[Federal Register Volume 70, Number 56 (Thursday, March 24, 2005)]
[Rules and Regulations]
[Pages 15169-15192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5607]
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DEPARTMENT OF ENERGY
10 CFR Part 300
RIN 1901-AB11
Guidelines for Voluntary Greenhouse Gas Reporting
AGENCY: Office of Policy and International Affairs, U.S. Department of
Energy.
ACTION: Interim final rule and opportunity for public comment; revised
general guidelines.
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SUMMARY: Section 1605(b) of the Energy Policy Act of 1992 directed the
Department of Energy (Department or DOE) to issue guidelines
establishing a voluntary greenhouse gas reporting program. On February
14, 2002, the President directed DOE, together with other involved
Federal agencies, to recommend reforms to enhance the Voluntary
Reporting of Greenhouse Gases Program established by DOE in 1994. DOE
is today issuing interim final General Guidelines that incorporate the
key elements of revised General Guidelines proposed by DOE on December
5, 2003. DOE also is publishing in the ``Rules and Regulations''
section of today's issue of the Federal Register a notice of
availability inviting public comment on draft Technical Guidelines that
will, combined with these General Guidelines, fully implement the
revised Voluntary Reporting of Greenhouse Gases Program.
DATES: The interim final rule will be effective September 20, 2005. The
incorporation by reference of the Draft Technical Guidelines is
approved by the Director of the Federal Register as of September 20,
2005. Written comments should be submitted on or before May 23, 2005.
ADDRESSES: You may submit comment, identified by RIN Number 1901-AB11,
by any of the following methods:
E-mail: [email protected].
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments.
Mail: Mark Friedrichs, PI-40; Office of Policy and
International Affairs; U.S. Department of Energy; 1000 Independence
Ave., SW., Washington, DC 20585.
Interested persons also may present oral views and data at public
workshops DOE will hold for discussing both these interim final General
Guidelines and the draft Technical Guidelines that DOE is making
available today. The locations, times, and other details of the public
workshops are set forth in the Notice of Availability for the draft
Technical Guidelines published in the ``Rules and Regulations'' section
of today's issue of the Federal Register.
You may obtain electronic copies of this notice, the draft
Technical Guidelines and other related documents, find additional
information about the planned workshops, and review comments received
by DOE and the workshop transcripts at the following Web site: http://www.pi.energy.gov/enhancingGHGregistry/. Those without internet access
may access this information by visiting the DOE Freedom of Information
Reading Room, Rm. 1E-190, 1000 Independence Avenue, SW., Washington,
DC, 202-586-3142, between the hours of 9 a.m. and 4 p.m., Monday to
Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Mark Friedrichs, PI-40, Office of
Policy and International Affairs, U.S. Department of Energy, 1000
Independence Ave., SW., Washington, DC 20585, or e-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Background
B. Process for Finalizing and Implementing Guidelines
II. Discussion of Revised General Guidelines
A. Overview and Purpose
B. Crosscutting Issues and Revisions
1. Whether to provide for reporting on international emissions
and reductions
2. Whether to provide for registered emissions reductions
3. Whether to modify the proposed basic requirements for
registration
a. Requiring large emitters to report entity-wide emissions and
reductions
b. Limiting registration to post-2002 reductions
4. How to assign responsibility for reporting emissions and
emissions reductions
5. ``Transferable credits''
6. Whether to include the General Guidelines in the Code of
Federal Regulations
C. Section-by-Section Discussion of the General Guidelines
1. General (Sec. 300.1)
2. Definitions (Sec. 300.2)
3. Guidance for defining and naming the reporting entity (Sec.
300.3)
4. Selecting organizational boundaries (Sec. 300.4)
5. Submission of an entity statement (Sec. 300.5)
6. Emissions inventories (Sec. 300.6)
7. Net entity-wide emission reductions (Sec. 300.7)
8. Calculating emission reductions (Sec. 300.8)
9. Reporting and recordkeeping requirements (Sec. 300.9)
10. Certification of reports (Sec. 300.10)
11. Independent verification (Sec. 300.11)
12. Acceptance of reports and registration of entity emission
reductions (Sec. 300.12)
13. Incorporation by reference (Sec. 300.13)
III. Regulatory Review and Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under the Treasury and General Government
Appropriations Act, 2001
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G. Review Under Executive Order 12988
H. Review Under the Unfunded Mandates Reform Act of 1995
I. Review Under the Treasury and General Government
Appropriations Act, 1999
J. Review Under Executive Order 13211
K. Congressional Review
I. Introduction
A. Background
Section 1605(b) of the Energy Policy Act of 1992 (EPACT) directs
the Department of Energy, with the Energy Information Administration
(EIA), to establish a voluntary reporting program and database on
emissions of greenhouse gases, reductions of these gases, and carbon
sequestration activities (42 U.S.C. 13385(b)). Section 1605(b) requires
that DOE's Guidelines provide for the ``accurate'' and ``voluntary''
reporting of information on: (1) Greenhouse gas emission levels for a
baseline period (1987-1990) and thereafter, annually; (2) greenhouse
gas emission reductions and carbon sequestration, regardless of the
specific method used to achieve them; (3) greenhouse gas emission
reductions achieved because of voluntary efforts, plant closings, or
state or federal requirements; and (4) the aggregate calculation of
greenhouse gas emissions by each reporting entity (42 U.S.C.
13385(b)(1)(A)-(D)). Section 1605(b) contemplates a program whereby
voluntary efforts to reduce greenhouse gas emissions can be recorded,
with the specific purpose that this record can be used ``by the
reporting entity to demonstrate achieved reductions of greenhouse
gases'' (42 U.S.C. 13385(b)(4)).
In 1994, after notice and public comment, DOE issued General
Guidelines and sector-specific guidelines that established the
Voluntary Reporting of Greenhouse Gases Program for recording
voluntarily submitted data and information on greenhouse gas emissions
and the results of actions to reduce, avoid or sequester greenhouse gas
emissions. The 1994 General Guidelines and supporting documents may be
accessed at http://www.eia.doe.gov/oiaf/1605/guidelns.html. The
Guidelines were intentionally flexible to encourage the broadest
possible participation. They permit participants to decide which
greenhouse gases to report, and allow for a range of reporting options,
including reporting of total emissions or emissions reductions or
reporting of just a single activity undertaken to reduce part of their
emissions. From its establishment in 1995 through the 2002 reporting
year, 381 entities, including utilities, manufacturers, coal mine
operators, landfill operators and others, have reported their
greenhouse gas emissions and/or their emission reductions to EIA.
On February 14, 2002, the President directed the Secretary of
Energy, in consultation with the Secretary of Commerce, the Secretary
of Agriculture, and the Administrator of the Environmental Protection
Agency, to propose improvements to the current section 1605(b)
Voluntary Reporting of Greenhouse Gases Program. These improvements are
to enhance measurement accuracy, reliability, and verifiability,
working with and taking into account emerging domestic and
international approaches.
On May 6, 2002, DOE published a Notice of Inquiry soliciting public
comments on how best to improve the Voluntary Reporting of Greenhouse
Gases Program (67 FR 30370). Written comments were received from
electric utilities, representatives of energy, manufacturing and
agricultural sectors, Federal and State legislators, State agencies,
waste management companies, and environmental and other non-profit
research and advocacy organizations.
DOE held public workshops in Washington, DC, Chicago, San Francisco
and Houston during November and December of 2002 to receive oral views
and information from interested persons. In addition, the U.S.
Department of Agriculture sponsored two workshops in January 2003 to
solicit input on the accounting rules and guidelines for reporting
greenhouse gas emissions in the forestry and agriculture sectors. These
workshops explored in greater depth many of the issues raised in the
Notice of Inquiry and addressed in the written comments. The public
comments covered a broad range of issues and views diverged widely on
some key issues. Generally, there was substantial support for revising
the current General Guidelines to enhance their utility and to
accomplish the President's climate change goals.
On December 5, 2003, DOE proposed revised General Guidelines (68 FR
68204). A public workshop was held on January 12, 2004, to discuss that
proposal and to receive public comment. Approximately 200 persons
attended the workshop. In addition, over 300 written comments were
received by the close of the public comment period on February 17,
2004.
DOE is today issuing interim final revised General Guidelines and,
in a notice of availability published elsewhere in this issue of the
Federal Register, makes available for public comment the draft
Technical Guidelines necessary to fully implement the revisions to the
Voluntary Program. Together, the General and Technical Guidelines will,
when effective, replace the guidelines for the Voluntary Reporting of
Greenhouse Gases issued by DOE in October 1994.
DOE previously indicated its intent to provide for further public
comment on the General Guidelines, as revised after a round of public
comments on the notice of proposed rulemaking published on December 5,
2003, through a supplemental notice of proposed rulemaking. However,
DOE subsequently decided to provide for further comment through the
device of a notice of interim final rulemaking rather than a
supplemental notice of proposed rulemaking. DOE opted for an interim
final rule because, after considering the public comments, the main
revisions to the initially proposed General Guidelines were relatively
few, involved issues within the scope of the initial proposal, and were
not significant enough to warrant a re-proposal as another notice of
proposed rulemaking. DOE also took account of the unusually varied and
robust opportunities for written and oral comment both before and after
publication of the proposed General Guidelines. These opportunities for
public comment make it less likely that members of the public will have
substantially new or different comments or information to offer in a
further round of public comments on the revised General Guidelines. DOE
recognizes that there is a possibility that public review of the draft
Technical Guidelines may suggest the need for further changes to the
General Guidelines. By publishing the General Guidelines as an interim
final rule with a 180-day effective date, DOE has provided for making
such changes and finalizing the draft Technical Guidelines before the
end of the 180-day period.
The Secretary of Energy has approved issuance of this interim final
rule.
B. Process for Finalizing and Implementing Guidelines
After full consideration of the public comments received, DOE will
finalize the General and Technical Guidelines. DOE has allowed 180 days
after publication of the interim final General Guidelines so that there
is sufficient time to consider and respond to all comments received.
DOE will further delay the effective date of the revised General
Guidelines if the 180-day period proves to be insufficient for
considering public comments and finalizing the General and Technical
Guidelines.
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Before the General and Technical Guidelines become effective, EIA
will, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), solicit public comment on the reporting elements to be
contained in the reporting forms to be used under the revised program
Guidelines. With respect to the existing 1994 General Guidelines, DOE
intends to publish a Federal Register notice of termination that will
take effect and terminate the existing Guidelines immediately prior to
the revised General and Technical Guidelines taking effect.
II. Discussion of Revised General Guidelines
The following section summarizes changes made to the revised
General Guidelines and responds to public comments on the December 5,
2003 proposal.
A. Overview and Purpose
The revised General Guidelines included in this interim final rule
are designed to enhance the measurement accuracy, reliability and
verifiability of information reported under the 1605(b) program and to
contribute to the President's climate change goals. The key elements of
the revised General Guidelines do the following:
Enable larger emitters to register reductions if they
provide entity-wide emissions data and can demonstrate they achieved
entity-wide emission reductions after 2002 that contribute to the
President's goal of reducing the greenhouse gas emissions of the U.S.
economy.
Provide for simplified procedures for small emitters to
report and to register reductions.
Provide for simplified reports from entities that do not
want to register their reductions.
Encourage companies and other reporting entities to report
at the highest level.
Require participants to ensure the accuracy and
completeness of their reports, and encourage independent verification.
Allow participants to report and register reductions
achieved internationally.
These key elements of the revised Guidelines, except for the last,
were included in the December 2003 proposal and, after careful
consideration by the Department of the public comments received, have
been retained in the revised General Guidelines contained in this
notice.
The President specifically requested that DOE ``enhance measurement
accuracy, reliability, and verifiability.'' DOE believes that today's
interim final revised General Guidelines enhance:
Measurement accuracy by creating a ranking system for
methods to calculate emissions, incorporating the best available
inventory methods, and enabling more sources to be covered;
Reliability by creating a more systematic approach to
reporting, stressing inventories and entity-wide reporting; and
Verifiability by creating a more transparent reporting
system for emissions and reductions, requiring recordkeeping and
encouraging independent verification.
The revised General Guidelines establish the basic requirements for
the enhanced reporting and registration program. The draft Technical
Guidelines, which are referred to in this preamble and in the text of
the General Guidelines, when final, will provide the specificity
necessary to fully implement the emissions inventory and emissions
reduction guidelines set forth in section 300.6 and section 300.8 of
the revised General Guidelines. As explained in the notice of
availability published in the ``Rules and Regulations'' section of
today's Federal Register, the draft Technical Guidelines have two major
parts:
Emissions Inventory Guidelines (Chapter 1), which includes
detailed guidance on how to measure or estimate greenhouse gas
emissions; and
Emission Reductions Guidelines (Chapter 2), which includes
guidance on the selection and application of methods used to calculate
emission reductions, including the establishment and modifications of
base periods and base values.
After consideration of the hundreds of public comments received on
the December 2003 proposal, DOE retained the key elements of the
previously proposed General Guidelines, as described above. However,
DOE has made a number of important changes, including the addition of
guidelines to allow reporting and registration of international
emissions and emission reductions, refinements in the procedures
governing the definition of ``reporting entity,'' increased specificity
regarding the requirements for registration, and a modification of the
de minimis provision to permit the exclusion from emissions inventories
of up to 3 percent of total emissions, with no quantitative maximum.
In addition to the changes described above, DOE has made changes to
reflect or incorporate the further guidance included in the draft
Technical Guidelines. A few sections of today's revised General
Guidelines, such as those on entity statements, recordkeeping and
independent verification, have been expanded to provide additional
guidance to reporters. In a few instances, the December 5, 2003
proposed General Guidelines have been modified to reflect changes in
the requirements for emissions inventories and emission reductions that
are set forth in the draft Technical Guidelines.
Once the revised General and Technical Guidelines take effect, the
1605(b) program will serve as the primary public emission and emission
reduction reporting mechanism for participants in EPA's Climate Leaders
program and in DOE's Climate VISION program. The establishment of
consistent reporting rules for all Federal greenhouse gas reporting
programs was supported by many of the comments received by DOE. While
the specific requirements of these other programs for reporting
emissions and emission reductions may be more prescriptive in some
areas than the requirements of the revised 1605(b) guidelines, these
differences should not prevent the use of the 1605(b) program as the
means by which participating entities publicly report on their
emissions and emission reduction achievements under the Climate Leaders
and Climate VISION programs. To support distinct program elements, each
of these programs is likely, however, to have other additional
reporting requirements.
