Download Development of Climate Action Plans and Sustainability

GHG Accounting Fundamentals
September 29, 2009
Presentation Overview
 Background and Greenhouse Gases
 Framework of GHG Inventory and Reduction Plans
 Inventory Concepts
• Emission Source Categories
• Boundaries
• Absolute vs. Intensity-Based
 Existing Protocols
Greenhouse Gases
Background: The Greenhouse Gas Effect
Background: The Science
From the Intergovernmental Panel on Climate Change
(IPCC), Fourth Assessment Report:
“Warming of the climate system is unequivocal, as is now evident from
observations of increases in global average air and ocean temperatures,
widespread melting of snow and ice and rising global average sea level”
“Global atmospheric concentrations of CO2, methane (CH4) and nitrous oxide
(N2O) have increased markedly as a result of human activities since 1750 and
now far exceed pre-industrial values determined from ice cores spanning many
thousands of years.”
“Most of the observed increase in global average temperatures since the mid20th century is very likely due to the observed increase in anthropogenic GHG
concentrations. It is likely that there has been significant anthropogenic warming
over the past 50 years averaged over each continent (except Antarctica)”
Whether one agrees or disagrees with the findings of the IPCC is in some ways
irrelevant. This is the issue that has captured the attention of national and local
government leaders, regulators, the public, shareholders, insurance
companies, and lenders and other financial institutions. Response is
becoming less and less voluntary.
Background: Greenhouse Gases
6 GHGs Typically Covered by
Existing Regulations / Protocols:
Additional GHGs / Factors Impacting
Climate:
Carbon Dioxide - CO2
Other “F-gases”
Methane - CH4
Nitrous Oxide - N2O
Sulfur Hexafluoride - SF6
Hydrofluorocarbons - HFC’s
Perfluorocarbons - PFC’s
• CFCs / HCFCs, typically not counted because
regulated by Montreal Protocol mechanisms
• NF3 included in proposed Federal cap & trade
legislation
• Other fluorinated gases such as HFEs included
in recent EPA mandatory reporting rule
Water Vapor
Ground Level Ozone
Carbon Black
Aviation Contrails
Ongoing debate regarding whether highaltitude emissions (aircraft) have greater
impact than ground-level emissions
Background: Global Warming Potential
Global Warming Potential (GWP) Definition:
“The ratio of radiative forcing (degree of warming to the atmosphere)
that would result from the emission of one unit of a given GHG
compared to one unit of carbon dioxide (CO2).“ 1
i.e., a measure of the climate impact of a given mass of one GHG
relative to an equal mass of release of CO2, based on a defined
time horizon
1 Source:
The Climate Registry General Reporting Protocol, Version 1.1
Global Warming Potential Estimates
Global Warming Potential Estimates
GWP (100-year)
SAR
TAR
AR4
CO2
1
1
1
CH4
21
23
25
N2O
310
296
298
SF6
23,900
22,200
22,800
HFCs
140 – 14,800
PFCs
6,500 – 12,200
Source: Intergovernmental Panel on Climate Change, Second Assessment
Report (1995), Third Assessment Report (2001), and Fourth Assessment
Report (2007)
Setting the Framework for a GHG Reduction Program
The Pathway to GHG Reduction
Climate Change Drivers Converging
The risks and effects of climate change have been accepted by the scientific, regulatory
community and a growing number of public stakeholders
Driver
Private Sector
Federal Sector
Regulatory Risk
New GHG legislation
New rules and regulation
New GHG legislation
New rules and regulation
Physical Risk
Transportation Networks
Intense Storm Events
Energy demand and delivery
Energy demand and delivery
Impacts to Infrastructure
Intense Storm Events
Drought
Financial Risk
Redefining “materiality” to include
Climate Change
Availability of insurance and investment
capital
Fiduciary responsibility
Rising energy prices
Efficiency requirements
Base infrastructure rework
New Market
Opportunity
Growth in carbon credit trading
Building a “green energy” economy
