Green News – Page 9 – GHG Accounting

Québec introduces 2012-2020 Climate Change Action Plan with 63% of Funds Targeted at Transportation

On June 3, 2012, Québec introduced its 2012-2020 Climate Change Action Plan and the accompanying Government Strategy for Climate Change Adaptation. Under the new action plan and strategy, nearly $2.7 billion will be invested towards the government’s climate change goals. Revenues to implement the plan, which is intended to be self-funded, are expected to come from the carbon market as well as charges on fossil fuels and combustibles which have been extended until 2014.

As the transport industry is estimated to account for 43% of all greenhouse gas (GHG) emissions in Québec, two-thirds of revenues from the action plan will fund transportation measures such as public and alternative transit, as well as inter-modality and energy efficiency in freight transport. The plan also allocates $200 million to support efforts by businesses to reduce GHG emissions through initiatives such as investing in projects related to energy efficiency, process optimization and the installation of environmentally friendly equipment. In addition, $40 million will be dedicated to support the development and marketing of new technologies.

These initiatives constitute the first phase of the 2013-2020 action plan. The second phase of the plan will be launched at the mid-point of the plan and will take into consideration the revenue generated by the carbon market and the new policy directions adopted with respect to sustainable mobility, land use planning and energy. The action plan will also evolve based on new developments in climate science, technologies and Québec’s progress in the attainment of its objectives.

Québec introduces amendments to draft GHG Regulations

To help Québec meet its emission reduction targets, the province introduced amendments to two draft GHG regulations in the June 8, 2012 edition of the Québec Official Gazette: (i) Regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere, and (ii) Regulation respecting a cap-and-trade system for greenhouse gas emission allowances.

Amendments to the Regulation respecting a cap-and-trade system for greenhouse gas emission allowances are intended to link the Quebec system with the California system as well as those of future partners such as Ontario and British Columbia. To this end, it specifies system registration admissibility conditions and necessary documents, as well as the procedure regulating emission rights trading and auctions, and provides the conditions for the delivery of offset credits, including protocols regarding certain admissible projects. Finally, amendments were made to adjust the regulation further to the adoption of Bill 89, An Act to amend the Environment Quality Act in order to reinforce compliance, by providing for administrative penalties and stronger sanctions.

The Regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere was also amended in order to complete the necessary harmonization with Western Climate Initiative (WCI) rules by adding declaration protocols. It provides, among other things, that the obligation to audit GHG emission declarations only applies to emitters subject to the GHG cap-and-trade system. In Québec, 2012 is a transition year during which regulated entities will have an opportunity to become familiar with the cap-and-trade system. The first carbon market compliance period will begin on January 1, 2013.

Legal Challenges Unlikely to Delay 2013 Start of California’s Cap-and-Trade Program

According to a panel of legal experts, it is unlikely that recent legal challenges to California’s cap-and-trade program will delay the start of compliance with the system on January 1, 2013. Speaking at the Navigating the American Carbon World conference in San Francisco on April 12, 2012, lawyers said that state regulators have done a good job in designing a system that can withstand legal challenges from regulated industries including the oil, gas and power sectors.

“Even if lawsuits are filed, I don’t think we’re going to see anything between now and the end of 2012 that will actually delay it,” said Tim O’Connor, a lawyer with the Environmental Defense Fund (EDF). He added that: “There might be lawsuits that are continuing, but nothing that will actually derail it at December 31, 2012,” when compliance with the program begins. Other panel members agreed that it was difficult to envision a scenario where a lawsuit would knock the program completely off course.

The majority of the lawsuits filed so far against the California Air Resources Board (ARB), the state agency that designed and is implementing the program, have come from environmental groups, not industry.

A lawsuit by an environmental justice group known as the Association of Irritated Residents (AIR) last year contributed to the ARB’s decision to delay compliance with the program until 2013.

In March 2012, two employees at the Environmental Protection Agency (EPA), acting as private citizens, filed a lawsuit claiming the ARB overstepped its authority when it said offset credits could count for compliance with the system. State officials and independent legal experts at the conference said they were confident the state would prevail in that case.

One reason lawsuits from industry have yet to materialize may be because the state has designed a system that stands on firm legal ground, EDF’s O’Connor said: “I would hope that the reason we haven’t seen a lot of legal challenges so far is because there are a lot of options that have been taken off the table because of smart design and design that is in compliance with the law”.

(Sources include: Thomson Reuters Point Carbon)

BC Announces New Funding for Public Sector Carbon Neutral Commitments

On April 5, 2011, Environment Minister Terry Lake announced a new $5 million capital program that will be available to school districts for energy-efficiency projects to lower their carbon emissions. The provincial government indicated that this funding reaffirms its commitment to being the first carbon-neutral government in North America.