Most of the basic requirements in the December 5, 2003 proposed
General Guidelines have not changed. To register emission reductions,
reporting entities with substantial emissions (average annual emissions
of 10,000 or more tons of carbon dioxide (CO2) equivalent)
must provide an inventory of their total emissions and calculate the
net reductions associated with entity-wide efforts to reduce emissions
or sequester carbon. Entities with average annual emissions of less
than 10,000 tons of CO2 equivalent (small emitters) are
eligible, under certain conditions, to register emission reductions
associated with specific activities without completing an entity-wide
inventory or entity-wide reduction assessment. DOE believes that these
registered emission reductions represent the types of ``real
reductions'' for which the President indicated there should be special
recognition.
The revised General Guidelines enable entities to report (but not
register) emission reductions achieved prior to 2003 as well as report
emission reductions achieved during or after 2003 that do not qualify
for registration. They also permit entities to report (but not
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necessarily register) emission reductions associated with specific
actions or with specific parts of the entity, even if these reports are
not accompanied by entity-wide emissions and reductions reports.
For convenience, the basic elements of the revised General
Guidelines being issued today are graphically represented in Figure 1.
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B. Crosscutting Issues and Revisions
Many of the comments received on the December 5, 2003 proposed
General Guidelines were directed at crosscutting issues that affect a
number of different provisions. A discussion of these issues and DOE's
response to major comments regarding these issues follows.
1. Whether To Provide for Reporting on International Emissions and
Reductions
In the December 5, 2003 proposed General Guidelines, DOE did not
propose provisions for the reporting or registration of emissions and
emission reductions occurring outside the United States, but it
solicited public comment on whether entities should be permitted to
report and/or register non-U.S. emissions and reductions. DOE also
solicited comments on other, more specific issues related to the
inclusion of non-U.S. activities. A large number of commenters
responded to this request, both at the public workshop and in written
comments. The vast majority of comments favored the inclusion of
international emissions and reductions, both for reporting and
registration. Some comments, however, raised concern about the
reliability of reports on non-U.S. emissions and reductions, and the
potential for double-counting reductions that are also recognized or
credited by other countries.
DOE has responded to the comments by allowing entities to both
report and register emissions and emission reductions occurring outside
the United States, subject to certain requirements. To register such
international emission reductions, entities must first report on their
domestic U.S. operations and meet all requirements for registration.
Entities intending to register emission reductions derived from non-
U.S. operations or offsets must meet all of the requirements for
registering reductions from U.S. operations. For example, a large
emitter will have to submit an emissions inventory for all non-U.S.
operations covered by the entity's report. Registered emission
reductions must reflect net reductions, based on an entity-wide
assessment of changes in all emissions, including changes in
sequestration and avoided emissions. A person or organization without
domestic U.S. operations is not allowed to report or register
international emissions and emission reductions, although that person
or organization's non-U.S. emission reductions may be reported as an
offset reduction by an entity participating in the 1605(b) program.
Emissions reductions credited or required under the greenhouse gas
programs of other countries must be specifically identified as such.
Because of the need for this disclosure and other national differences,
all reports on international emissions and emission reductions must be
compiled and reported on a country-specific basis.
An entity that chooses to report on some portion of its non-U.S.
operations must do so in a manner that is consistent with the
definition of the entity, as set forth in its entity statement (see
Sec. 300.5). In this regard, the entity's coverage of non-U.S.
operations must be done in way that is fully consistent with its
management structure. For example, if an entity chooses to report on
multiple elements of its North American operations, including some
elements outside the U.S., then all such operations must be included.
An entity may register emissions reductions in a portion of the
countries in which it has operations only if the decision to include or
exclude countries follows the entity's organizational structure. This
approach is consistent with how the revised General Guidelines treat
all parent or holding company relationships with subsidiaries.
2. Whether To Provide for Registered Emissions Reductions
In the December 5, 2003 proposed General Guidelines, DOE proposed
to allow reporters to ``register'' reductions if they met specific,
more stringent, reporting requirements designed to increase the
credibility of reported emissions and emission reductions. DOE
explained that allowing the option of registration would provide
special recognition to those entities that were willing to meet
additional requirements, while ensuring that all of the program
elements set forth in section 1605(b) of EPACT would remain available
to participants that did not choose to register their reductions.
Public comment on the registration option was mixed. There was some
support for allowing an option to provide more comprehensive data to
DOE, but other comments expressed concern that a system that
differentiated between entities simply reporting and those registering
would automatically devalue all reductions not registered. Many
supported only one type of recognition, either reporting alone or
registration alone, but not two classes of reporting. After considering
the comments, DOE nevertheless has retained the distinction between
reporting and registering in the revised General Guidelines. DOE
continues to believe this is the most effective method for improving
the program, including improving the accuracy of the reports, as
directed by the President, while continuing to cover all of the program
elements required by the statute. The main distinction between
registering and reporting under the revised guidelines concerns the
degree to which individual reports cover all of the entity's emissions
and emission reductions. Under the revised guidelines, large emitters
interested in ``registering'' reductions must submit entity-wide
emission inventories and will be recognized only for net reductions in
their entity-wide emissions. DOE believes that data that reflects
entity-wide emissions and reductions are better indicators of the
entity's overall contribution to greenhouse gas reductions and should,
therefore, be clearly distinguished from reports that are not entity-
wide. DOE believes this characteristic, together with the other
additional requirements specified in the guidelines, are sufficiently
significant to warrant a unique designation. Comments on the issue of
registration were often linked to the issue of transferable credits,
which is addressed below (II.B.4).
3. Whether To Modify the Proposed Basic Requirements for Registration
In addition to the general comments received on the desirability of
allowing reductions to be ``registered,'' a number of more specific
comments addressed two of the key requirements for registration: (1)
The requirement for entity-wide reports by large emitters, and (2) the
limiting of registered emission reductions to only those that were
achieved after 2002.
a. Requiring large emitters to report entity-wide emissions and
reductions. As a prerequisite for registration, DOE proposed to require
large emitters to submit an inventory of their total emissions and to
complete an entity-wide assessment of emission reductions. Many
comments opposed one or both of these requirements. In particular, many
commenters advocated a change to permit the registration of emission
reductions resulting from individual projects (or actions), rather than
reserving registration for those entities that could demonstrate net,
entity-wide emission reductions.
Most of the emission reductions that have been reported under the
existing program are based on identifiable ``projects'' or actions.
Over 3,000 distinct projects have been reported to DOE since the
inception of the program. The actions to reduce emissions vary widely
and include recovery of landfill methane, improved energy efficiency,
recycling, switching from coal or oil to natural gas, and the
generation of electricity from nuclear power or
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renewable energy, and many others. Because most large companies and
institutions regularly take actions that have as one of their effects
the reduction of greenhouse gas emissions, there are always many
candidates for project-based emission reductions. But the net effect of
such project-based reductions on an entity's total emissions is often
questioned, because large entities may be taking actions that reduce
certain emissions, while simultaneously taking other actions that
increase other emissions. Furthermore, it is impossible to evaluate the
significance of a particular entity's actions to reduce emissions
unless the total emissions of that entity are known. For these reasons,
a number of commenters favored retaining the entity-wide focus of the
proposed revisions to the General Guidelines. DOE continues to find
these arguments persuasive, and therefore has retained the provision
requiring large emitters who register to complete an entity-wide
inventory of emissions and to calculate emission reductions on the
basis of an entity-assessment of changes in emissions.
The focus on entity-wide emission reductions does not, however,
preclude entities from including in their entity-wide assessment the
effects of ``projects,'' whether they are captured indirectly in
measures of changes in greenhouse gas emissions intensity or their
total emissions, or directly through the calculation of increased
carbon storage resulting from tree plantings, increased avoided
emissions from nuclear power and renewable energy generation, or
reductions calculated using various action-specific methods, such as
the recovery of landfill methane, that are specified in the draft
Technical Guidelines.
b. Limiting registration to post-2002 reductions.
In the December 5, 2003 proposed General Guidelines, DOE proposed
to permit the registration of only those emission reductions achieved
after 2002. Most public comments opposed restricting registration to
post-2002 reductions. Most argued that the revised guidelines should
provide full recognition to any reduction achieved after the statutory
base year of 1990, as long as the entity complied with the requirements
of the revised guidelines. DOE has retained this restriction, however,
because it believes the arguments against such restriction are contrary
to the intended focus of the revised Guidelines. The restriction is
intended to focus the program on recent and future efforts to reduce
greenhouse gas emissions, rather than on actions taken many years ago.
Limiting registered reductions to those achieved after 2002 will also
provide an indication of reporting entities' contributions to the
President's goal of reducing the greenhouse gas emissions intensity of
the U.S. economy by 18 percent between 2002 and 2012. In addition, this
forward-looking focus helps enhance the transparency and verifiability
of the reported data. Even if the guidelines permitted entities to
register reductions achieved prior to 2003, DOE believes it is unlikely
that most entities would be technically capable of meeting all of the
requirements of the revised guidelines for earlier years, unless they
already had extensive emission measurement and recordkeeping processes
in place. The revised General Guidelines still permit reporting of
historical activity, however, and therefore fully comply with the
statutory requirements of section 1605(b).
4. How To Assign Responsibility for Reporting Emissions and Emission
Reductions
In the December 5, 2003 proposed General Guidelines, DOE proposed
that: emission inventories cover all emissions from stationary or
mobile sources within the organizational boundaries of the entity
(proposed section 300.6(b)); and the entity responsible for emission
reductions, avoided emissions or sequestered carbon would be the legal
owner of the facility, land or vehicle which generated the affected
emission, generated the energy that was sold so as to avoid other
emissions, or was the place where the sequestration action occurred
(proposed section 300.8(e)).
Few comments were received on these proposals and the revised
General Guidelines contain provisions that closely parallel those
included in the December 5 proposal (see sections 300.6(d) and
300.8(k)).
The draft Technical Guidelines further amplify the revised General
Guidelines provisions and, in some cases, identify exceptions to these
general rules. The relevant technical guidance falls into the following
categories: indirect emissions, biogenic (or natural) emissions,
avoided emissions, emissions from manufactured products and transfers
of greenhouse gases to other entities.
Indirect Emissions: The draft Technical Guidelines specify that
both the users and generators of electricity, steam and hot/chilled
water report the emissions associated with these forms of distributed
energy, and that each report a portion of the associated reductions.
The guidelines recognize that the emission inventories associated with
indirect emissions will overlap with those associated with the
generation of electricity and other forms of distributed energy. This
overlap is explicit and will be clearly identified in EIA's database of
entity reports. With respect to emission reductions, the draft
Technical Guidelines specify methods that will attribute reductions
associated with the declines in the emissions intensity of generation
to the owners of the energy generating facilities that resulted in
these declines. Emission reductions associated with reductions in the
use of electricity or other forms energy would be attributed to the end
users.
Biogenic (or natural) Emissions: Emissions associated with the
combustion or decay of biomass is another area where the draft
Technical Guidelines would establish some special rules. Most of the
carbon sequestered in growing trees is eventually reemitted after the
trees have been harvested. These emissions occur at many sites: on the
land where the trees grew, at lumber mills and other wood processing
facilities, at landfills, and some in waste-to-energy plants or in
plants burning methane recovered from landfills. Since entities that
grow trees would report the reductions associated with sequestration
but most of such sequestered carbon eventually would be reemitted if
the trees were harvested, the guidelines would assign most of the
responsibility for such emissions to the tree growers, rather than to
the users or disposers of wood products. The guidelines would require
most users and disposers of wood products to treat any resulting carbon
emissions as biogenic. For example, any entity that directly combusted
wood or wood products would treat the resulting emissions of carbon
dioxide as biogenic. However, there is a further exception to this
rule. The guidelines specify that increased production and distribution
of methane recovered from landfills should be presumed to substitute
for natural gas, based on its heat content. Note that methane emissions
from landfills would be considered anthropogenic, while the carbon
dioxide produced by the flaring of such methane would be considered
biogenic.
Avoided Emissions: ``Changes in avoided emissions'' is one of the
five methods of calculating emission reductions. While avoided
emissions are not included in emission inventories, the draft Technical
Guidelines would enable entities that increase the generation of
electricity or other forms of distributed energy to account for the
effects of this increased generation on the emissions of other
generators. For example, the owner of the wind farm or
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nuclear power plant may qualify to register the avoided emissions
associated with these facilities, while the competing generator (that
reduces its total generation and emissions directly), the utility that
distributes the renewable or nuclear power to users, and the ultimate
user may not register reductions resulting from the actions of the wind
farm or nuclear power plant owner.
Emissions from Manufactured Products: A number of manufactured
products or materials contain anthropogenic greenhouse gases that are
emitted to the atmosphere during their normal life cycle. In general,
the draft Technical Guidelines require the owner, rather than the
manufacturer, of the product or material to report as part of its
emissions inventory these emissions at the time the emissions occur.
Transfers of Greenhouse Gases to Other Entities: Entities that
capture greenhouse gases and sell or otherwise transfer them to another
entity usually would have to report such transactions, but their total
emissions inventory would reflect only those gases actually released by
the reporting entity, not those quantities transferred. Entities that
purchase or otherwise receive greenhouse gases from other entities
would also have to report such transactions, but should also include in
their emissions inventory only those quantities of gases actually
released. The receiving entity should also record the amount of
transferred gas either destroyed or permanently sequestered. To qualify
for a registered emission reduction in such cases, an entity would have
to increase the net quantity of emissions destroyed or permanently
sequestered relative to its base period. The entity responsible for the
destruction or sequestration may report or register such reductions, or
may assign the reporting rights for such reductions to other entities,
such as the entity that initially captured the gas.
5. ``Transferable Credits''
DOE received many public comments on whether the December 5, 2003
proposed General Guidelines would faithfully carry out the President's
February 14, 2002 statement that the Government would give
``transferable credits'' to entities that can show real reductions of
greenhouse gas emissions. Although there appears to be a deeply felt
disagreement on this question, the disagreement seems to be completely
over form, and not substance. There is substantial if not complete
agreement among the commenters on the permissible reach of the
Guidelines, on what the President intended the Guidelines to
accomplish, and on the extent of and limitations on the Guidelines'
ability to provide protection to reporting entities in some future
potential greenhouse gas legal or regulatory regime.
