions control devices such as catalytic converters or particulate filters.

Other ways to improve fuel economy include:

• Maintaining speed limits
• Enhancing load planning and fleet logistics
• Upgrading the fleet to current fuel-efficient engine models
• Using alternative-fueled vehicles
• Providing training to drivers on fuel-efficient driving techniques
• Improving preventative maintenance programs