Starting in 2012/13, the new K-12 energy-efficiency capital program will be available to boards of education through the Ministry of Education. The amount of available funding has been set to be equal to or greater than the total paid by school boards each year for purchases of carbon offsets from the Pacific Carbon Trust (PCT).

In addition to the new funding, the following program enhancements for all public sector organizations were announced:

SMARTTool administration costs will no longer be charged to public sector organizations, resulting in $850,000 of cost savings that will be absorbed by the PCT.
To ensure the PCT’s offset portfolio meets the needs of stakeholders, the PCT will create an advisory panel. The panel will play an ongoing role in reviewing the structure and diversity of the carbon offset portfolio and provide suggestions regarding future offset opportunities. The panel will include representatives from the private and public sectors that purchase offsets from PCT, as well as select carbon-industry experts.
To streamline the current system, a link will be established that will feed energy data directly into the SMARTTool to reduce administrative costs associated with measuring emissions.

Under BC’s Carbon Neutral Regulation of the Greenhouse Gas Reduction Targets Act, certain public sector organizations were required to be carbon neutral by 2010. In June 2011, it was announced that BC had become the first major jurisdiction in North America to achieve carbon neutral operations as of 2010. This means that BC’s public sector including schools, post-secondary institutions, government offices, Crown corporations and hospitals have all achieved net-zero greenhouse gas emissions.

Global Protocol for Community-scale GHG Emissions released for Public Comment

On March 20, 2012, the ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group released a draft edition of the Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC) to help cities around the world measure and report GHG emissions using a consistent protocol. Public comments on the draft GPC may be submitted until April 20, 2012 and a final version will be released on May 15 at the United Nations climate talks in Bonn. The design of the GPC is specified within the scope of the Memorandum of Understanding that was signed between ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group on 1 June 2011 in Sao Paulo.

The GPC is the result of a year-long collaboration between ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group; in June 2011, the two organizations forged an agreement to develop a standard approach for accounting and reporting GHG emissions that will boost the ability of cities to access funding and implement actions. Other organizations that participated in the development of GPC include the World Bank Group, United Nations-HABITAT, United Nations Environment Program, the Organization for Economic Cooperation and Development, and the World Resources Institute. This new collaboratively developed community protocol establishes a single minimum standard for accounting and reporting community scale greenhouse gas (GHG) emissions that can be used across multiple platforms. The GPC complements ICLEI’s programs and tools on local climate action that are being implemented globally, in particular the 2009 International Local Government GHG Emissions Analysis Protocol (IEAP) and its national supplements.

The GPC has three main components:

guiding principles and a policy framework to link the efforts across local and national governments and the private sector;
the 2012 Accounting and Reporting Standard with supplemental guidance on methodologies, and reporting templates; and
a roadmap for institutionalizing the process for updating the Standard on an ongoing basis.

Background

To manage emissions in an effective and transparent way, cities must measure and publicly report them. Planning for climate action at the city level starts with developing a GHG inventory, which allows local policy makers and residents to understand which sectors drive GHG emissions in their city or community, and respond by developing action plans that address those sectors. To date, a consistent accounting and reporting guidance for cities on how to conduct community scale inventories has been lacking. Rather, competing guidance has resulted in a proliferation of protocols and inventories that cannot be easily communicated between financing institutions, local and national governments, and the private sector. The absence of a common approach prevents comparison between cities and across time, and reduces the ability of cities to demonstrate the global impact of collective local actions.

Harmonization of GHG accounting methodologies presents local governments with opportunities for credible reporting of climate data in a transparent, verifiable, consistent, and locally relevant way. An internationally recognized GHG accounting standard which harmonizes prevailing methodologies can help local governments to set targets, measure progress, and leverage national and international financing. The community protocol integrates seamlessly with national and corporate GHG accounting methodologies, facilitating linkages between these entities for improved coordination to reduce GHG emissions. ICLEI is also working with its partners to reflect provisions of the GPC in the GHG performance section of the carbon Cities Climate Registry (cCCR). As of February 2012, the cCCR had compiled more than 1 GtCO2/yr of community GHG emissions reported by over 160 cities worldwide.

The GPC builds upon the principles, knowledge, experiences, and practices defined in previously published city-led inventories, institutional standards, and organizational protocols. These include the International Local Government GHG Emissions Analysis Protocol (ICLEI), Draft International Standard for Determining Greenhouse Gas Emissions for Cities (UNEP/UN-HABITAT/WB), GHG Protocol Standards (WRI/WBCSD), Baseline Emissions Inventory/Monitoring Emissions Inventory methodology (EC-CoM JRC), and Local Government Operations Protocol (ICLEI-USA).