No commenter on the December 5, 2003 proposal argued that DOE has
the legal authority to give emissions reductions that are reported or
registered in the 1605(b) program a regulatory or financial value under
some future climate policy. For example, the Edison Electric Institute
(EEI), which has argued that DOE's Guidelines should do something more
to award ``transferable credits'' (and ``baseline protection'') to
entities reporting or registering reductions in the 1605(b) program,
has also stated that the 1605(b) program can only provide ``a
nonbinding hedge against current and future climate regulatory
policy.'' (EEI, Feb. 17, 2004). EEI incorporated earlier written
comments of the Electric Power Industry Climate Initiative (EPICI) that
also reflected the view that DOE may not issue ``transferable credits''
guaranteed to have value under a future climate policy:
[W]e know of no plans by the President, in calling for these
distinctly different reforms [transferable credits and baseline
protection], to attempt by guidelines to bind a future President or
Congress, and we are not suggesting that he attempt to do so. A
recognition or certification by DOE of reductions reported
accurately pursuant to revised 1605 guidelines could not be said to
have such a binding effect.
EPICI, Sept. 25, 2002, at 16. Similarly, the Competitive Enterprise
Institute (CEI), the Natural Resources Defense Council (NRDC), and
several other commenters who urged that the Guidelines either could not
or should not do anything further with respect to ``transferable
credits'' also conclude that DOE lacks the authority to provide credits
that would have a regulatory or financial value under a future climate
policy. CEI, Jan. 9, 2004; NRDC, Feb. 17, 2004; NESCAUM, Feb. 16, 2004;
Pew Center, Feb. 11, 2004; and State of New Jersey, Feb. 17, 2004.
DOE has carefully considered all of these comments and has decided
that its revised General Guidelines and draft Technical Guidelines
appropriately meet the objectives the President sought to accomplish on
this point. In particular, the Guidelines provide more detail on the
criteria by which reporting entities can be credited with ``registered
reductions''. DOE believes that its substantial revisions to the
1605(b) General Guidelines, accompanied by the detailed Technical
Guidelines, including the provisions regarding registered reductions,
fully carry out the President's objectives for improvements to the
program.
As stated by the Chairman of the Council on Environmental Quality
in his opening remarks at the Washington workshop on the Notice of
Inquiry in this proceeding, the revised 1605(b) Guidelines can ``create
a building block of recognition that * * * will be acknowledged and
recognized with respect to any future climate policy'' (Transcript 3-4,
November 18, 2002). By establishing a more credible database of
emission inventories and net, entity-wide emission reductions, the
reductions that may be registered under the revised General Guidelines
and draft Technical Guidelines appropriately carry out the policy
objectives set forth by the President's statement. It is important to
note that under both current law and the President's policy, the
decisions to make and report emission reductions remain voluntary.
6. Whether To Include the General Guidelines in the Code of Federal
Regulations
Some commenters argued that it is unlawful or inappropriate for DOE
to issue the revised General Guidelines as a proposed rule and, when
final, place them in the Code of Federal Regulations. One commenter
wrote to the Director of the Federal Register, who oversees the
publication of both the Federal Register and the Code of Federal
Regulations, asserting that it is unlawful and inappropriate to codify
the General Guidelines. The Director responded in a letter that has
been added to the other public comments filed in this proceeding (see
Letter, Raymond A. Mosley, Director of the Federal Register, to William
L. Fang, January 23, 2004).
DOE has considered these comments, but continues to believe it is
both lawful and desirable that the revised General Guidelines be
included in the Code of Federal Regulations. The revised General
Guidelines clearly are a ``rule'' within the meaning of that term in
the Administrative Procedure Act (5 U.S.C. 551(4)), and they were
properly classified as a ``rule document'' by the Office of the Federal
Register. The Director of the Federal Register also concluded that it
is proper under the Federal Register Act (44 U.S.C. 1501-1511) for DOE
to include the revised General Guidelines in the Code of Federal
Regulations. The revised General Guidelines will be more accessible to
the public if they are preserved in the Code of Federal Regulations.
Placing the General Guidelines in the Code of Federal
[[Page 15177]]
Regulations also will not affect the rights of reporting entities
because codification of rule documents does not affect their nature as
substantive or procedural or legally-binding or non-binding. Lastly,
codification is handled by the Office of the Federal Register, and it
will not add any time to the notice and comment process required by
section 1605(b).
C. Section by-Section Discussion of the General Guidelines
1. General (Sec. 300.1)
A new paragraph (f) has been added to this section to indicate that
DOE intends to periodically review and update the General Guidelines
and the Technical Guidelines. These periodic reviews would consider
possible additions to the list of covered greenhouse gases, changes to
the minimum, quantity-weighted quality rating for emission inventories,
modifications to the benchmarks specified by DOE, changes to the
minimum requirements for registered emission reductions, and other
possible changes to the General and Technical Guidelines. DOE intends
to coordinate any changes to the Guidelines in order to minimize the
number of times such changes are made and to ensure that such changes
are made only after a thorough, public review by DOE and interested
stakeholders.
2. Definitions (Sec. 300.2)
The Definitions section of the revised General Guidelines defines
the key terms used in the General Guidelines. The draft Technical
Guidelines contain a Glossary that references all of the terms defined
in the General Guidelines and contains additional terms used only in
the draft Technical Guidelines. Although comparatively few changes have
been made to the definitions contained in the proposed General
Guidelines published on December 5, 2003 a few new terms have been
added in response to public comments on the proposal and the completion
of the draft Technical Guidelines. The new terms defined in today's
revised General Guidelines are: ``aggregator,'' ``start year,'' ``base
period,'' and ``base value.'' The definitions of other terms have been
modified to improve their clarity.
Aggregator. Under the existing program, a number of organizations
have aggregated the emission reductions of many small entities and
submitted a single report to EIA. Some comments suggested that a role
for such aggregators be more clearly defined under the revised General
Guidelines. In response to these comments, DOE has defined and used the
term ``aggregator'' in the revised General Guidelines. As defined, an
aggregator might be any trade association, company or organization that
collects or compiles information and reports to EIA on behalf of
businesses, organizations, households or other entities that could
report directly, but have chosen not to do so. Because the aggregator
would be the entity reporting to EIA, EIA would recognize the
aggregator as the entity responsible for any registered emission
reductions. An aggregator may be a small or a large emitter and must
report on its own emissions in accordance with whatever rules are
applicable to its entity type, except that an aggregator that is a
small emitter may choose not to report on any of its own emissions. In
reporting on behalf of third-party businesses, organizations, or
households, the aggregator must follow the reporting rules that would
apply to those entities if they had themselves reported. DOE encourages
trade associations and other organizations to serve as aggregators or
to assist third parties to report directly.
Start year. ``Start year'' is a new term introduced to identify
when an entity begins to report under the revised guidelines and to
establish more clearly the first year for which an entity reports an
emissions inventory. The start year is the last year of the base
period(s) initially established by an entity and the year immediately
preceding the first year for which an entity reports emissions
reductions. For a particular entity, the start year remains fixed, even
if changes in the entity require adjustments in base periods or base
values.
Base period and Base value. In the December 5, 2003 proposed
General Guidelines, the terms ``base year'' and ``base period'' were
used, but definitions for those terms were not included in section
300.2. ``Base year'' was a single year upon which emission reduction
calculations were often based. ``Base period'' was a period of 2-4
years that might also be the basis for emission reduction calculations.
In today's revised General Guidelines, the term ``base year'' has been
dropped and the term ``base period'' has been modified to include time
periods of 1-4 years. Consequently, the term ``base period'' now
encompasses the meanings originally given to both terms. DOE also has
included a definition for the term ``base value,'' which is used to
specify the quantitative value (e.g., emissions, emissions intensity,
megawatt hours (MWhs), carbon stock) used to calculate reductions. This
value is usually derived from emissions and/or performance of an entity
(or subentity) during the base period. The following graphic depicts
the relationships between a start year, base period, first reduction
year and reporting years.
[GRAPHIC] [TIFF OMITTED] TR24MR05.001
[[Page 15178]]
De minimis emissions. The revised General Guidelines include a de
minimis provision that allows reporters to omit emissions from their
inventories that are, in total, less than 3 percent of the entity's
emissions. This provision spares reporters the sometimes
disproportionate cost of accounting for small emission quantities whose
contribution to total emissions is small. The definition has been
changed from the initial proposal as a result of public comment. Public
comments supported a variety of modifications to the earlier proposal
to allow exclusion of 3 percent or 10,000 tons, whichever is less. Some
favored expanding the de minimis level to 5 percent of total emissions,
although some also endorsed the 3 percent de minimis level, with no
physical maximum, and a few opposed any de minimis exclusion. The
revised General Guidelines retain the 3 percent level, but eliminate
the 10,000-ton maximum exclusion. The 3 percent level appears to be the
minimum level considered practical by many potential reporters. Given
the inherent uncertainty of some of the measurement and estimation
methods specified in the guidelines, emissions representing less than 3
percent of an entity's total could be considered immaterial. This
approach ensures that all reporters may exclude the same percentage
share of their total emissions. The revised General Guidelines also
make clear that a large emitter, when starting to report, must provide
an estimate of the emissions that are being excluded, and that de
minimis emissions must be periodically re-estimated, at least every
five years, to ensure that they do not exceed the 3 percent maximum.
The de minimis exemption would not be applicable to small emitters that
choose to report on the emissions of specific activities, rather than
on their total, entity-wide emissions.
Greenhouse gases. This definition has been slightly modified from
the proposal to indicate that entities may report on other gases or
particles that have been demonstrated to have significant, quantifiable
climate forcing effects when released to the atmosphere in significant
quantities only if DOE has established or approved methods for
estimating the emissions and emission reductions associated with such
greenhouse gases. DOE will consider public recommendations on
appropriate methods for estimating the emissions and emission
reductions associated with any gases that have significant,
quantifiable climate forcing effects. Once DOE has concluded that an
anthropogenic emission meets the definition of greenhouse gases
specified in the guidelines and has modified the Technical Guidelines
to establish methods for accurately quantifying such emissions, DOE
will begin accepting reports on such emissions and will initiate the
interagency and public review process necessary to add the new emission
to the list of gases in section 300.5 of the General Guidelines. Only
after DOE has formally added the identified emission to the list of
greenhouse gases specifically identified in the General Guidelines
would entities be permitted to register reductions associated with such
emissions.
3. Guidance for Defining and Naming the Reporting Entity (Sec. 300.3)
Public comments on this section of the revised General Guidelines
varied widely. Some advocated that DOE require entities to report only
at the highest meaningful level of aggregation, while others
recommended that entities be given more flexibility in determining how
best to define themselves. As revised, this section of the General
Guidelines now addresses three distinct issues: (1) The basis for
defining entities; (2) the level of aggregation; and (3) the choice of
an entity name. This section also has been modified from the December
5, 2003 proposal to accommodate entities with non-U.S. operations that
report reductions from those operations.
With respect to the basis for defining entities, public comments
have suggested that DOE consider a variety of different bases, both
more general and more specific than the ``legal basis'' originally
proposed and now included in the definition of ``entity'' in section
300.2. DOE has made no change in this section because it continues to
believe that the basis for defining a reporting entity should be found
in existing Federal, State, or local law. DOE believes it is reasonable
to define entities according to their legal status because that status
provides a definable, identifiable basis for determining reporting
parameters.
A variety of comments were also submitted on DOE's guidance
regarding the appropriate level of aggregation of entities. DOE had
proposed to encourage entities to report at the highest meaningful
level of aggregation, but to provide entities with the flexibility to
choose an appropriate level of aggregation. Some comments supported
requiring that entities report at the highest level of aggregation,
such as parent or holding company, while others wanted the flexibility
to define their entity at the subsidiary or plant level. DOE is
allowing reporting entities to decide on the level of aggregation,
subject to the condition that they report at the next higher level of
aggregation any time they choose to report on two or more subsidiaries
of that level. For example, an entity may be the aggregation of three
subsidiary entities: A, B, and C. If A and B want to report together,
then they must also include C. DOE chose this approach because it
permits entities some flexibility in determining how to define
themselves, while at the same time it discourages entities from
reporting only on those subsidiaries that had achieved significant
reductions in emissions.
Finally, this section now includes guidance on the selection of a
name for reporting entities, which previously appeared in the
requirements for the Entity Statement.
4. Selecting Organizational Boundaries (Sec. 300.4)
Because many entities are involved in joint or shared financial
and/or managerial operations, such as joint ventures, partnerships,
leases, and parent/subsidiary relationships, guidelines are needed for
defining entity boundaries. DOE has considered several options,
including operational control; financial control; and equity share, as
these terms are used in the Greenhouse Gas Protocol developed by the
World Business Council for Sustainable Development/World Resources
Institute (WBCSD/WRI). Public comments voiced support for all the
options, though the comments provided little input on ways to preserve
flexibility in the establishment of boundaries while also preventing or
further discouraging the shifting of emissions to non-reporting parts
of the entity in order to create the appearance of net emission
reductions. Some comments argued in favor of fixed rules for deciding
whether to include leased and partially owned operations, while others
argued that the choice should be left to the discretion of the
reporting entity. Commenters also raised concerns regarding the
differences between the terminology used in DOE's proposed General
Guidelines and the terms used in the WBCSD/WRI Protocol.
A number of changes have been made to respond to these comments.
The term ``operational'' used in the DOE's original proposal has been
changed to ``organizational'' in the revised General Guidelines. The
section now indicates that the primary basis for defining
organizational boundaries should be financial control, although
entities retain the flexibility to use other approaches, such as equity
share or operational control if necessary. DOE believes that financial
control should be
[[Page 15179]]
used where feasible because it is the best indicator of which entity is
most likely to control both the operational and investment decisions
necessary to affect greenhouse gas emissions. The use of a single
method, financial control, also minimizes potential conflicts between
different entities that share ownership of a facility. In such
situations, the use of different methods for determining organization
boundaries might lead to conflicting claims regarding reported emission
reductions.
5. Submission of an Entity Statement (Sec. 300.5)
A range of comments touched on DOE's proposed requirements for the
entity statement, including some that advocated differentiating among
large emitters intent on registering emissions reductions, small
emitters intent on registration, and entities that do not intend to
register emission reductions. In response to these comments and in an
effort to more clearly define the early steps in the reporting process,
DOE has made a number of changes to this section.
