Many organizations are required to report greenhouse gas (GHG) emissions to the U.S. EPA mandated by the Mandatory Reporting Rule (MRR). Effective December 29, 2009, large sources and suppliers in the United States will begin collecting data on January 1, 2010 and report GHG emissions to EPA by March 31, 2011. Similar to the EPA MRR, many states also have mandatory reporting requirements. The map below summarizes the current status of different state level GHG reporting requirements (reference: PEW Center on Global Climate Change, July 25th, 2009). The purpose of this article is to summarize verification requirements in the U.S. for different GHG reporting programs.
Mandatory reporting is intended to provide information that will assist agencies in development and implementation of strategies to gain a better understanding of where and in what quantities GHGs are emitted. This information will guide development of the best possible policies and programs to reduce emissions. Accurate quantification of GHG emissions becomes critical when the asset has a price, as carbon may have under future regulatory schemes such as cap and trade – whether that be a regional or federal program. In order to ensure accuracy, third party verification is required for some voluntary registries and mandatory reporting programs.
The U.S. EPA’s MRR does not require mandatory verification of reported GHG emissions. Instead, reporters will self-certify and submit emissions and activity data necessary for verification to EPA. Consistent with many other EPA reporting programs such as the Toxic Release Inventory (TRI), EPA will then perform verification on selected submitted reports. Consistent with Clean Air Act Section 114 and other existing requirements, EPA can initiate enforcement actions and inspections for non-compliance items for reporting, recordkeeping, and monitoring provisions. Therefore, the burden of compliance lies upon the reporter itself. Due to the importance of GHG emissions, EPA is expected to enforce strict compliance with the mandatory reporting and monitoring requirements. Elevated levels of enforcement actions can be expected from EPA.
Comparing Self-Certification with Third-Party Verification
Third-party verification programs generally allow three to six months for the verification process to be completed. The primary cost of third party verification is associated with contracting the services of third party verifiers. However, with third party verification, a high level of confidence and consistency is gained for the reported GHG emissions and value added enhancements to the inventory are often identified, such as use of correct emission calculations methodology and associated GHG emissions. Furthermore, the organization receives a confirmation that the data is accurate, potentially lessening compliance risk.
Enhancing Value with Third-Party Verification
Third party verification is not only useful when it is required. It can be a valuable addition to any GHG management program by providing the organization confidence that the inventory is free of material misstatements. Informal third party verification could certainly be used voluntarily by companies who want a “gut-check” that their EPA MRR reports are accurate. Similarly, it could be used for public reporting of emissions to instill internal and stakeholder confidence in the reported data. Informal voluntary third-party verification of reported GHG emissions calculations, entity boundaries, data checks, sampling plans, monitoring plans, reporting, recordkeeping, and inventory programs is highly recommended to minimize any uncertainty in the GHG emissions data reported to EPA and local or state agencies.
Environmental managers who have not utilized third party verification may wonder how the process would unfold. The verification process usually takes one or two weeks of intense review of emissions, methodology, and data checks. The third party verifiers review the inventory and certify whether it is accurate and free of material misstatement. For AB 32, a discrepancy is defined as “material” (significant) if overall reported emissions differ from emissions estimated by the verifier by 5% or more. To perform the verifications, the verifier reviews the company’s data collection and data management systems, the methodologies and factors used to estimate emissions, and the information being reported. While verifiers do not review all activity data or emissions measurement data records and calculations, they do review a sample and they typically conduct site visits to a subset of the company’s facilities. During site visits, the verifiers observe the facility’s operations and monitoring equipment, review documentation, and meet with staff.
General verification steps required by most programs such as The Climate Registry, the EU ETS, and CARB are summarized below.
One Example of State-Based GHG Reporting
In December 2007, the California Air Resources Board (ARB) promulgated AB 32 regulations requiring organizations to measure, calculate, report, and verify their greenhouse gas (GHG) emissions if they are in selected industry sectors (cement, electricity, refineries, cogeneration, and hydrogen plants) or are a general stationary combustion (GSC) source generating ≥ 25,000 metric tons of CO2 per year. Starting 2009, operators of facilities subject to AB 32 mandatory reporting were required to submit their 2008 GHG inventory by April 1 or June 1 (June 1 for all facilities in 2009) and continue submitting the annual emissions data until the facility’s emissions drop below the prescribed thresholds for three consecutive years.
Third party GHG verification is required under the AB 32 regulations to ensure the reported emissions are accurate and independently verifiable. Under AB 32, each reporting entity selects a third-party private verification firm that reviews the GHG emission inventory and underlying documentation to verify whether reported GHG emissions are accurate within a certain de minimis materiality threshold (e.g., five percent). Third-party verification is required annually or triennially under AB 32. Verification opinions are due to ARB six months after the submission of the GHG emission reports (October 1 or December 1each year, December 1 for all facilities in 2009).
- Resolve and monitor Conflict of Interest (COI)
- Assess conformance and completeness of reported data
- Perform a risk assessment and identify areas with greatest potential for material misstatements
- Review the methodologies used to calculate emissions
- Review systems in place for data collection, data handling, and monitoring
- Develop a verification plan
- Develop a sampling plan
- Perform site visits, interviews, and collect data
- Review records (calibrations, fuel data, electricity transactions, etc.)
- Verify emissions and data checks
- Review, identify, and list all compliance and conformance gaps
- Develop detailed verification report listing any compliance/conformance gaps
- Perform an independent technical review
- Provide an official verification opinion statement
Accessing Third Party Verification Assistance
As a recognized leader in industrial air quality issues, Trinity’s GHG Verification Services team is uniquely qualified to support our clients for mandatory or voluntary verification by identifying and verifying entity boundaries, emissions sources, emissions factors, electricity transactions, data reviews, measurements, and calculations to minimize any uncertainty in the GHG emissions data reported to agencies. Trinity’s AB 32 GHG Verification Unit is a CARB AB 32 and The Climate Registry (TCR)-accredited verification body with several accredited lead and sector specific verifiers. Our GHG Verification Services are conducted exclusively by accredited Trinity verifiers who have significant operational, emission calculations, and verification experience. We also perform many informal verification projects to help organizations in ensuring compliance with EPA’s mandatory reporting requirements. As an example, recently our verification team assisted a large paper mill with informal verification and ensured that the facility is ready to demonstrate compliance with EPA’s new reporting and monitoring requirements. For assistance, contact Vineet Masuraha at (949) 296-4100 or at email@example.com, or call your local Trinity office at (800) 229-6655.