Within the context of the GPC, several challenges have been identified in efforts to account for community-scale emissions:

Developing a community-scale GHG accounting and reporting standard that attributes emissions to the activities of the community.
Harmonizing existing community-based GHG accounting methodologies and standardizing accounting, reporting, and the relationships of community-scale inventories with national, organizational, and global climate efforts.
Advancements in GHG accounting methodologies at the community-scale are continuously evolving. An open, global protocol must therefore include a process for revising the standard to meet the inevitable improvements of tomorrow.

To address these challenges, the GPC provides a template to analyze the relationship with national and organizational GHG accounting methodologies, allocating all community activities and services that may result in GHG emissions, including inter-city emissions, to categories defined by the 2006 IPCC Guidelines and by Scope definition, to reflect varying levels of control by the community over these emissions. In addition, the GPC introduces a community-scale GHG accounting standard – referred to as the 2012 Accounting and Reporting Standard – which harmonizes GHG accounting methodologies and provides step-by-step guidance for cities on how to collect relevant data, quantify emissions, and report results using a series of summary reporting templates. Data collection for reporting is guided through use of data collection tables, providing transparency in activity data, emissions factors, and data sources. The 2012 Accounting and Reporting Standard enhances local policy development by: (i) benchmarking emissions between cities to facilitate peer-to-peer networking and sharing of best practices; (ii) allowing for consistent measurement of a community’s GHG emissions over time to evaluate various GHG abatement efforts; and (iii) facilitating climate-linked finance.

The GPC and associated processes are guided by six principles:

Measurability. Data required to perform complete emissions inventories should be available; where necessary partners will work with communities to develop local capacity communities to enable for data development and collection for compliance with the 2012 Accounting Standard.
Accuracy. The calculation of GHG emissions should not systematically overstate or understate actual GHG emissions.
Relevance. The reported GHG emissions should reflect emissions occurring as a result of activities and consumption from within the community’s geopolitical boundaries.
Completeness. All significant emissions sources included should be accounted for.
Consistency. Emissions calculations should be consistent in approach.
Transparency. Activity data, sources, emissions factors and accounting methodologies should be documented and disclosed/

Comments on the full document should be submitted through the feedback form template. The deadline for feedback is April 20, 2012. Feedback should be sent directly to GPC@iclei.org.

European Commission Launches Consultation to address GHG emissions from ships

The European Commission has launched an online public consultation on possible measures to reduce greenhouse gas (GHG) emissions from ships. All interested stakeholders can send their contributions until 12 April 2012.

The European Union (EU) has committed itself to reducing total GHG emissions by 2020 by at least 20% across all sectors. The 2008 legislation provides that the European Commission should make a proposal to include international maritime emissions in the EU reduction commitment if no international agreement was approved before the end of 2011 which included such emissions.

Despite significant efforts in the International Maritime Organisation (IMO) and the United Nations Framework Convention on Climate Change (UNFCCC), there has been only limited progress to date on the necessary technical, operational and market-based measures for new and existing ships. The European Commission will continue to support further efforts of these organizations for the development of global measures. The European Parliament and the Member States have therefore repeatedly called on the European Commission to take action if there is no international agreement.

International maritime transport emissions account for approximately 3% of global CO2 emissions and they are expected to more than double by 2050 if no additional action is taken. The introduction of measures to cut emissions will also reduce fuel consumption, thus bringing down transportation costs. Such action will also stimulate demand for low carbon maritime equipment and services.

World’s Leading Investors Issue Guidelines for Company Action on Climate Change

At the Investor Summit on Climate Risk & Energy Solutions held at the United Nations in New York in January 2012, the world’s largest investors issued guidelines detailing their expectations of how companies should approach responding to climate change. The guidelines, entitled “Institutional Investors’ Expectations of Corporate Climate Risk Management”, provide a unified global investor voice on the issue for the first time in response to concerns about the impact of climate change on their investments.