Environmental Stewardship
Inventory Concepts
Reporting Principles
 Relevance
Reflects GHG emissions, serves decisionmaking needs
 Completeness
Report everything within the
boundary, state exclusions clearly
 Consistency
Support meaningful comparisons over
time, document change
 Transparency
Clear audit trail
 Accuracy
Minimize uncertainties as far as
practicable, reasonable assurance for uses
Emission Sources
 Scope 1: Direct Emission Sources
• Stationary Combustion (e.g. boilers for comfort heating, boilers for electricity
generation)
• Mobile Combustion (e.g., vehicles)
• Process Related Emissions (e.g. N2O byproducts of ozone generation)
• Fugitive Emissions (e.g., methane from WWTP surfaces, leaks of natural
gas from pipelines)
 Scope 2 – Indirect Emission Sources
• Use of electricity, steam, and/or hot/chilled water
• Use of electricity intentionally double counted in context of Scope 1
emissions (ownership by another entity)
 Scope 3 – Optional Indirect Emission Sources
• Upstream or downstream activities
• Examples: raw material transport, waste removal and disposal, product
transport, landscaping, employee commute
• Generally considered part of GHG “footprint” rather than “inventory”
Emission Scopes
Emission Scopes & Life Cycle Considerations
Footprint
Other emissions indirectly
resulting from utility operations
Outsourced
solids handling
and transport
Emissions from
production of
purchased LOX
Inventory
Stationary combustion,
indirect electrical emissions,
etc. from facilities owned or
controlled by the utility
Off-site GAC
regeneration
Water conveyance to
utility systems
A water utility’s inventory includes GHG emissions within its
organizational boundary. A footprint includes lifecycle GHG
emissions, and is typically far broader.
Organizational Boundaries
 Determining the breadth of facilities and operations to include in the
emission inventory
 Two common methods specified for organizational boundary definition
• Equity share approach (all owned or partially owned facilities or emission sources
included, pro-rated based on fraction owned)
• Control approach (all facilities or emission sources under the control of the entity
are included 100%)
• Approach must be commonly applied across entire scope
• consider shared, co-located and outsourced operations
 Addressing mergers and acquisitions
• Boundaries change over time, and procedures are specified for how current and
prior year inventories are adjusted based on organizational changes
 Also may consider geographic boundaries
Organizational Boundaries
Choose:
Report by Ownership or
Control
Report by Ownership
Report by Control
Report by Equity Share
Test Control:
If Own (>50%),
or control HS&E
Then: Report 100%
Else: Report 0%
Organizational Boundaries- Leased Sources
 Finance/ Capital Leases- treated as an asset on the
balance sheet
 Operational Leases- Everything else
• Control is defined as the ability to pay electricity bills, control
H&SE policy, etc.
Choose:
Report by Ownership or
Control
Report by Ownership
Report by Control
Test Control:
Finance Leases
If Pay utility bills
Operational Boundaries
GHGs Relevant to Water Utilities - Group Discussion
GHG
Relevant Sources
CO2, N20, CH4
Stationary-
Mobile-
Process-
IndirectHFCs
PFCs
SF6
De Minimis Emissions
 Latin origin meaning, “of little importance” or “at a level that is too small
to be concerned with.”
 Historically, de minimis emissions were excluded from inventories. By
most current protocols, all identified emission sources must be included
whether de minimis or not – however sources shown to be de minimis
are held to a lower standard of rigor for data quality
 De Minimis threshold ranges from 3 – 5% of overall emissions total,
depending on the referenced protocol
 WaterRF study showed that most water utility sources not currently
defined in existing protocols are likely de minimis
Absolute VS. Intensity Based Reporting
 Absolute Emissions: Simply the sum of emissions from all sources (ex.