Two new sub-sections, ``Choosing a start year'' and ``Determining
the type of reporting entity,'' have been added to more clearly define
the first steps in the reporting process, and the requirements for
entity statements have been differentiated for each of the three major
categories of reporters.
DOE solicited comments concerning whether, and at what cutoff
level, small emitters should be allowed to report emissions and
register emissions reductions without having to meet all of the
requirements for large emitters. Little feedback was received. DOE has
retained the simplified reporting requirements for small emitters in
the revised General Guidelines. EIA will provide a method that entities
can use to quickly and inexpensively estimate their emissions to
determine whether they qualify as small emitters. This method, the
Simplified Emissions Inventory Tool (SEIT), will enable entities to
prepare a rough estimate of their emissions inventory based on readily
available quantities of fuel use, land type, livestock, or type and
size of building(s) owned, although such rough estimates would not meet
the minimum requirements for an emissions inventory. The SEIT is
defined and referenced in the revised General Guidelines and discussed
in Chapter 1 of the draft Technical Guidelines.
6. Emissions Inventories (Sec. 300.6)
A number of comments were received on this section of the proposed
General Guidelines. Some opposed the requirement for entity-wide
inventories as a precondition to the registration of emission
reductions, while many others favored some type of inventory
requirement. Because emission inventories provide a comprehensive
assessment of an entity's total emissions in a given year, DOE is
proposing to retain the requirement that large emitters complete an
emissions inventory if they intend to register emission reductions. The
major changes to section 300.6 involve the emissions estimation method
rating system.
DOE has modified this section of the revised General Guidelines to
reflect the quality rating system incorporated into Greenhouse Gas
Emissions Inventory Guidelines (Chapter 1 of the draft Technical
Guidelines). The emissions rating system is designed to: (1) Help
achieve the President's stated objective of improving the ``accuracy,
reliability, and verifiability'' of reported emissions; (2) ensure that
the bulk of reported emissions that meet this standard are as accurate
as available estimation methods permit; (3) create an incentive for
reporters to use more accurate methods over time; and (4) be cost-
effective and practical to implement.
The rating system is based on DOE rankings of available emissions
and sequestration estimation methods by considering accuracy,
reliability, verifiability, and practical application. Using these
criteria, the best available methods are usually rated ``A,'' and given
a value of 4 points. The next best methods are usually rated ``B'' and
given a value of 3 points; the next best rated ``C'' and given a value
of 2 points; and the least desirable methods rated ``D'' and given a
value of 1 point. The revised General Guidelines require the weighted
average rating of all reported emissions and sequestration to be 3.0 or
higher to qualify for registration. This provision reflects DOE's
belief that methods given an A or B rating are sufficiently accurate to
serve as the basis for entity-wide reporting, while methods given a C
or D rating should be used only for those gases or sources that
represent a small share of the reporting entity's total emissions.
The emissions rating system is an ordinal rating system in the
sense that while an A rating is considered better than a B rating, and
B is better than C, the rating system doesn't specify how much better A
is than B. Similarly, two ``A'' rated methods for different sources may
not be of comparable quality. Both will be the best method available
for a given source, but they may vary in degree of accuracy,
reliability, verifiability or cost.
Paragraph (c) of section 300.6 permits and describes how reporters
may obtain approval for the use of estimation methods not included in
the Technical Guidelines. DOE encourages reporters to improve their
emissions inventory methods over time, and DOE will periodically
consider the desirability of raising the minimum acceptable weighted
average.
7. Net Entity-Wide Emission Reductions (Sec. 300.7)
A number of comments addressed entity-wide reductions, including
the requirement for entity-wide assessments of emission reductions by
large emitters, the simplified requirements proposed for small
emitters, the procedures for third party emission reductions (offsets),
and adjusting for year-to-year increases in net emissions. After full
consideration of these comments, DOE has made changes to its original
proposal.
DOE proposed to allow the reporting of third party emissions
reductions, referred to as offsets, because it would encourage large
emitters to actively support emission reductions by non-reporting
entities, especially small emitters. Comments were received both in
support of and in opposition to DOE's proposal. Some advocated that DOE
permit reporting entities to register the ``project-based'' emission
reductions achieved by third parties, without requiring those third
parties to meet the requirements of reporting directly to the program.
Others felt that offset reductions, especially if based on individual
projects, should meet ``additionality'' tests, to try to ensure that
the reductions would not have occurred anyway, or at least that there
be some assurance that the third party did not have net increasing
emissions.
DOE has retained the provision allowing reporters to register the
emission reductions achieved by third parties, as long as those third
parties meet the requirements of reporting directly to the program. DOE
believes that this provision will provide an incentive for emitters
with limited options for reducing their own emissions to support other
efforts to reduce or sequester greenhouse gas emissions. The revised
General Guidelines state that the third party achieving the offset
reductions cannot also report directly to the program, at least not in
the same year as the offset reductions are reported (see related
discussion on Aggregators in II.B.4 of this preamble).
The provision that requires entities to adjust for year-to-year
increases in net
[[Page 15180]]
emissions has been modified and expanded to improve its clarity.
8. Calculating Emission Reductions (Sec. 300.8)
A number of comments were received on this section. In response to
these comments and its own further analysis, DOE has significantly
expanded this section in order to more clearly define the necessary
steps in the process of calculating emission reductions. It now begins
with guidance on the selection of the appropriate calculation methods
and the establishment of subentities for the purpose of calculating
reductions.
The revised General Guidelines are now clearer about how
subentities are defined and used in the calculation of emissions
reductions. An entity is required to define a subentity, which is a
discrete component of the reporting entity with clearly defined
emissions and reductions, if the entity must use more than one
emissions reduction calculation method. This approach provides the
flexibility needed by many entities whose reductions cannot be
comprehensively estimated with a single calculation method, while at
the same time creating a transparent way to track multiple types of
reductions. Reporting entities have considerable flexibility in
defining such subentities, but they must ensure that they are not
overlapping and that the sum of the emissions of all subentities equals
the total emissions reported by the entity.
Changes have been made to the descriptions of the five calculation
methods identified in the proposal. Because of the important
interactions between the emission intensity and avoided emissions
methods in the energy distribution sector, the revised General
Guidelines provide, in section 300.8(h)(4), that this interaction must
be accounted for by using the special calculation methods described in
Chapter 2 of the draft Technical Guidelines, which provides detailed
guidance on the selection and application of calculation methods. This
technical guidance and some of the issues upon which DOE hopes to focus
public comment are described in the separate Notice of Availability
published in today's Federal Register.
The name for the fifth calculation method has been changed to
Action-Specific Method. DOE hopes that this term will help minimize
some of the confusion that seems to accompany the use of the term
``project''.
9. Reporting and Recordkeeping Requirements (Sec. 300.9)
DOE received comparatively few comments on this section of the
proposed guidelines, but DOE has included additional guidance in the
revised General Guidelines to clarify the intent of these requirements,
especially with respect to the types of records that must be
maintained. Because the purpose of the 3-year record maintenance
requirement is to permit verification of entity reports, DOE applies
this requirement only to entities intent on registering their emission
reductions.
Some comments noted the absence from the proposed General
Guidelines of any provision on protection of confidential business
information that may be included in an entity's section 1605(b) report.
Section 1605(b)(3) of the Energy Policy Act of 1992 provides that any
trade secret or commercial or financial information in 1605(b) reports
shall be protected as provided in 5 U.S.C. 552(b)(4), one of the
exemptions from mandatory disclosure set forth in the Freedom of
Information Act (see 42 U.S.C. 13385(b)(3)). DOE, therefore, has added
section 300.9(e) to the revised General Guidelines to address the
protection of confidential information submitted in entity reports. The
new paragraph references the statute and DOE's procedures for making
determinations about information claimed by submitters to be entitled
to exemption from public disclosure. If an entity requests
confidentiality for information in its report, and DOE determines that
the information falls within 5 U.S.C. 552(b)(4), then EIA will not make
the information publicly available in its database. Because the primary
purpose of the 1605(b) voluntary reporting program is to enable
reporting entities to demonstrate achieved reductions of greenhouse
gases, DOE believes few reporters will request confidentiality. This
has been the experience under the current guidelines.
10. Certification of Reports (Sec. 300.10)
Public comments encouraged DOE to not require CEO certification of
1605(b) reports, but instead to require an entity officer or manager
with signing authority for the entity and responsibility for ensuring
environmental compliance to provide entity certification. One reason
given for this suggested change was the burden it would place on a CEO
and other senior managers. Some also indicated that the CEO may not be
the most knowledgeable officer of the organization with respect to
greenhouse gas emissions and reductions. In response to these comments,
which DOE finds persuasive, DOE has modified the certification
requirement to provide that the certifying official may be the officer
or employee of the company or organization who is responsible for
reporting the entity's compliance with environmental regulations.
A second concern voiced in the public comments was that reporting
entities might not be able to certify that no double-reporting (double-
counting or duplicate reporting) occurred because events may transpire
beyond the reporting entity's knowledge and boundaries. DOE has
retained the proposed requirement that entities take reasonable steps
to assure that no double-reporting has occurred. For example,
communicating with other companies or organizations that share
financial or operational control of the facilities covered by an
entity's report regarding the need to avoid double-reporting would be
considered a reasonable step.
DOE has revised section 300.10 to include more detailed
certification requirements for entities that request to have their
emissions reductions registered. DOE believes the more specific
certification statement requirements will enhance the reliability of
reported reductions.
11. Independent Verification (Sec. 300.11)
Public comments generally supported DOE's proposal of optional,
rather than mandatory, independent verification. In response to these
comments and as a result of DOE's further consideration of this issue,
DOE has substantially revised and expanded the guidance on independent
verification to ensure that the revised General Guidelines contain
sufficient guidance for full implementation of these requirements by
EIA. Because of the terminology used by national standards
organizations, DOE has revised the verification text to clarify that
the independent verifier would ``attest'' to the accuracy and
reliability of reports as established by professional standards. DOE
also recognizes that independent ``verifiers'' cannot ensure a priori
that reporting entities will keep verifiable records for at least three
years. They can only attest to whether the current records, if kept for
three years, would allow for verification. The reporting entity must
certify it will keep verifiable records for at least three years.
12. Acceptance of Reports and Registration of Entity Emission
Reductions (Sec. 300.12)
DOE received few substantive comments on this section of the
proposed General Guidelines, but DOE has made some changes to more
clearly
[[Page 15181]]
specify the procedures EIA should follow in reviewing and accepting or
rejecting reports.
13. Incorporation by Reference (Sec. 300.13)
Although the rules of the Director of the Federal Register require
incorporation by reference of the draft Technical Guidelines in these
interim final General Guidelines, DOE plans to issue final General
Guidelines that incorporate the final Technical Guidelines before the
effective date of the interim final General Guidelines. If necessary,
DOE will amend the effective date of the interim final General
Guidelines in order to provide adequate time to fully consider all
comments and issue final General and Technical Guidelines.
III. Regulatory Review and Procedural Requirements
A. Review Under Executive Order 12866
Today's action has been determined to be ``a significant regulatory
action'' under Executive Order 12866, ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Accordingly, this action was
subject to review under that Executive Order by the Office of
Information and Regulatory Affairs of the Office of Management and
Budget (OMB).
Because of new requirements associated with the revised General
Guidelines and the Technical Guidelines, it is anticipated that the
costs for participants to report and register reductions are likely to
increase. The anticipated benefits of the new requirements include
enhanced data quality associated with reported and registered
reductions. The magnitude of these effects has not been assessed.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking'' (67 FR 53461, August 16, 2002), DOE published
procedures and policies to ensure that the potential impacts of its
draft rules on small entities are properly considered during the
rulemaking process (68 FR 7990, February 19, 2003), and has made them
available on the Office of General Counsel's Web site: http://www.gc.doe.gov.
DOE has reviewed today's revised General Guidelines for the
Voluntary Greenhouse Gas Reporting Program under the provisions of the
Regulatory Flexibility Act and the procedures and policies published on
February 19, 2003. The Guidelines establish procedures and guidance for
the accurate voluntary reporting of information on greenhouse gas
emissions and reductions. The Guidelines are voluntary, and the Agency
anticipates that the small entities will weigh the benefits and costs
when deciding to participate. On the basis of the foregoing, DOE
certifies that these Guidelines will not have a significant economic
impact on a substantial number of small entities. Accordingly, DOE has
not prepared a regulatory flexibility analysis for this rulemaking.
C. Review Under the Paperwork Reduction Act
EIA previously obtained Paperwork Reduction Act clearance by the
Office of Management and Budget (OMB) for forms used in the current
Voluntary Reporting of Greenhouse Gases program (OMB Control No. 1905-
0194). EIA is preparing new forms and associated instructions to
implement the revised guidelines for the program, and it will publish a
separate notice in the Federal Register requesting public comment on
the proposed collection of information in accordance with 44 U.S.C.
3506 (c)(2)(A). After considering the public comments, EIA will submit
the new forms, instructions, and related guidelines to OMB for approval
pursuant to 44 U.S.C. 3507 (a)(1).
D. Review Under the National Environmental Policy Act
DOE has concluded that these revised General Guidelines fall into a
class of actions that will not individually or cumulatively have a
significant impact on the human environment, as determined by DOE's
regulations implementing the National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.). This action deals with the procedures and
guidance for entities that wish to voluntarily report their greenhouse
gas emissions and their reduction and sequestration of such emissions
to EIA. Because the Guidelines relate to agency procedures, the
Guidelines are covered under the Categorical Exclusion in paragraph A6
to subpart D, 10 CFR part 1021. Accordingly, neither an environmental
assessment nor an environmental impact statement is required.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism'' (64 FR 43255, August 4, 1999)
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. The Executive Order also requires agencies
to have an accountable process to ensure meaningful and timely input by
State and local officials in the development of regulatory policies
that have federalism implications. On March 14, 2000, DOE published a
statement of policy describing the intergovernmental consultation
process it will follow in the development of such regulations (65 FR
13735). DOE has examined today's action and has determined that it does
not preempt State law and does not have a substantial direct effect on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. No further action is required by
Executive Order 13132.