Co-ordinated by three leading investor groups on climate change, the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Investors Group on Climate Change (IGCC) in Australia and New Zealand, the document outlines seven steps investors expect companies to take to minimize the risks and maximize the opportunities presented by climate change and climate policy:

Governance. Clearly define board and senior management responsibilities and accountability processes for managing climate change risks and opportunities.
Strategy. Integrate the management of climate change risks and opportunities into the company’s business strategy.
Goals. Make commitments to mitigate climate change risks: define key performance metrics and set quantified and time-bound goals to improve energy efficiency and reduce greenhouse gas emissions in a cost-effective manner; and set goals to address vulnerabilities to climate change.
Implementation. Make a systematic review of cost-effective opportunities to improve energy efficiency, reduce emissions, utilize renewable energy and adapt to climate change impacts. Where relevant, integrate climate change considerations into research and development, product design, procurement and supply chains.
Emissions inventories. Prepare and report comprehensive inventories of greenhouse gas emissions; data should be presented to allow trends in performance to be assessed and it should include projections of likely changes in future emissions.
Disclosure. Disclose and integrate into annual reports and financial filings, the company’s view of and response to its material climate change risks and opportunities, including those arising from carbon regulations and physical climate change risks.
Public policy. Engage with public policy makers and other stakeholders in support of effective policy measures to mitigate climate change risks. Ensure there is board oversight and transparency about the company’s lobbying activity and political expenditures on this topic.

In addition, the guidelines set out steps that investors will take in the following areas: analysis, inquiry, monitoring, engagement, collaboration and public policy. By moving beyond disclosure and clearly outlining the areas in which investors expect to see companies take action, the guidelines provide a platform from which investors can monitor the performance of companies and engage with them to encourage positive steps on climate change. Investors are already taking action by monitoring alignment with their expectations through initiatives such as the Carbon Disclosure Project, and collaborating with companies through investor networks and the UN Principles for Responsible Investment. This group of investors considers the guidelines to be of particular importance to companies in carbon-intensive sectors, and those who have not have adopted carbon reduction targets or a systematic approach to managing climate change risks.

Leading Global Investors Urge Action on Investment-Grade Climate Change Policy

A group of 285 of the world’s leading investors issued a “2011 Global Investor Statement on Climate Change” urging governments and institutional policy makers to take new policy action to stimulate private sector investment in climate change solutions. According to the Institutional Investors Group on Climate Change (IIGCC), “current levels of investments in low-carbon technology and infrastructure are substantially lower than the $500 billion per year deemed necessary by the International Energy Agency to hold the increase of global average temperatures below 2 degrees Celsius—the target agreed in Cancun...” Since 2008, investor support for climate action has more than doubled, when 150 investors with $9 trillion in assets under management first urged government leaders to act on climate change. The IIGCC currently manages more than $20 trillion in assets.

IIGCC also released a report with the Statement, entitled “Investment-Grade Climate Change Policy: Financing the Transition to the Low-Carbon Economy“. The report emphasizes the importance of investment-grade policy to encourage institutional investors to allocate capital toward climate change solutions, including appropriate governmental incentives to compensate for increased risk and a sufficient scale for technology deployment. In addition, the report underscores that long-term policy stability is critical and that retroactive policy changes can significantly damage investor confidence.

The IIGCC calls for both domestic and international policy action, including:

definition by governments of clear short-, medium-, and long-term greenhouse gas emission targets and enforceable legal mechanisms and timelines;
lasting financial incentives that favor low-carbon assets;
lasting and comprehensive policies that accelerate implementation of energy efficiency, clean energy, and renewable energy;
a legally binding international climate change treaty;
support for the development of the Green Climate Fund and other funds to assist developing countries to address climate change; and
increased efforts to reduce deforestation.

Québec Prepares to Start Emissions Trading as it Formally Adopts Cap-and-Trade Regulation

On December 14, 2011, Québec formally adopted the Regulation respecting the cap-and-trade system for greenhouse gas emission allowances (the Regulation), which came into force on January 1, 2012 and is based on the rules established by the Western Climate Initiative (WCI).

With the adoption of the Regulation, Québec officially steps to the starting line next to California. The first year of implementation of the system will be a transition year, which will allow emitters and participants to familiarize themselves with how the system works. In particular, 2012 will provide emitters and participants with opportunities to register with the system, take part in pilot auctions and buy and sell greenhouse gas (GHG) emission allowances in the market. No reduction or capping of GHG emissions will be required during this transition year. Over the course of the year, emitters will also be able to make any adjustments that may be necessary to meet their emission reduction obligations, which will come into force on January 1, 2013. Starting on January 1, 2013, some 75 operators in Québec (primarily in the industrial and electricity sectors) whose annual GHG emissions equal or exceed the annual threshold of 25,000 tonnes of carbon dioxide equivalent (CO2e), will be subject to the capping and reduction of their GHG emissions.

It should be noted that starting in 2015, companies which import or distribute in Québec fuels that are used in the transportation and building sectors (and whose combustion generates an amount of GHGs greater than or equal to 25,000 tonnes of CO2e per year) will also be subject to the capping and reduction of their emissions.