tons of CO2-e)
 Emissions Intensity: Total emissions correlated to a production or output
metric (i.e., absolute emissions / normalization metric)
• Example: tons of CO2-e per million gallons of water treated
• Allows benefits of projects or progress towards reduction goals to be recognized
even in light of organization growth or mergers
Baseline Emissions
 For entity-wide emission inventories, baseline or base-year emissions
typically refer to the total emissions in the first year of a period over
which a reduction effort is planned
• Used as the baseline against which progress towards a reduction goal is
assessed
• Base-year emissions may be adjusted based on organizational boundary
changes, in particular for mergers or divestitures
 For specific emission reduction projects, baseline is the projected
emissions “but not for” the project
• May be defined as “static” – assuming no changes but not for the project, or
“dynamic” – acknowledging that other changes would have occurred
• Discussed more in afternoon session
Benchmarking
 Purpose of Benchmarking
• Evaluation of emissions over time in relation to targets or
industry benchmarks
• Facilitation of comparisons between similar businesses,
processes, or products
• Improving public understanding of an entity’s emissions
profile over time, even as the business activity changes,
expands, or decreases
Benchmarking
 Sum emissions depending on how benchmarking will
be used
• facility type (source, treatment, distribution,
buildings/infrastructure, fleet, and other)
• emission source type (stationary equipment vs.
generators, mobile fleet vs. handling equipment, electricity
usage for offices vs. electricity usage for transfer pumps,
etc.)
• source category (direct, indirect, and other indirect)
• CO2-e
Inventory Management Plan (IMP)
 Why develop an IMP?
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Institutionalize the process
Minimize workload
Prepare for audits and certification
Increase credibility under reporting programs
Roadmap for the inventory
Achieve the Reporting Principles
What does the IMP look like?
 Could be a single document that spells out all
requirements
 Could be an overview document (or web-based tool)
that links to:
•
•
•
•
existing or new SOP’s
software data base user guides
job descriptions
etc.
IMP Outline
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•
•
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Organizational Boundaries
Operational Boundaries
Quantification Methods and Factors
Data Management- Type of data, process flow, Quality
Assurance
• Adjustment procedures
• Management Tools- Training, Roles &Responsibilities
• Auditing and Verification
Existing Protocols
Organizations Publishing Existing Protocols
 World Resource Institute / World Business Council on
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Sustainable Development (WRI/ WBCSD)
EPA – Climate Leaders / National Greenhouse Gas Registry
DOE 1605b
The Climate Registry (TCR)
California Climate Action Registry (CCAR)
International Council for Local Environmental Initiatives (ICLEI) –
Local Governments for Sustainability
Chicago Climate Exchange (CCX)
ISO 14064
United Kingdom Water Industry Research (UKWIR) – Workbook
for Quantifying Greenhouse Gas Emissions
WRI/ WBCSD GHG Protocol
 Starting point for virtually every
protocol that is available today
 Consists of 2 separate but
interrelated modules:
• GHG Protocol—Corporate
Accounting and Reporting Standard
• GHG Protocol—Project Accounting
WRI/ WBCSD GHG Protocol
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4, N2O,
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HFC, PFC, and SF6
Sources of GHGs - Scope 1 (direct), Scope 2 (indirect), Scope
3 (optional indirect) emissions
Materiality Threshold (uncertainty error range potentially
causing material misstatement) is defined
Emission factors based on IPCC and international energy data
sources (except US energy is based on e-GRID)
Includes guidance and calculation tools for:
• Stationary Combustion, Indirect Emissions, Mobile Combustion, HFC
usage, and Sector specific modules for the Cement Industry,
Aluminum Production, Iron & Steel, Pulp & Paper, Ammonia
Production, etc.
 Does not include a registry
EPA Climate Leaders /
National Greenhouse Gas Inventory
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4,
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N2O, HFC, PFC, and SF6
Sources- Direct, Indirect, Optional
Materiality or de minimis threshold is not defined – all GHG
sources must be included in baseline
Emission factors are based on US Sources- e-GRID,
DOE/EIA
Includes guidance for:
• Stationary Combustion, Indirect Emissions, Mobile Combustion,
HFC usage, and Sector specific modules for the Iron & Steel,
MSW Landfilling, HFC manufacturing. Others are drafted- Cement
Industry, Aluminum Production, Pulp & Paper.