F. Review Under the Treasury and General Government Appropriations Act,
2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed
today's notice under the OMB and DOE guidelines and has concluded that
it is consistent with applicable policies in those guidelines.
G. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform'' (61 FR 4729, February 7, 1996), imposes on
Federal agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. Section 3(b) of
[[Page 15182]]
Executive Order 12988 specifically requires that Executive agencies
make every reasonable effort to ensure that the regulation: (1) Clearly
specifies the preemptive effect, if any; (2) clearly specifies any
effect on existing Federal law or regulation; (3) provides a clear
legal standard for affected conduct while promoting simplification and
burden reduction; (4) specifies the retroactive effect, if any; (5)
adequately defines key terms; and (6) addresses other important issues
affecting clarity and general draftsmanship under any guidelines issued
by the Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, these revised General Guidelines meet the relevant
standards of Executive Order 12988.
H. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to assess the effects of a Federal
regulatory action on state, local, and tribal governments, and the
private sector. The Department has determined that today's action does
not impose a Federal mandate on state, local or tribal governments or
on the private sector.
I. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
These revised General Guidelines would not have any impact on the
autonomy or integrity of the family as an institution. Accordingly, DOE
has concluded that it is not necessary to prepare a Family Policymaking
Assessment.
J. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) requires Federal agencies to prepare and submit to
the OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgated or is expected to lead to promulgation of
a final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use. Today's regulatory
action would not have a significant adverse effect on the supply,
distribution, or use of energy and is therefore not a significant
energy action. Accordingly, DOE has not prepared a Statement of Energy
Effects.
K. Congressional Review
As required by 5 U.S.C. 801, DOE will report to Congress the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
List of Subjects in 10 CFR Part 300
Administrative practice and procedure, Energy, Gases, Incorporation
by reference, Reporting and recordkeeping requirements.
Issued in Washington, DC, on March 16, 2005.
Karen A. Harbert,
Assistant Secretary for Policy and International Affairs.
0
For the reasons set forth in the preamble, DOE amends Chapter II of
Title 10 of the Code of Federal Regulations by adding a new Subchapter
B consisting of part 300 to read as follows:
Subchapter B--Climate Change
PART 300--VOLUNTARY GREENHOUSE GAS REPORTING PROGRAM: GENERAL
GUIDELINES
Sec.
300.1 General.
300.2 Definitions.
300.3 Guidance for defining and naming the reporting entity.
300.4 Selecting organizational boundaries for registering.
300.5 Submission of an entity statement.
300.6 Emissions inventories.
300.7 Net emission reductions.
300.8 Calculating emission reductions.
300.9 Reporting and recordkeeping requirements.
300.10 Certification of reports.
300.11 Independent verification.
300.12 Acceptance of reports and registration of entity emission
reductions.
300.13 Incorporation by reference.
Authority: 42 U.S.C. 7101, et seq., and 42 U.S.C. 13385(b).
Sec. 300.1 General.
(a) Purpose. This part and the Technical Guidelines referenced in
paragraph (c) of this section govern the Voluntary Reporting of
Greenhouse Gases Program authorized by section 1605(b) of the Energy
Policy Act of 1992 (42 U.S.C. 13385(b)). The purpose of the Guidelines
is to establish the procedures and requirements for filing voluntary
reports, and to encourage corporations, government agencies, non-profit
organizations, households and other private and public entities to
submit annual reports of their greenhouse gas emissions, emission
reductions, and sequestration activities that are complete, reliable
and consistent. Over time, it is anticipated that these reports will
provide a reliable record of the contributions reporting entities have
made toward reducing their greenhouse gas emissions.
(b) Registration option. An entity may request to have its emission
reductions registered under Sec. 300.12(b) of this part if it complies
with all of the requirements of this part, including the entity-wide
reporting standards set forth in Sec. Sec. 300.6 and 300.7. The
requirements for registration, as distinguished from other reporting,
are clearly stated in the provisions of these General Guidelines.
(c) Technical Guidelines. Further guidance on the interpretation
and application of these General Guidelines is provided in the Draft
Technical Guidelines for the Voluntary Reporting of Greenhouse Gases
Program (hereafter ``Draft Technical Guidelines'' (incorporated by
reference, see Sec. 300.13).
(d) Forms. Annual reports of greenhouse gas emissions, emission
reductions, and sequestration must be made on forms or software that
are available from the Energy Information Administration of the
Department of Energy (EIA).
(e) Status of reports under previous Guidelines. EIA continues to
maintain in its Voluntary Reporting of Greenhouse Gases database all
reports received pursuant to DOE's October 1994 Guidelines. Those
Guidelines are available from the EIA at http://www.eia.doe.gov/oiaf/1605/guidelns.html.
(f) Periodic review and updating of General and Technical
Guidelines. DOE intends periodically to review the General Guidelines
and the Technical
[[Page 15183]]
Guidelines to determine whether any changes are warranted; DOE
anticipates these reviews will occur approximately once every three
years. These reviews will consider any new developments in climate
science or policy, the participation rates of large and small emitters
in the 1605(b) program, the general quality of the data submitted by
different participants, and any changes to other emissions reporting
protocols. Possible changes could include, but are not limited to:
(1) The addition of greenhouse gases that have been demonstrated to
have significant, quantifiable climate forcing effects when released to
the atmosphere in significant quantities;
(2) Changes to the minimum, quantity-weighted quality rating for
emission inventories;
(3) Modifications to the benchmarks or emission conversion factors
used to calculate avoided and indirect emissions; and
(4) Changes in the minimum requirements for registered emission
reductions.
Sec. 300.2 Definitions.
This section provides definitions for commonly used terms in this
part.
Activity means any single category of economic production or
consumption that produces measurable emissions of greenhouse gases or
sequestration, the annual changes of which can be assessed generally by
using a single calculation method.
Aggregator means an entity that reports to the 1605(b) program on
behalf of non-reporting third parties, usually small emitters.
Avoided emissions means the emissions displaced by increases in the
generation and sale of electricity, steam, hot water or chilled water
produced from energy sources that emit fewer greenhouse gases per unit
than other competing sources of these forms of distributed energy.
Base period means a period of 1-4 years used to derive the average
annual base emissions, emissions intensity or other values from which
emission reductions are calculated.
Base value means the value from which emission reductions are
calculated for an entity or subentity. The value may be annual
emissions, emissions intensity, kilowatt-hours generated, or other
value specified in the 1605(b) guidelines. It is usually derived from
actual emissions and/or activity data derived from the Base Period.
Biogenic emissions mean emissions that are naturally occurring and
are not significantly affected by human actions or activity.
Carbon stocks are the quantity of carbon stored in biological and
physical systems including: trees, plants, wood products and other
terrestrial biosphere sinks, soils, oceans, sedimentary and geological
sinks, and the atmosphere.
De minimis emissions means emissions from one or more sources and
of one or more greenhouse gases that, in aggregate, are less than or
equal to 3 percent of the total annual carbon dioxide (CO2)
equivalent emissions of a reporting entity.
Department or DOE means the U. S. Department of Energy.
Direct emissions means greenhouse gas emissions resulting from
stationary or mobile sources within the organizational boundary of an
entity, including but not limited to emissions resulting from
combustion of fuels, process emissions, and fugitive emissions.
EIA means the Energy Information Administration within the U.S.
Department of Energy.
Emissions mean direct release of greenhouse gases to the atmosphere
from any anthropogenic (human induced) source and certain indirect
emissions (releases) specified in this part.
Emissions intensity means emissions per unit of output, where
output is defined as the quantity of physical output, or a non-physical
indicator of an entity's or subentity's productive activity.
Entity or reporting entity means the whole or part of any business,
institution, organization or household that:
(1) Is recognized as an entity under any U.S. Federal, State or
local law that applies to it;
(2) Is located, at least in part, in the United States; and
(3) Whose operations affect U.S. emissions of greenhouse gases.
First reduction year means the first year for which an entity
intends to register emission reductions; it is the year that
immediately follows the start year.
Fugitive emissions means uncontrolled releases to the atmosphere of
greenhouse gases from the processing, transmission, and/or
transportation of fossil fuels or other materials, such as HFC leaks
from refrigeration, SF6 from electrical power distributors, and methane
from solid waste landfills, among others, that are not emitted via an
exhaust pipe(s) or stack(s).
Greenhouse gases means:
(1) Carbon dioxide (CO2)
(2) Methane (CH4)
(3) Nitrous oxide (N2O)
(4) Hydrofluorocarbons (HFCs)
(5) Perfluorocarbons (PFCs)
(6) Sulfur Hexafluoride (SF6)
(7) Other gases or particles that have been demonstrated to have
significant, quantifiable climate forcing effects when released to the
atmosphere in significant quantities and for which DOE has established
or approved methods for estimating emissions and reductions (Sec.
300.1(f)) describes plans for periodically considering the addition of
other gases or particles to this list).
Indirect emissions means greenhouse gas emissions from stationary
or mobile sources outside the organizational boundary of an entity,
including but not limited to the generation of electricity, steam and
hot/chilled water that are the result of an entity's energy use or
other activities.
Net emission reductions means the sum of all annual changes in
emissions, avoided emissions and sequestration of the greenhouse gases
specifically identified in Sec. 300.6(f), and determined to be in
conformance with Sec. Sec. 300.7 and 300.8 of this part.
Offset means an emission reduction that meets the requirements of
this part, but is achieved by a party other than the reporting entity
and has not otherwise been reported under this program.
Reporting Year means the year that is the subject of a report to
DOE.
Sequestration means the removal of atmospheric CO2
(carbon dioxide), either through biologic processes or physical
processes, including capture, long-term separation, isolation, or
removal of greenhouse gases from the atmosphere, such as through
cropping practices, forest and forest products management or injection
into an underground reservoir.
Simplified Emission Inventory Tool (SEIT) is a computer-based
method, to be developed and made readily accessible by EIA, for
translating common physical indicators into an estimate of greenhouse
gas emissions.
Sink means an identifiable discrete location, set of locations, or
area in which carbon dioxide (CO2) or some other greenhouse
gas is sequestered.
Source means any process or activity that releases a greenhouse
gas.
Start year means the year upon which the initial entity statement
is based. For large emitters, it is the first year for which the entity
submits a complete emissions inventory under this part. For all
entities, it is the year immediately preceding the first year for which
the entity intends to register reductions and the last year of the
initial base period(s).
Subentity means a component of any entity, such as a discrete
business line,
[[Page 15184]]
facility, plant, vehicle fleet, or energy using system, which has
associated with it emissions of greenhouse gases that can be
distinguished from the emissions of all other components of the same
entity; and, when summed with the emissions of all other subentities,
equal the entity's total emissions.
Total emissions means the total annual contribution of the
greenhouse gases specifically identified in Sec. 300.6(f) to the
atmosphere by an entity, including both direct and indirect entity-wide
emissions.
United States or U.S. means the 50 States, the District of
Columbia, the Commonwealth of Puerto Rico, and the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, and any other territory
of the United States.
Sec. 300.3 Guidance for defining and naming the reporting entity.
(a) A reporting entity must be composed of one or more legally
distinct businesses, institutions, organizations or households that are
located, at least in part, in the United States and whose operations
affect U.S. emissions of greenhouse gases. For the purposes of this
program, a legally distinct entity is any holding company, corporation,
subsidiary, partnership, joint venture, business, operating entity,
government, government agency, institution, organization or household
that is treated as a distinct entity under an existing U.S. Federal,
state or local law. Businesses may be defined by a certificate of
incorporation or corporate charters, Federal tax identification
numbers, or other level of organization recognized by specific laws.
Similarly, public or private institutions and organizations can define
their scope by referencing their charter, tax identification, or other
legal basis.
(b) Entities that intend to register reductions are strongly
encouraged to define themselves at the highest level of aggregation. To
achieve this objective, DOE suggests the use of a corporate-level
definition of the entity, based on filings with the Securities and
Exchange Commission, or comparable institutional charters. While
reporting at the highest level of aggregation is encouraged, it is
recognized that certain businesses and institutions may conclude that
reporting at some lower level is desirable. However, once an entity has
determined the level of corporate or institutional management at which
it will report (e.g., the holding company, subsidiary, regulated
stationary source, state government, agency, etc.), the entity must
include all elements of the organization encompassed by that management
level and exclude any organizations that are managed separately. For
example, if two subsidiaries of a parent company are to be covered by a
single report, then all subsidiaries of that parent company must also
be included. Similarly, if a company decides to report on the U.S. and
Canadian subsidiaries of its North American operations unit, it must
also report on any other subsidiaries of its North American unit, such
as a Mexican subsidiary.
(c) A name for the defined entity must be specified. For entities
that intend to register reductions, this should be the name commonly
used to represent the activities being reported, as long as it is not
also used to refer to substantial activities not covered by the
entity's reports. While DOE believes entities should be given
considerable flexibility in defining themselves at an appropriate level
of aggregation, it is essential that the name assigned to the reporting
entity correspond closely to the scope of the operations and emissions
covered by its report. If, for example, an individual plant or
operating unit is reporting as an entity, it should be given a name
that corresponds to the specific plant or unit, and not to the
responsible subsidiary or corporate entity. In order to distinguish
parent company from its subsidiaries, the name of the parent company
generally should not be incorporated into the name of the reporting
subsidiary, but if it is, the name of the parent company usually should
be secondary.
(d) An entity that does not intend to register reductions must
report the legal basis for their entity and must specify a name for
reporting purposes.
Sec. 300.4 Selecting organizational boundaries for registering.
(a) An entity that intends to register its entity-wide emissions
reductions must determine, document, and maintain its organizational
boundary for accounting and reporting purposes.
(b) Each such entity must disclose in its entity statement the
approach used to establish its organizational boundaries, which should
be consistent with the following guidelines:
(1) In general, entities should use financial control as the
primary basis for determining their organizational boundaries, with
financial control meaning the ability to direct the financial and
operating policies of the entity with a view to gaining economic or
other benefits from its activities. This approach should ensure that
all sources, including subsidiaries, that are wholly or largely owned
by the entity are covered by its reports.
(2) Entities may establish organizational boundaries using
approaches other than financial control, such as equity share or
operational control, but must disclose how the use of these other
approaches result in organizational boundaries that differ from those
resulting from using the financial control approach.