For all participating WCI members, the adoption of a cap-and-trade regulation a cap is the first of two key steps towards the establishment of a regional North American carbon market. The second step will consist of concluding a series of recognition agreements, among the different partners, to link their systems together.

BC and Ontario in the meantime continue to dither on whether to join the cap-and-trade scheme and businesses in those provinces are losing out on key opportunities to participate in the transitional market, recently valued for 2012 at almost US$ 800 million by Thomson Reuters Point Carbon. By finalizing their cap-and-trade regulations in a timely way, BC and Ontario could continue to be leaders in regional efforts to reduce GHG emissions and to spur technological innovation in their provinces.

Durban COP 17 – An Agreement to Agree

From November 28 to December 11, 2011, delegates from 194 countries met in Durban, South Africa for the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). With the expiry of the Kyoto Protocol’s initial commitment period looming at the end of 2012, the Durban conference delegates were focused on reaching an agreement to extend or replace the existing UN climate regime.

The negotiators ultimately reached an agreement entitled the Durban Platform for Enhanced Action (the Platform is available online). While the absence of specific details as to what is to be agreed by 2015 introduces considerable uncertainty, for the first time a number of nations which contribute significantly to global GHG emissions have agreed to accept legally binding targets on GHG from 2020. This list includes Brazil, China, India and the US.

Four key actions were agreed upon to build towards a global carbon agreement requiring all major emitters to reduce emissions:

Kyoto Protocol Extension. The Kyoto Protocol has been extended for a second commitment period and 35 developed country parties committed to taking on binding emission-reduction commitments after the Kyoto Protocol expires on December 31, 2012. This second commitment period will run from January 1, 2013 to either December 31, 2017 or December 31, 2020, with the final expiration date to be decided upon next year. The parties who committed to a second round of reduction obligations were primarily from the European Union (EU) and have already committed to internally binding emission reduction targets. Certain other industrialized parties, such as Australia, will not take on targets under a second commitment period until a new international climate agreement has been finalized. Japan and Russia have also declared that they will not submit to a second commitment period under the Kyoto Protocol.
Global Carbon Agreement. All UNFCCC parties are required to establish, by 2015, “a protocol, another legal instrument or an agreed outcome with legal force” that would come into force in 2020. This agreement will replace the Kyoto Protocol and impose binding emissions reductions on both developed and developing nations (including the US, China and India). The goal remains to limit global warming to 2° Celsius. Nations did ot change the emission reduction commitments they made at the 2009 Copenhagen and 2010 Cancun climate talks. Rules will be developed in 2012.
Green Climate Fund (GCF). It was agreed that up to US$100 billion per annum by 2020 will be transferred to developing nations for mitigation and adaptation measures. However, it still remains to be seen how the parties will finance the GCF, but it is expected that the GCF will leverage private sector capital to source results-based investments in emission reduction projects.
Work Plan. Starting in the first half of 2012, the Durban Platform Working Group will plan its work on matters such as mitigation, adaptation, finance, technology development and transfer, transparency of action, and support and capacity-building.

Other key outcomes include:

Carbon Capture and Storage (CCS). CCS was approved to qualify for the Clean Development Mechanism (CDM) and earn carbon credits (under the Kyoto Protocol). 5 per cent of credits issued will be held in a reserve to ensure carbon dioxide does not leak from approved CCS projects for 20 years.
Reduced Emissions from Deforestation and Degradation (REDD). Supportive market-based mechanisms and funding will be discussed through 2012.

As a result of the extension of Kyoto and a second commitment period, emissions offset markets based on the CDM and Joint Implementation (JI) will remain active. Although details have not been finalized, it is likely that the EU will continue to accept certified emission reductions (CERs), which are awarded under the CDM to emission reduction projects in developing countries, and emission reduction units (ERUs), which are awarded under the JI to such projects in certain developed countries. The EU has committed to a third phase of its Emissions Trading System, which contemplates the continued use of international offset credits such as CERs and ERUs.

It is anticipated that carbon markets will continue to play an important role in the new international climate treaty to be established by 2015. According to Christiana Figueres, the Executive Secretary of the UNFCCC, the extension of Kyoto will enable its accounting rules, flexibility mechanisms and markets to remain as models to inform future agreements.

Within a day of the negotiations closing, Canada announced that it will formally withdraw from the Kyoto Protocol before the end of the year, with the intent that it will no longer have an enforceable emissions reduction commitment. Canada will, however, remain a party to the UNFCCC and a participant in international climate negotiations.

The next key date is February 28, 2012 when parties must submit their views on raising what the conference called the “level of ambition” to achieve significant mitigation, so that a work plan can be launched. The next round of UNFCCC negotiations will take place in Qatar from November 26 to December 7, 2012.