DOE 1605b
 The U.S. Department of Energy (DOE) set up a voluntary
reporting program to help organizations and individuals
measure and record the actions they have taken to reduce
GHGs or to increase carbon sequestration.
 The program is based on General Guidelines for the
Voluntary Reporting of Greenhouse Gases [Section 1605(b)
of the Energy Policy Act of 1992].
DOE 1605b
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4,
N2O, HFC, PFC, and SF6
 Sources- Direct, Indirect
 De minimis threshold defined as 3% of total GHG inventory
 Provides a methodology rating approach
• Stationary
– Monitoring
– Mass balance using Carbon content of fuel
– IPCC for CH4 and N2O
• Indirect
– Generator specific factors
– EIA
– e-GRID
 Includes guidance for:
• Stationary Combustion, Indirect Emissions, Mobile Combustion,
Process emissions, geologic sequestration, forestry, agriculture
The Climate Registry (TCR)
 The Climate Registry is policy-neutral collaboration among 40 states;
9 Canadian provinces; 6 Mexican states; and 3 Native American
tribes aimed at developing and managing a common greenhouse gas
emissions reporting system.
• Goal is to improve consistency
and transparency between
programs and establish a high
level of integrity in emissions
accounting and reporting.
The Climate Registry (TCR)
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4,
N2O, HFC, PFC, and SF6
 Sources- Direct, Indirect, Optional Indirect
 De minimis threshold defined as 5%
 Emission factor sources- EPA, IPCC, Climate Leaders, eGRID
 Protocols are equivalent to WRI/WBCSD
California Climate Action Registry (CCAR)
 The California Climate Action Registry (CCAR) was
established by California statute as a non-profit voluntary
registry for GHG emissions. The purpose of the CCAR is to
help companies and organizations with operations in the
state to establish GHG emissions baselines against which
any future GHG emission reduction requirements may be
applied.
 Participants include businesses, non-profit organizations,
municipalities, state agencies, and other entities.
 CCAR staff were instrumental in establishing TCR
 CCAR to be eventually superseded by TCR, and CCAR will change its
mission to focus on the management and tracking of GHG emission reduction
projects via the Climate Action Reserve (CAR)
California Climate Action Registry (CCAR)
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4,
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N2O, HFC, PFC, and SF6
Sources- Direct, Indirect
De minimis threshold defined as 5%
Emission factors sources- California Specific, DOE/EIA,
IPCC, e-GRID
Includes guidance for:
• Stationary Combustion, Indirect Emissions, Mobile Combustion,
and Sector specific modules for Cement Industry, Forest Products,
and Power/Utility
 NOTE- CA Mandatory Program (AB32) started in 2008
International Council for Local Environmental Initiatives
(ICLEI) – Local Governments for Sustainability
 more than 700 cities, towns, and counties worldwide
 provides resources, tools, and information exchange services for
reduction of GHG emissions.
 February 2008, ICLEI released a draft of the ICLEI Protocol for inventory
of municipal operations. Guidance on inventory of community emissions
forthcoming
 similar to the WRI/WBCSD GHG Protocol, but with additional guidance
relative to information management for municipalities
International Council for Local Environmental Initiatives
(ICLEI) – Local Governments for Sustainability
 Sources- Direct, Indirect
 adds “conservativeness” as a guiding principle
• that is, assumptions, values, and procedures used to
quantify GHG emission levels should overestimate, not
underestimate
 Tiered approach to emission factors and activity data
• Tier 1: Basic
• Tier 2: Intermediate
• Tier 3: Most accurate/complex (Try to use best)
Chicago Climate Exchange (CCX)
 Established in response to a feasibility study
conducted by Environmental Financial Products and
funded by the Chicago-based Joyce Foundation.