(3) Emissions from facilities or vehicles that are partially owned
or leased, or not directly controlled or managed by the entity, may be
included at the entity's discretion, provided that the entity has taken
reasonable steps to assure that doing so does not result in the double
counting of emissions, sequestration or emission reductions.
(4) If the scope of a defined entity extends beyond the United
States, the reporting entity should use the same approach to
determining its organizational boundaries in the U.S. and outside the
U.S.
Sec. 300.5 Submission of an entity statement.
(a) Determining the type of reporting entity. The entity statement
requirements vary by type of entity. For the purposes of these
guidelines, there are three types of entities:
(1) Large emitters that intend to register emission reductions;
(2) Small emitters that intend to register emission reductions; and
(3) Emitters that intend to report, but not register emission
reductions.
(b) Choosing a start year. Entities that intend to register
reductions must first choose a start year. The first entity statement
describes the make-up, operations and boundaries of the entity, as they
existed in the start year. For a large emitter, the start year is the
first year for which the entity submits a complete emissions inventory
under this part. For all entities, it is the year immediately preceding
the first year for which the entity intends to register emission
reductions and the last year of the initial base period(s). The
entity's emissions in its start year or its average annual emissions
over a period of up to four years ending in the start year determine
whether it qualifies to begin reporting as a small emitter. For
entities intending to register emission reductions, the start year may
be no earlier than 2002. For entities not intending to register
reductions, the start year may be no earlier than 1990.
(c) Determining and maintaining large or small emitter reporting
status. (1) Any entity that intends to register emission reductions can
choose to participate as a large emitter, but only entities that have
demonstrated that their annual emissions are less than or equal to
10,000 metric tons of CO2
[[Page 15185]]
equivalent may participate as small emitters. To demonstrate that its
annual emissions are less than or equal to 10,000 metric tons of
CO2 equivalent, an entity must submit either an estimate of
its emissions during its chosen start year or an estimate of its
average annual emissions over a continuous period not to exceed four
years of time ending in its chosen start year, as long as the
operations and boundaries of the entity have not changed significantly
during that period.
(2) An entity must estimate its total emissions using methods
specified in Chapter 1 of the Draft Technical Guidelines (incorporated
by reference, see Sec. 300.13) or by using the Simplified Emission
Inventory Tool (SEIT) provided by EIA and also discussed in Chapter 1.
The results of this estimate must be reported to EIA. [Note that
emission estimates developed using SEIT would have quality ratings of
less than 3.0 and therefore would not meet the emissions inventory
requirements of the revised Guidelines.]
(3) After starting to report, each small emitter must annually
certify that the emissions-related operations and boundaries of the
entity have not changed significantly since the previous report. A new
estimate of total emissions must be submitted after any significant
increase in emissions, any change in the operations or boundaries of
the small emitter, or every five years, whichever occurs first. Small
emitters with estimated annual emissions of over 9,000 metric tons of
CO2 equivalent should re-estimate and submit their emissions
annually. If an entity determines that it must report as a large
emitter, then it must continue to report as a large emitter in all
future years in order to ensure a consistent time series of reports.
Once a small emitter becomes a large emitter, it must begin reporting
in conformity with the reporting requirements for large emitters.
(d) Entity statements for large emitters intending to register
reductions. When a large emitter intending to register emission
reductions first reports under these guidelines, it must provide the
following information in its entity statement:
(1) The name to be used to identify the participating entity;
(2) The legal basis of the named reporting entity;
(3) The criteria used to determine:
(i) The organizational boundaries of the reporting entity, if other
than financial control; and
(ii) The sources of emissions included or excluded from the
entity's reports, such as sources excluded as de minimis emissions.
(4) The names of any parent or holding companies the activities of
which will not be covered comprehensively by the entity's reports;
(5) The names of any large subsidiaries or organizational units
covered comprehensively by the entity's reports. All subsidiaries of
the reporting entity must be covered by the entities reports, but only
large subsidiaries must be specifically identified in the entity
statement;
(6) A list of each country where operations occur, if the entity is
including any non-U.S. operations in its report;
(7) A description of the entity and its primary U.S. economic
activities, such as electricity generation, product manufacturing,
service provider or freight transport; for each country listed under
paragraph (d)(6) of this section, reporters should describe the
economic activity in that country.
(8) A description of the types of emission sources or sinks to be
covered in the entity's emission inventories, such as fossil fuel power
plants, manufacturing facilities, commercial office buildings or heavy-
duty vehicles;
(9) The names of other entities that substantially share the
ownership or operational control of sources that represent a
significant part of the reporting entity's emission inventories, and a
certification that, to the best of the certifier's knowledge, the
direct greenhouse gas emissions and sequestration in the entity's
report are not included in reports filed by any of these other entities
to the 1605(b) program; and
(10) Identification of the start year.
(e) Entity statements for small emitters intending to register
reductions. When a small emitter intending to register emission
reductions first reports under these guidelines, it must provide the
following information in its entity statement:
(1) The name to be used to identify the participating entity;
(2) An identification or description of the legal basis of the
named reporting entity;
(3) An identification of the entity's control over the activities
covered by the entity's reports, if other than financial control;
(4) The names of any parent or holding companies the activities of
which will not be covered comprehensively by the entity's reports;
(5) An identification or description of the primary economic
activities of the entity, such as agricultural production, forest
management or household operation; if any of the economic activities
covered by the entity's reports occur outside the U.S., a listing of
each country in which such activities occur;
(6) An identification or description of the specific activity (or
activities) and the emissions, avoided emissions or sequestration
covered by the entity's report, such as landfill gas recovery or forest
sequestration;
(7) A certification that, to the best of the certifier's knowledge,
the direct greenhouse gas emissions and sequestration in the entity's
report are not included in reports filed by any other entities
reporting to the 1605(b) program; and
(8) Identification of the start year.
(f) Entity statements for reporters not registering reductions.
When a participant not intending to register emission reductions first
reports under this part, it must, at a minimum, provide the following
information in its entity statement:
(1) The name to be used to identify the reporting entity;
(2) A description of the entity and its primary economic
activities, such as electricity generation, product manufacturing,
service provider, freight transport, agricultural production, forest
management or household operation; if any of the economic activities
covered by the entity's reports occur outside the United States, a
listing of each country in which such activities occur; and
(3) A description of the types of emission sources or sinks, such
as fossil fuel power plants, manufacturing facilities, commercial
office buildings or heavy-duty vehicles, covered in the entity's
reports of emissions or emission reductions.
(g) Changing entity statements. (1) Reporters are required to
annually review and, if necessary, update their entity statements.
(2) From time to time, an entity may choose to change the scope of
activities included within the entity's reports or the level at which
the entity wishes to report. An entity may also choose to change its
organizational boundaries, its base period, or other elements of its
entity statement. For example, companies buy and sell business units,
or equity share arrangements may change. In general, DOE encourages
changes in the scope of reporting that expand the coverage of an
entity's report and discourages changes that reduce the coverage of
such reports unless they are caused by divestitures or plant closures.
Any such changes should be reported in amendments to the entity
statement, and major changes may warrant or require changes in the base
values used to calculate emission reductions and, in some cases, the
entity's base periods. However, in no case should there be an
[[Page 15186]]
interruption in the annual reports of entities registering emission
reductions. Chapter 2 of the Draft Technical Guidelines (incorporated
by reference, see Sec. 300.13), the Emission Reduction Guidelines,
provides more specific guidance on how such changes should be reflected
in entity statements, reports, and emission reduction calculations.
(h) Documenting changes in amended entity statements. A reporter's
entity statement in subsequent reports should focus primarily on
changes since the previous report. Specifically, the subsequent entity
statement should report the following information:
(1) For significant changes in the entity's scope or organizational
boundaries, the entity should document:
(i) The acquisition or divestiture of discrete business units,
subsidiaries, facilities, and plants;
(ii) The closure or opening of significant facilities;
(iii) The transfer of economic activity to or from specific
operations covered by the entity's reports, such as the transfer of
operations to non-U.S. subsidiaries;
(iv) Significant changes in land holdings (applies to entities
reporting on greenhouse gas emissions or sequestration related to land
use, land use change, or forestry);
(v) Whether the entity is reporting at a higher level of
aggregation than it did in the previous report, and if so, a listing of
the subsidiary entities that are now aggregated under a revised
conglomerated entity, including a listing of any non-U.S. operations to
be added and the specific countries in which these operations are
located; and
(vi) Changes in its activities or operations (e.g., changes in
output, contractual arrangements, equipment and processes, outsourcing
or insourcing of significant activities) that are likely to have a
significant effect on emissions, together with an explanation of how it
believes the changes in economic activity influenced its reported
emissions or sequestrations.
Sec. 300.6 Emissions inventories.
(a) General. The objective of an emission inventory is to provide a
full accounting of an entity's emissions for a particular year,
including direct emissions of all six categories of greenhouse gases
identified in Sec. 300.2, indirect emissions specified in paragraph
(e) of this section, and all sequestration or other changes in carbon
stocks. An emission inventory must be prepared in accordance with
Chapter 1 of the Draft Technical Guidelines (incorporated by reference,
see Sec. 300.13). An inventory does not include avoided emissions or
any offset reductions, and is not subsequently adjusted to reflect
future acquisitions, divestitures or other changes to the reporting
entity. Entity-wide inventories are a prerequisite for the registration
of emission reductions by entities with average annual emissions of
more that 10,000 metric tons of CO2 equivalent. Entities
that have average annual emissions of less than 10,000 metric tons of
CO2 equivalent are eligible to register emission reductions
associated with specific activities without also reporting an inventory
of the total emissions.
(b) Quality requirements for emission inventories. The Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13)
usually identify more than one acceptable method of measuring or
estimating greenhouse gas emissions. Each acceptable method is rated A,
B, C or D, with A methods usually corresponding to the highest quality
method available and D methods representing the lowest quality method
that may be used. Each letter is assigned a numerical rating reflecting
its relative quality, 4 for A methods, 3 for B methods, 2 for C methods
and 1 for D methods. Entities that intend to register emission
reductions must use emission inventory methods that result in a
quantity-weighted average data quality rating of at least 3.0. Each
emission source or sink that uses a distinct emissions measurement or
estimation method must be reported separately to permit independent
calculation of the entity's quantity-weighted quality rating.
(c) Using estimation methods not included in the Technical
Guidelines. A reporting entity may obtain DOE approval for the use of
an estimation method not included in the Draft Technical Guidelines
(incorporated by reference, see Sec. 300.13) if the method covers
sources not described in the Draft Technical Guidelines, or if the
proposed method provides more accurate results for the entity's
specific circumstances than the methods described in the Draft
Technical Guidelines. If an entity wishes to propose the use of a
method that is not described in the Draft Technical Guidelines, the
entity must provide a written description of the method, an explanation
of how the method is implemented (including data requirements),
empirical evidence of the method's validity and accuracy, and a
suggested rating for the method to DOE's Office of Policy and
International Affairs (with a copy to EIA). DOE reserves the right to
deny the request, or to assign its own rating to the method. By
submitting this information, the reporter grants permission to DOE to
incorporate the method in a future revision of the Technical
Guidelines.
(d) Direct emissions inventories. Direct greenhouse gas emissions
that must be reported are the emissions resulting from stationary or
mobile sources within the organizational boundaries of an entity,
including but not limited to emissions resulting from combustion of
fossil fuels, process emissions, and fugitive emissions. Process
emissions (e.g., PFC emissions from aluminum production) must be
reported along with fugitive emissions (e.g., leakage of greenhouse
gases from equipment).
(e) Inventories of indirect emissions associated with purchased
energy. (1) To provide a clear incentive for the users of electricity
and other forms of purchased energy to reduce demand, the indirect
emissions from the consumption of purchased electricity, steam, and hot
or chilled water must be included in a reporting entity's inventory as
indirect emissions. To avoid double counting among entities, the
reporting entity must report all indirect emissions separately from its
direct emissions. Reporting entities should use the methods for
quantifying indirect emissions specified in the Draft Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(2) Reporting entities may choose to report other forms of indirect
emissions, such as emissions associated with employee commuting,
materials consumed or products produced, although such other indirect
emissions are not to be included in the entity's emission inventory and
may not be the basis for registered emission reductions. All such
reports of other forms of indirect emissions must be distinct from
reports of indirect emissions associated with purchased energy and must
be based on emission measurement or estimation methods identified in
the Draft Technical Guidelines (incorporated by reference, see Sec.
300.13) or approved by DOE.
(f) Entity-level inventories of changes in terrestrial carbon
stocks. Annual changes in managed terrestrial carbon stocks should be
comprehensively assessed and reported across the entity and the net
emissions resulting from such changes included in the entity's
emissions inventory. Entities should use the methods for estimating
changes in managed terrestrial carbon stocks specified in the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13).
(g) Treatment of de minimis emissions and sequestration. (1)
Although the goal
[[Page 15187]]
of the entity-wide reporting requirement is to provide an accurate and
comprehensive estimate of total emissions, there may be small emissions
from certain sources that are unduly costly or otherwise difficult to
measure or reliably estimate annually. A reporting entity may exclude
particular sources of emissions or sequestration if the total
quantities excluded represent less than or equal to 3 percent of the
total annual CO2 equivalent emissions of the entity. The
entity must identify the types of emissions excluded and provide an
estimate of the annual quantity of such emissions using methods
specified in the Draft Technical Guidelines (incorporated by reference,
see Sec. 300.13) or by the Simplified Emissions Inventory Tool (SEIT).
The results of this estimate of the entity's total annual emissions
must be reported to DOE together with the entity's initial entity
statement.
(2) After starting to report, each entity that excludes from its
annual reports any de minimis emissions must re-estimate the quantity
of excluded emissions after any significant increase in such emissions,
or every five years, whichever occurs sooner.
(h) Separate reporting of domestic and international emissions. Any
non-U.S. emissions included in an entity's emission inventory must be
separately reported, by country of origin, and clearly distinguished
from emissions originating in the U.S.
(i) Covered gases. Entity-wide emissions inventories must include
all emissions of the named greenhouse gases listed in Sec. 300.2 or
subsequently included in this list through the process described in
Sec. 300.1(f). Entities may report other greenhouse gases, but such
gases must be reported separately and emission reductions, if any,
associated with such other gases are not eligible for registration.
