An Update on International GHG Regulatory Programs

GHG regulatory programsWith increased concern for global climate change, more countries are enacting laws and regulations that address greenhouse gas (GHG) emissions reporting and reduction. These increasingly broad and complex requirements make it more challenging for global corporations to achieve compliance.

In the US, current federal programs include the Mandatory Reporting Rule for GHG Emissions and the PSD/Title V Tailoring Rule. US EPA is also making headway on the development of regulations to reduce GHG emissions, specifically new source performance standards for CO2 emissions from certain new fossil fuel-fired electric generating units. And since 2010, federal agencies have been obligated to report and reduce GHG emissions to meet the requirements of Executive Order 13514.

Additionally, some 20 US states have in place GHG accounting and reporting (A&R) requirements and/or GHG emission reduction targets. In California, AB-32 requirements encompass GHG A&R, as well as a GHG cap-and-trade program.

GHG regulatory programs continue to proliferate internationally as well. In Canada, there is a two-tier system for GHG A&R, with reporting required at the federal and provincial levels. Provinces such as Alberta, British Columbia, Ontario and Quebec require GHG emissions A&R, and the regulations include provisions for inventory verification.

Most recently, cap-and-trade regimes are in development in Canada.  Quebec developed a system for GHG emission allowances for companies in the industrial and electricity sectors that emit 25,000 metric tons or more of CO2e annually, as well as fossil fuel distributors. Quebec has linked its system with that of California (AB-32). Ontario has announced that it will adopt a cap-and-trade system to reduce GHG emissions, as well, to be linked with the systems already in place in Quebec and California.

While most countries in South America do not have GHG regulations, Mexico and Brazil are noteworthy. Mexico passed a GHG registry and reporting regulation that came into effect in May 2015. The regulation applies to a broad range of industries, including 150 subsectors, and requires reporting of direct and indirect GHG emissions from both point and mobile sources. Entities with emissions greater than 25,000 metric tons CO2e must include their GHG emissions as part of their Annual Operating License reporting obligations. The regulation contains provisions for registration of GHG mitigation and emission reduction projects, and requires reporting entities to submit a Verification Statement every three years. In 2008, Brazil established a voluntary GHG Protocol Program to promote GHG A&R and management. The World Business Council for Sustainable Development and World Resources Institute are partners, among others. The original group of founding member companies has grown to 70 since program inception, as has the coverage of Brazil’s national GHG inventory.

In the European Union (EU), the Emissions Trading Scheme (ETS) is now in its third phase for the period 2013 – 2020. It incorporates GHG A&R requirements and verification, including industry-specific requirements for GHGs beyond CO2, an EU-wide cap on GHG emissions, a carbon trading scheme, and country-specific permitting and control technology requirements.

Australia’s GHG A&R requirements have been in place since 2007 through its National Greenhouse and Energy Reporting Act. Registered corporations are required to report annual direct and indirect (Scope 2) GHG emissions in excess of 50,000 metric tons CO2e, as well as energy consumption and production above a threshold of 200 Terajoules. New Zealand has taken a different approach by establishing an emissions trading system to drive GHG A&R and reductions to meet their international Kyoto obligations. While the system applies to energy, transport, and emission-intensive industrial processes, it is the only system in the world that includes emissions liabilities for land-use sectors. Participation is compulsory for individual installations that exceed sector-specific emissions thresholds.

Japan’s Mandatory Greenhouse Gas Accounting and Reporting System has been in place since 2006.  This A&R system requires that specified entities report their direct and indirect (Scope 2) GHG emissions to the Government. Industrial companies, commercial businesses, universities, freight carriers, etc. that consume more than 1,500,000 litres of crude oil equivalent of energy per year or emit more than 3,000 metric tons CO2e per year must report their GHG emission levels annually.

Finally, while China is by far the largest GHG emitting country, it currently does not currently regulate GHGs. However a five-year strategy plan called the Twelfth Guideline addresses sustainability, GHG emissions control, energy conservation and management, and more. Additionally, China is developing a cap-and-trade regime, which is targeted for implementation by 2016. Presently six regional carbon markets are in operation, in Guangdong and Hubei provinces and in the cities of Shenzhen, Beijing, Shanghai and Tianjin.

This partial look at international GHG developments illustrates that more countries are taking action to regulate GHG emissions, thus raising the bar for companies to achieve compliance, especially those operating in multiple countries.