• concluded “a North American private-sector pilot GHG
trading market was feasible”
 “North America’s only, and the world’s first, GHG
emission registry, reduction and trading system for all
six GHGs”
Chicago Climate Exchange (CCX)
 voluntary, legally binding commitment to reduce direct
GHG emissions below an emissions baseline.
 inventories based upon the WRI/WBCSD GHG
Protocol guidance and tools.
 CCX hires a third party, the Financial Industry
Regulatory Authority, for verification of inventory data,
unlike most other registries that require the member to
hire an independent third party from a list of precertified verification parties.
ISO 14064
 The ISO 14064 comprises three standards:
• ISO 14064-1, Greenhouse gases – Part 1: Specification with
guidance at the organization level for the quantification and
reporting of greenhouse gas emissions and removals.
• ISO 14064-2, Greenhouse gases – Part 2: Specification with
guidance at the project level for the quantification, monitoring and
reporting of greenhouse gas emission reductions and removal
enhancements.
• ISO 14064-3, Greenhouse gases – Part 3: Specification with
guidance for the validation and verification of greenhouse gas
assertions.
 Closely follows WRI GHG Protocol
 GHGs addressed include the 6 Kyoto Gases- CO2, CH4,
N2O, HFC, PFC, and SF6
 Sources- Direct, Energy Indirect, Other indirect
 Specific emission factors or quantification methodologies are
not provided
United Kingdom Water Industry Research (UKWIR) –
Workbook for Quantifying Greenhouse Gas Emissions
 Finalized in February 2005
 Specifically on estimating individual water company
GHG emissions
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Drinking water treatment and pumping
Sewage treatment and pumping
Sludge treatment and disposal
Administrative activities
Transport
Use of purchased electricity
Production and use of self-generated electricity from biogas,
sludge, or other fuels
• Fuel use, including use in process and transport
 Microsoft Excel Spreadsheet Tool
 2004 UK Department for Environment, Food, and Rural
Affairs (Defra) Guidelines for Company Reporting
Questions?
Extra Material
CO2 Emissions Since Industrial Revolution
GHG Atmospheric Concentrations
IPCC 4th Report
Figure Observed changes in (a) global average surface temperature; (b) global average sea level from tide gauge (blue) and satellite (red)
data and (c) Northern Hemisphere snow cover for March-April. All differences are relative to corresponding averages for the period 1961-1990.
Smoothed curves represent decadal averaged values while circles show yearly values. The shaded areas are the uncertainty intervals
estimated from a comprehensive analysis of known uncertainties (a and b) and from the time series (c).
Physical and Infrastructure Risks
Projected Changes
This Century
More hot days, more
frequent heat waves
Industry, Human
Settlements and
Society
Agriculture, Forestry
and Water
Higher energy demand
Increased water demand
Fewer disruptions to transport Increased insect infestation
from snow and ice
Lower crop yields in warmer
Reduced winter tourism
climates
More frequent heavy Flooding of transportation and Crop, tree and reef damage
commerce networks
Soil erosion
precipitation, intense Property loss
Water logging of soil and
hurricane and cyclone Withdrawal of risk coverage inhibition of cultivation
by insurers
activity
More areas affected
by drought
Rise in sea levels
Power outages
Shortages of water for
industry
Reduced hydropower
Population migrations
Land degradation
Lower crop yields
Wildfires
Human Health
Increase in heat-related
deaths and illnesses
Decrease in deaths and
illnesses from cold
Increases in flood-related
injuries and deaths
Higher incidence of infectious
(e.g., Malaria), respiratory and
skin diseases
More food and water
shortages
Higher incidence of water and
food borne disease
Movements of populations
Salinization of irrigation water, Increase in flood related
and infrastructure
estuaries and freshwater
injuries and deaths
Property loss
systems
More migration related health
Withdrawal of risk coverage Shortages of fresh water
problems
by insurers