(j) Units for reporting. Emissions and sequestration should be
reported in terms of the mass (not volume) of each gas, using metric
units (e.g., metric tons of methane). Entity-wide and subentity
summations of emissions and reductions from multiple sources must be
converted into CO2 equivalent units using the global warming
potentials for each gas in the International Panel on Climate Change's
Third Assessment (or most recent) Report, as specified in the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13).
Entities should specify the units used (e.g., kilograms, or metric
tons). Reporting entities may need to use the standard conversion
factors specified in the Draft Technical Guidelines to convert existing
data into the common units required in the entity-level report.
Emissions from the consumption of purchased electricity must be
reported by region (from the list provided by DOE in the Draft
Technical Guidelines) or country, if outside the United States.
Consumption of purchased steam or chilled/hot water must be reported
according to the type of system and fuel used to generate it (from the
list provided by DOE in the Draft Technical Guidelines). Entities must
convert purchased energy to CO2 equivalents using the
conversion factors in the Draft Technical Guidelines. Entities should
also provide the physical quantities of each type of purchased energy
covered by their reports.
Sec. 300.7 Net emission reductions.
(a) Entities that intend to register emission reductions achieved
after 2002 must comply with the requirements of this section. Entities
may voluntarily follow these procedures if they want to demonstrate the
achievement of net, entity-wide reductions prior to 2003. Only large
emitters must follow the requirements of paragraph (b) of this section,
but small emitters may do so voluntarily. Only entities that qualify as
small emitters may use the special procedures in paragraph (c) of this
section. Entities seeking to register emission reductions achieved by
third parties (offsets) must certify that these emission reductions
were calculated in a manner consistent with the requirements of
paragraph (d) of this section and use the emission reduction
calculation methods identified in Sec. 300.8. All entities seeking to
register emission reductions must comply with the requirements of
paragraph (e) of this section. Only reductions in the emissions of the
named greenhouse gases listed in Sec. 300.2 are eligible for
registration.
(b) Assessing net emission reductions for large emitters. (1)
Entity-wide reporting is a prerequisite for registering emission
reductions by entities with average annual emissions more than 10,000
metric tons of CO2 equivalent. Net annual entity-wide
emission reductions must be based, to the maximum extent practicable,
on a full assessment and sum total of all changes in an entity's
emissions, avoided emissions and sequestration relative to the entity's
established base period(s). This assessment must include all entity
emissions, including the emissions associated with any non-U.S.
operations covered by the entity statement. It must include the annual
changes in the total emissions of the entity or, alternatively, the
total emissions of each of the subentities identified in its entity
statement. All changes in emissions, avoided emissions, and
sequestration must be determined using methods that are consistent with
the guidelines described in Sec. 300.8.
(2) If it is not practicable to assess the changes in net emissions
resulting from certain entity activities using at least one of the
methods described in Sec. 300.8, the reporting entity may exclude them
from its estimate of net emission reductions. The reporting entity must
identify as one or more distinct subentities the sources of emissions
excluded for this reason and describe the reasons why it was not
practicable to assess the changes that had occurred. DOE believes that
few emission sources will be excluded for this reason, but has
identified at least two situations where such an exclusion would be
warranted. For example, it is likely to be impossible to assess the
emission changes associated with a new manufacturing plant that
produces a product for which the entity has no historical record of
emissions or emissions intensity (emissions per unit of product
output). However, once the new plant has been operational for a full
year, a base period and base value(s) for the new plant could be
established and its emission changes might be assessed in the following
year. Until the emission changes of this new subentity could be
assessed, it should be identified in the entity's report as a subentity
for which no assessment of emission changes is practicable. The other
example involves a subentity that has reduced its output below the
levels of its base period. In such a case, the subentity could not use
the absolute emissions method and may also be unable to identify an
effective intensity metric or other method.
(3) A reporting entity should also exclude from the entity-wide
assessment of changes in emissions, avoided emissions and sequestration
any emissions or sequestration that have been excluded from the
entity's inventory. All de minimis or biogenic emissions excluded from
the entity's inventory of greenhouse gas emissions should also be
excluded from its assessments of emission changes.
(c) Assessing emission reductions for entities with small
emissions. (1) Entities with average annual emissions of less than or
equal to 10,000 metric tons of CO2 equivalent are not
required to inventory their total emissions or assess all changes in
their emissions, avoided emissions and sequestration to qualify for
registered reductions. These entities may register emission reductions
that have occurred since
[[Page 15188]]
2002 and that are associated with one or more specific activities, as
long as they:
(i) Perform a complete assessment of the annual emissions and
sequestration associated with each of the activities upon which they
report, using methods that meet the same data quality requirements
applicable to entity-wide emission inventories; and
(ii) Determine the changes in the emissions, avoided emissions or
sequestration associated with each of these activities.
(2) An entity reporting as a small emitter must report on one or
more specific activities and is encouraged, but not required to report
on all activities occurring within the entity boundary. Examples of
small emitter activities include: Vehicle operations; product
manufacturing processes; building operations or a distinct part
thereof, such as lighting; livestock operations; crop management; or
power generation. For example, a farmer managing several woodlots and
also producing a wheat crop may report emission reductions associated
with managing an individual woodlot. However, the farmer must also
assess and report the net sequestration resulting from managing all the
woodlots within the entity's boundary. The small emitter is not
required to report on emissions or reductions associated with growing
the wheat crop.
(3) A small emitter must certify that the reductions reported were
not caused by actions likely to cause increases in emissions elsewhere
within the entity's operations. This certification should be based on
an assessment of the likely direct and indirect effects of the actions
taken to reduce greenhouse gas emissions.
(d) Net emission reductions achieved by third parties (offset
reductions or emission reductions submitted by aggregators). A
reporting entity or aggregator under certain conditions may register
net emission reductions achieved by third parties. A large emitter that
is reporting on behalf of other entities must meet all of the
requirements applicable to large emitters, including submission of an
entity statement, an emissions inventory, and an entity-wide assessment
of emission reductions. If an aggregator is a small emitter, it may
choose to report only on the activities, emissions and emission
reductions of the third parties on behalf of which it is reporting and
not to report on any of its own activities or emission reductions. The
reporting entity or aggregator must include in its report all of the
information on the third party, including an entity statement, an
emissions inventory (when required), an assessment of emission
reductions and appropriate certifications, that would be required if
the third party were directly reporting to EIA. The report to DOE must
also include a certification by the third party indicating that it has
agreed that the reporting entity or aggregator should be recognized as
the entity responsible for any registered reductions and that the third
party does not intend to report directly to DOE. The net emissions
reductions (or increases) of each third party will be evaluated
separately by EIA to determine whether they are eligible for
registration. The registered reductions for each third party will be
included in EIA's summary of all registered reductions reported by the
responsible entity. EIA will also include in the entity's summary
report any emission increases by such a third party. If the agreement
between the reporting entity and any third party is discontinued, for
any reason, all emission reductions or emissions attributable to the
third party would be removed by EIA from the records of the reporting
entity.
(e) Adjusting for year-to-year increases in net emissions. (1)
Normally, net annual emission reductions for an entity are calculated
by summing the net annual changes in emissions, avoided emissions and
sequestration, as determined using the calculation methods identified
in Sec. 300.8 and according to the procedures described in Sec. 300.7
(b) for large emitters, Sec. 300.7 (c) for small emitters, and Sec.
300.7 (d) for offsets. However, if the entity experienced a net
increase in emissions for one or more years, these increases must be
reported and taken into account in calculating any future year
reductions. If the entity subsequently achieves net annual emission
reductions, the net increases experienced in the preceding year(s) must
be more than offset by these reductions before the entity can once
again register emission reductions. For example, if an entity achieved
a net emission reduction of 5,000 metric tons of CO2
equivalent in its first year, a net increase of 2,000 metric tons in
its second year, and a net reduction of 3,000 metric tons in its third
year, it would be able to register a 5,000 metric ton reduction in its
first year, no reduction in its second year, and a 1,000 metric ton
reduction in its third year (3,000-2,000). The entity must file full
reports for each of these three years. Its report for the second year
would indicate the net increase in emissions and this increase would be
noted in EIA's summary of the entity's report for that year and for any
future year, until the emissions increase was entirely offset by
subsequent emission reductions. If this same entity achieved a net
reduction of only 1,000 metric tons in its third year, it would not be
able to register additional reductions until it had, in some future
year, offset more than its second year increase of 2,000 metric tons.
Sec. 300.8 Calculating emission reductions.
(a) Choosing Appropriate Emission Reduction Calculation Methods.
(1) An entity must choose the method or methods it will use to
calculate emission reductions from the list provided in paragraph (h)
of this section. Each of the calculation methods has special
characteristics that make it applicable to only certain types of
emissions and activities. An entity should select the appropriate
calculation method based on several factors, including: how the
reporter's subentities are defined, how the reporter will gather and
report emissions data; and the availability of other types of data that
might be needed, such as production or output data.
(2) For some entities, a single calculation method will be
sufficient, but many entities may need to apply more than one method
because discrete components of the entity require different calculation
methods. In such a case, the entity will need to select a method for
each subentity (or discrete component of the entity with identifiable
emission or reductions). The emissions and output measure (generally a
physical measure) of each subentity must be clearly distinguished and
reported separately. Guidance on the selection and specification of
calculation methods is provided in Chapter 2 of the Draft Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(b) Identifying subentities for calculating reductions. If more
than one calculation method is to be used, an entity must specify the
portion of the entity (the subentity) to which each method will be
applied. Each subentity must be clearly identified. From time to time,
it may be necessary to modify existing or create new subentities. The
entity must provide to DOE a full description of such changes, together
with an explanation of why they were required.
(c) Choosing a base period for calculating reductions. In general,
the base period used in calculating emission reductions is the single
year or up to four-year period average immediately preceding the first
year of calculated emission reductions.
[[Page 15189]]
(d) Establishing base values. To calculate emission reductions
reporters must establish a base value against which to compare
reporting year performance. The minimum requirements for base values
for each type of calculation method are specified in Chapter 2 of the
Draft Technical Guidelines (incorporated by reference, see Sec.
300.13). In most cases, an historic base value, derived from emissions
or other data gathered during the base period, is the minimum
requirement specified.
(e) Emission reduction and subentity statements. For each emission
reduction calculation method and subentity, an entity must submit to
EIA the following information:
(1) An identification and description of the method used to
calculate emission reductions, including:
(i) The type of calculation method;
(ii) The measure of output used (if any); and
(iii) The method-specific base period for which any required base
value will be calculated.
(2) When starting to report, the base period used in calculating
reductions must end in the start year. However, over time it may be
necessary to revise or establish new base periods and base values in
response to significant changes in processes or output of the
subentity.
(3) A description of the subentity and its primary economic
activity or activities, such as electricity generation, product
manufacturing, service provider, freight transport, or household
operation; and
(4) A description of the emission sources or sinks covered, such as
fossil fuel power plants, manufacturing facilities, commercial office
buildings or heavy-duty vehicles.
(f) Changes in calculation methods, base periods and base values.
When significant changes occur in the composition or output of
reporting entities, an entity may need to change previously specified
calculation methods, base periods or base values. An entity should make
such changes only if necessary and it should fully document the reasons
for any changes. The Draft Technical Guidelines (incorporated by
reference, see Sec. 300.13) describe when such changes should be made
and what information on such changes must be provided to DOE.
(g) Continuous reporting. To ensure that the summation of entity
annual reports accurately represents net, multi-year emission
reductions, an entity must submit a report every year, beginning with
the first reduction year. An entity may use a specific base period to
determine emission reductions in a given future year only if the entity
has submitted qualified reports for each intervening year. If an
interruption occurs in the annual reports of an entity, the entity must
subsequently report on all missing years prior to qualifying for the
registration of additional emission reductions.
(h) Calculation methods. An entity must calculate any change in
emissions, avoided emissions or sequestration using one or more of the
methods described in this paragraph and in the Draft Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(1) Changes in emissions intensity. A reporting entity may use
emissions intensity as a basis for determining emission reductions as
long as the reporting entity selects a measure of output that is:
(i) A reasonable indicator of the output produced by the reporting
entity;
(ii) A reliable indicator of changes in the reporting entity's
activities;
(iii) Related to emissions levels; and
(iv) Any appropriate adjustments for acquisitions, divestitures,
insourcing, outsourcing, or changes in products have been made, as
described in the Draft Technical Guidelines (incorporated by reference,
see Sec. 300.13).
(2) Changes in absolute emissions. A reporting entity may use
changes in the absolute (actual) emissions (direct and/or indirect) as
a basis for determining net emission reductions as long as the
reporting entity makes only those adjustments required by the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13). An
entity intending to register emission reductions may use this method
only if the entity demonstrates in its report that any reductions
derived from such changes were not achieved as a result of reductions
in the output of the reporting entity, and certifies that emission
reductions are not the result of major shifts in the types of products
or services produced.
(3) Changes in carbon storage (for actions within entity
boundaries). A reporting entity may use changes in carbon storage as a
basis for determining net emission reductions as long as the entity
uses estimation and measurement methods that comply with the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13), and
has included an assessment of the net changes in all sinks in its
inventory.
(4) Changes in avoided emissions (for actions within entity
boundaries). A reporting entity may use changes in the avoided
emissions associated with the sale of electricity, steam, hot water or
chilled water generated from non-emitting or low-emitting sources as a
basis for determining net emission reductions as long as:
(i) The measurement and calculation methods used comply with the
Draft Technical Guidelines (incorporated by reference, see Sec.
300.13);
(ii) The reporting entity certifies that any increased sales were
not attributable to the acquisition of a generating facility that had
been previously operated, unless the entity's base period includes
generation values from the acquired facility's operation prior to its
acquisition; and
(iii) Generators of distributed energy that have net emissions in
their base period and intend to report reductions resulting from
changes in avoided emissions, use a method specified in the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13) that
integrates that calculation of reductions resulting from both changes
in emissions intensity and changes in avoided emissions.
(5) Action-specific emission reductions (for actions within entity
boundaries). An entity-wide reporter may use the action-specific
approach only if it is not possible to measure accurately emission
changes by using one of the methods identified in paragraphs (h)(1)
through (h)(4) of this section. A reporting entity may determine
emission reductions based on an estimate of the effects on emissions of
a specific action, as long as the entity demonstrates that the estimate
is based on analysis that:
(i) Uses output, utilization and other factors that are consistent,
to the maximum extent practicable, with the action's actual performance
in the year for which reductions are being reported;
(ii) Excludes any emission reductions that might have resulted from
reduced output or were caused by actions likely to be associated with
increases in emissions elsewhere within the entity's operations; and
(iii) Uses methods that are in compliance with the Draft Technical
Guidelines (incorporated by reference, see Sec. 300.13).
(i) Summary description of actions taken to reduce emissions. Each
reported emission reduction must be accompanied by an identification of
the types of actions that were the likely cause of the reductions
achieved. Entities are also encouraged to include in their reports
information on the benefits and costs of the actions taken to reduce
greenhouse gas emissions, such as the expected rates of return, life
[[Page 15190]]
cycle costs or benefit to cost ratios, using appropriate discount
rates.
(j) Emission reductions associated with plant closings, voluntary
actions and government (including non-U.S. regulatory regimes)
requirements.
(1) Each report of emission reductions must indicate whether the
reported emission reductions were the result, in whole or in part, of
plant closings, voluntary actions, or government requirements. DOE will
presume that reductions that were not the result of plant closings or
government requirements are the result of voluntary actions.
(2) If emission reductions were, in whole or in part, the direct
result of plant closings that caused a decline in output, the report
must identify the reductions as such; these reductions do not qualify
for registration. DOE presumes that reductions calculated using the
emissions intensity method do not result from a decline in output.
(3) If the reductions were associated, in whole or part, with U.S.
or non-U.S. government requirements, the report should identify the
government requirement involved and the type of effect these
requirements had on the reported emission reductions. If, as a result
of the reduction, a non-U.S. government issued to the reporting entity
a credit or other financial benefit or regulatory relief, the report
should identify the government requirement involved and describe the
specific form of benefit or relief provided.
(k) Determining the entity responsible for emission reductions. The
entity that DOE will presume to be responsible for emission reduction,
avoided emission or sequestered carbon is the entity with financial
control of the facility, land or vehicle which generated the reported
emissions, generated the energy that was sold so as to avoid other
emissions, or was the place where the sequestration action occurred. If
control is shared, reporting of the associated emission reductions
should be determined by agreement between the entities involved so as
to avoid double-counting; this agreement must be reflected in the
entity statement and in any report of emission reductions. DOE will
presume that an entity is not responsible for any emission reductions
associated with a facility, property or vehicle excluded from its
entity statement.
Sec. 300.9 Reporting and recordkeeping requirements.
(a) Starting to report under the Guidelines. An entity may report
emissions and sequestration on an annual basis beginning in any year,
but no earlier than the base period of 1987-1990 specified in the
Energy Policy Act of 1992. To be recognized under these Guidelines, all
reports must conform to the measurement methods established by the
Draft Technical Guidelines (incorporated by reference, see Sec.
300.13). This requirement applies to entities that report to the
revised Voluntary Reporting of Greenhouse Gases Program registry for
the first time as well as those entities that have previously submitted
emissions reports pursuant to section 1605 (b) of the Energy Policy Act
of 1992.
(b) Revisions to reports submitted under the Guidelines. (1) Once
DOE has accepted a report under this part, it may be revised by the
reporting entity only under certain conditions specified in this
paragraph (b)(1) of this section and related provisions of the Draft
Technical Guidelines (incorporated by reference, see Sec. 300.13). In
general:
(i) Revised reports may be submitted to correct errors that have a
significant effect on previously estimated emissions or emission
reductions; and
(ii) Emission inventories may be revised in order to create a
consistent time series based on significant improvements in the
emission estimation or measurement techniques used.
(2) Reporters must provide the corrected or improved data to DOE,
together with an explanation of the significance of the change and its
justification.
(3) If a change in calculation methods (for inventories or
reductions) is made for a particular year, the entity must, if
feasible, revise its base value to assure methodological consistency
with the reporting year value.
(c) Definition and deadline for annual reports. Entities should, if
practicable, report emissions on a calendar year basis, from January 1
to December 31. In all cases, the time period covered by annual reports
should be specified and used consistently in all reports. To be
included in the earliest possible DOE annual report of greenhouse gas
emissions reported under this part, entity reports must be submitted to
DOE no later than July 1 for emissions occurring during the previous
calendar year.
(d) Recordkeeping. Entities intending to register reductions must
maintain adequate supporting records for at least three years to enable
verification of all information reported. The records should document
the basis for the entity's report to DOE, including:
(1) The content of entity statements, including the identification
of the specific facilities, buildings, land holding and other
operations or emission sources covered by the entity's reports and the
legal, equity, operational and other bases for their inclusion;
(2) Information on the identification and assessment of changes in
entity boundaries, processes or products that might have to be reported
to DOE;
(3) Any agreements or relevant communications with other entities
or third parties regarding the reporting of emissions or emission
reductions associated with sources the ownership or operational control
of which is shared;
(4) Information on the methods used to measure or estimate
emissions, and the data collection and management systems used to
gather and prepare this data for inclusion in reports;
(5) Information on the methods used to calculate emission
reductions, including the basis for:
(i) The selection of the specific output measures used, and the
data collection and management systems used to gather and prepare
output data for use in the calculation of emission reductions;
(ii) The selection and modification of all base years, base periods
and baselines used in the calculation of emission reductions;
(iii) Any baseline adjustments made to reflect acquisitions,
divestitures or other changes;
(iv) Any models or other estimation methods used; and
(v) Any internal or independent verification procedures undertaken.
(e) Confidentiality. DOE will protect trade secret and commercial
or financial information that is privileged or confidential as provided
in 5 U.S.C. 552(b)(4). An entity must clearly indicate in its 1605(b)
report the information for which it requests confidentiality. DOE will
handle requests for confidentiality of information submitted in 1605(b)
reports in accordance with the process established in the Department's
Freedom of Information regulations at 10 CFR 1004.11.
Sec. 300.10 Certification of reports.
(a) General requirement and certifying official: All reports
submitted to EIA must include a certification statement, as provided in
paragraph (b) of this section, signed by a certifying official of the
reporting entity. A household report may be certified by one of its
members. All other reports must be certified by the chief executive
officer, agency head, or an officer or employee of the entity who is
responsible for reporting the entity's compliance with environmental
regulations.
(b) Certification statement requirements. All entities, whether
[[Page 15191]]
reporting or registering reductions, must certify the following:
(1) The information reported is accurate and complete;
(2) The information reported has been compiled in accordance with
this part; and
(3) The information reported is consistent with information
submitted in prior years, if any, or any inconsistencies with prior
year's information are documented and explained in the entity
statement.
(c) Additional requirements for registering. The certification
statement of an entity registering reductions must also certify that:
(1) The reporting entity took reasonable steps to ensure that
direct emissions, emission reductions, and/or sequestration reported
are neither double counted nor reported by any other entity;
(2) Any emissions, emission reductions, or sequestration reported
that were achieved by a third party are included in the report only if
there exists a written agreement with each third party providing that
the reporting entity is the entity entitled to report these emissions,
emission reductions, or sequestration;
(3) None of the emissions, emission reductions, or sequestration
reported are a product of shifting emissions to other entities or to
non-reporting parts of the entity;
(4) None of any reported changes in avoided emissions associated
with the sale of electricity, steam, hot or chilled water generated
from non-emitting or low-emitting sources are attributable to the
acquisition of a generating facility that has been previously operated,
unless the entity's base period includes generation values from the
acquiring facility's operation prior to its acquisition;
(5) The reporting entity maintains records documenting the analysis
and calculations underpinning the data reported on this form for a
period of not less than three years; and
(6) The reporting entity has, or has not, obtained independent
verification of the report, as described in Sec. 300.11.
Sec. 300.11 Independent verification.
(a) Reporting entities are encouraged to have their annual reports
reviewed by independent and qualified auditors, as described in
paragraphs (b), (c), and (f) or this section.
(b) Qualifications of verifiers. (1) DOE envisions that independent
verification will be performed by professional verifiers (i.e.
individuals or companies that provide verification or ``attestation''
services). EIA will consider a report to the program to be
independently verified if:
(i) The lead individual verifier and other members of the
verification team are accredited by one or more independent and
nationally-recognized accreditation programs, described in paragraph
(c) of this section, for the types of professionals needed to determine
compliance with DOE's 1605(b) Guidelines; and
(ii) All members of a verification team have education, training
and/or professional experience that matches the tasks performed by the
individual verifiers, as deemed necessary by the verifier accreditation
program.
(2) As further guidance, individual verifiers should have a
professional degree or accreditation in engineering (environmental,
industrial, chemical), accounting, economics, or a related field,
supplemented by specific training and/or experience in emissions
reporting and accounting, and should have their qualifications and
continuing education periodically reviewed by an accreditation program.
The skills required for verification are often cross-disciplinary. For
example, an individual verifier reviewing a coal electric utility
should be knowledgeable about mass balance calculations, fuel
purchasing accounting, flows and stocks of coals, coal-fired boiler
operation, and issues of entity definition.
(3) Companies that provide verification services must use
professionals that possess the necessary skills and proficiency levels
for the types of entities they provide verification services to.
Maintaining such skills and proficiency levels may require continuing
training to ensure all individuals have up-to-date knowledge regarding
the tasks they perform.
(c) Qualifications of organizations accrediting verifiers.
Organizations that accredit individual verifiers must be nationally
recognized certification programs. They may include, but are not
limited to the: American Institute of Certified Public Accountants;
American National Standards Institute's Registrar Accreditation Board
program for Environmental Management System auditors (ANSI-RAB-EMS);
Board of Environmental, Health and Safety Auditor Certification:
California Climate Action Registry; Clean Development Mechanism
Executive Board; and the United Kingdom Accreditation Scheme.
(d) Scope of verification. As part of any independent verification,
qualified verifiers shall use their expertise and professional judgment
to verify for accuracy, completeness and consistency with DOE's
guidelines of:
(1) The content of entity statements, annual reports and the
supporting records maintained by the reporter;
(2) The representation in entity statements (or lack thereof) of
any significant changes in entity boundaries, products, or processes;
(3) The procedures and methods used to collect emissions and output
data, and calculate emission reductions (for entities with widely
dispersed operations, this process should include on-site reviews of a
sample of the facilities);
(4) Relevant personnel training and management systems; and
(5) Relevant quality assurance/quality control procedures.
(e) Verification statement: Both the verifier and, if relevant, an
officer of the company providing the verification service must sign the
verification statement. The verification statement shall attest to the
following:
(1) The verifier has examined all components listed in paragraph
(d) of this section;
(2) The information reported in the verified entity report and this
verification statement is accurate and complete;
(3) The information reported by the reporting entity has been
compiled in accordance with this part;
(4) The information reported on the entity report is consistent
with information submitted in prior years, if any, or any
inconsistencies with prior year's information are documented and
explained in the entity statement;
(5) The verifier used due diligence to assure that direct
emissions, emission reductions, and/or sequestration reported are not
double reported by any other entity;
(6) Any emissions, emission reductions, or sequestration that were
achieved by a third party are included in this report, if and only if
there exists a written agreement with each third party indicating that
they have agreed that the reporting entity should be recognized as the
entity entitled to report these emissions, emission reductions, or
sequestration;
(7) None of the emissions, emission reductions, or sequestration
reported is a product of shifting emissions to other entities or to
non-reporting parts of the entity;
(8) No reported changes in avoided emissions associated with the
sale of electricity, steam, hot or chilled water generated from non-
emitting or low-emitting sources are attributable to the acquisition of
a generating facility that has been previously operated, unless the
base year generation values are derived
[[Page 15192]]
from records of the facility's operation prior to its acquisition;
(9) The verifying entity will maintain sufficient records to
document the analysis and calculations underpinning this verification
for a period of no less than three years; and
(10) The independent verifier is not owned in whole or part by the
reporting entity, nor provides any ongoing operational or support
services to the entity, except services consistent with independent
financial accounting or independent certification of compliance with
government or private standards.
(f) Qualifying as an independent verifier. An independent verifier
may not be owned in whole or part by the reporting entity, nor may it
provide any ongoing operational or support services to the entity,
except services consistent with independent financial accounting or
independent certification of compliance with government or private
standards.
Sec. 300.12 Acceptance of reports and registration of entity emission
reductions.
(a) Acceptance of reports. EIA will review all reports to ensure
they are consistent with this part and with the Draft Technical
Guidelines (incorporated by reference, see Sec. 300.13). Subject to
the availability of adequate resources, EIA intends to notify reporters
of the acceptance or rejection of any report within six months of its
receipt.
(b) Registration of emission reductions. EIA will review each
accepted report to determine if emission reductions were calculated
using the reporting entity's base period emissions (no earlier than
2002) or the average annual emissions of its base period (a period of
up to four sequential years ending no earlier than 2002), and to
confirm that the report complies with the other provisions of this
part. EIA will also review its records to verify that the entity has
submitted accepted annual reports for each year between the
establishment of its base period and the year covered by the current
report. DOE will notify the entity that reductions meeting these
requirements have been credited to the entity as ``registered
reductions'' which can be held by the reporting entity for use
(including transfer to other entities) in the event a future program
that recognizes such reductions is enacted into law.
(c) Rejection of reports. If EIA does not accept a report or if it
determines that emission reductions intended for registration do not
qualify, the report will be returned to the sender with an explanation
of its inadequacies. The reporting entity may resubmit a modified
report for further consideration at any time.
(d) EIA database and summary reports. The Administrator of EIA will
establish a publicly accessible database composed of all reports that
meet the definitional, measurement, calculation, and certification
requirements of these Guidelines. A portion of the database will
provide summary information on the emissions and registered emission
reductions of each reporting entity.
Sec. 300.13 Incorporation by reference.
The Draft Technical Guidelines for the Voluntary Reporting of
Greenhouse Gases Program (August 5, 2004) referenced in Sec. 300.1(c)
and other sections of this part have been approved for incorporation by
reference by the Director of the Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy of the Draft
Technical Guidelines from the Office of Policy and International
Affairs, U.S. Department of Energy, 1000 Independence Ave., SW.,
Washington, DC 20585, or by visiting the following Web site: http://www.policy.energy.gov/enhancingGHGregistry/drafttechnicalguidelines/.
The Draft Technical Guidelines also are available for inspection at the
National Archives and Record Administration (NARA). For more
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
[FR Doc. 05-5607 Filed 3-23-05; 8:45 am]
BILLING CODE 6450-01-P