GHG Reporting

B.C.’s GHG Reporting Regulation has come into force on January 1, 2010

The Reporting Regulation (the Regulation) is a new regulation under the Greenhouse Gas Reduction (Cap and Trade) Act that has come into force on January 1, 2010. The Regulation requires facilities in British Columbia that emit over 10,000 tonnes of greenhouse gases (GHGs) annually to report their emissions.

The Regulation has been designed to allow for a single reporting window with Environment Canada, which aims to create administrative simplicity for industry stakeholders. The Regulation sets out requirements for facilities with GHG emissions from a number of activities within B.C. to report GHG emissions to the Ministry of Environment (MOE).

One of the key objectives of the Regulation is to facilitate an accurate and transparent reporting mechanism, which will support properly functioning cap-and-trade system. As such, the Regulation specifies among other criteria:

· GHGs subject to reporting;

· level of emissions requiring reporting;

· facilities required to report;

· quantification methods to be used in reporting;

· requirements and procedures for annual reporting;

· verification mechanisms; and

· compliance obligations.

Below is an overview of the reporting specifics:

· all six main GHGs included;

· 10,000 tonne carbon dioxide equivalent (CO2e) reporting threshold;

· 25,000 tonne CO2e verification threshold;

· upstream oil and gas; (ii) natural gas transmission and distribution; (iii) electricity transmission and distribution; and, (iv) oil pipeline transportation emissions are aggregated into “linear facilities” to determine whether the 10,000 tonne reporting and 25,000 verification thresholds are exceeded;

· carbon dioxide from wood biomass, or the wood biomass component of mixed fuels, is not included in the determination of thresholds;

· first requirements (data collection and management) for reporting operations start on January 1, 2010;

· not applicable to public sector organizations, except for BC Hydro and BC Transmission Corporation electricity generation or electricity transmission;

· not applicable to emissions of landfill gas as defined under the Landfill Gas Management Regulation;

· registration to occur by April 1, 2010;

· annual emissions reports, beginning with the 2010 calendar year, required by March 31 of the following year;

· facilities with emissions greater than 20,000 tonnes of CO2e in any year between 2006 and 2009 must report these emissions along with the 2010 emissions report submitted in 2011;

· a facility may calculate emissions using alternative methodologies for the lower of 3% of the facilities total emissions, or 20,000 tonnes;

· for the 2010 calendar year, a facility may measure a specific parameter using alternative methods inconsistent with those prescribed in the regulation (approval is required for this after March 31, 2010);

· MOE may publish emissions data from major source categories;

· a facility may request that certain data remain confidential; and

· Western Climate Initiative quantification methods are required to be used (where these do not exist, required methods are specified by the MOE).

Below is an overview of verification specifics:

· verification to a reasonable level of assurance;

· 5% materiality threshold applies;

· verification statements to be submitted by September 1 of the following year for 2010 and 2011 reports (thereafter the verification deadline is the same as the reporting deadline, April 1);

· verification to be completed by an independent third party verification body, accredited by the Standards Council of Canada or the American National Standards Institute in accordance with ISO 14065;

· for verifications completed before Dec. 31, 2012, verifiers can be accredited by the California Air Resources Board; and

· conflict of interest requirements for verifiers apply.

Activities covered include:

· General Stationary Combustion

· Mobile Equipment Fuel Combustion (except for linear facilities; generally on-site, off-road equipment)

· Aluminium or Alumina Production

· Ammonia Production

· Carbon Dioxide Transportation (linear facility)

· Cement Production

· Coal Mining from Underground Mines

· Coal Storage at Facilities that Combust Coal

· Copper or Nickel Smelting or Refining

· Electricity Generation

· Electricity Transmission (linear facility)

· Electronics Manufacturing

· Ferroalloy Production

· Glass Manufacturing

· Hydrogen Production

· Industrial Wastewater Processing

· Lead Production

· Lime Manufacturing

· Magnesium Production

· Natural Gas Transmission, Natural Gas Distribution or Natural Gas Storage (linear facility)

· Nitric Acid Manufacturing

· Oil and Gas Extraction and Processing Activities (linear facility)

· Oil Transmission (linear facility)

· Petrochemical Production

· Petroleum Refining

· Phosphoric Acid Production

· Pulp and Paper Production

· Refinery Fuel Gas Combustion

· Zinc Production

With the implementation of new reporting legislation and pending regulations in several jurisdictions, it is important to determine and understand your reporting obligations. This will enable you to comply with regulatory requirements and any specified reporting standards. The starting point is accounting for your actual greenhouse gas emissions, i.e. determining their source and the amount from each source, and calculating your total emissions based on accepted protocols.

Through the use of recognized international greenhouse gas accounting standards and our diverse team expertise, GHG Accounting Services can help you clarify your reporting obligations and work with you to fulfill these reporting obligations in an efficient and cost effective manner.

In addition to tracking, calculating, and reporting greenhouse gas emission using the requisite factors and protocols, GHG Accounting Services’ comprehensive approach will also allow you to effectively translate data into emission reduction plans and tangible energy savings, leading to overall improved business performance and cost reductions.

U.S. EPA Issues Final Rule on GHG Reporting

On September 22, 2009, the U.S. Environmental Protection Agency (EPA) issued a final rule requiring the reporting of GHG emissions from large emission sources in the U.S. (the EPA Reporting Rule). In particular, the EPA Reporting Rule requires stationary source GHG emitters, suppliers of fossil fuels or industrial gases, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHGs to submit annual reports to the EPA. Regulated facilities must begin monitoring on January 1, 2010 and first reports will be due on March 31, 2011.

Under the EPA Reporting Rule, a broad range of facilities will be required to report on the following GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE). The EPA Reporting Rule captures 85% of U.S. GHG emissions and applies to approximately 10,000 facilities. There is a general reporting threshold of 25,000 metric tons of carbon dioxide equivalent (CO2e) per year from facilities with stationary input capacity of 30mm BTU/hr or greater. There are also 15 categories of emission sources – including cement, petrochemical and aluminum production – that are required to report whether or not the 25,000 ton threshold is met or exceeded. In addition, there are 9 categories – including iron, steel, glass, and pulp & paper production – that are also subject to a 25,000 ton threshold, but not limited to fuel combustion sources.

The following industries will be subject to the EPA Reporting Rule:

– Electricity generators

– Suppliers of coal-based liquid fuels, petroleum products, natural gas, natural gas liquids, industrial GHGs

– Petroleum refiners

– Petrochemical producers

– Pulp & paper manufacturers

– Producers and manufacturers of adipic acid, aluminum, ammonia, cement, ferroalloy, glass, iron, steel, lead, lime, nitric acid, phosphoric acid, soda ash, titanium dioxide, and zinc

– Municipal solid waste landfills

– Large-scale farming operations

It should be noted that the following sources are not covered by the EPA Reporting Rule:

– Coal suppliers

– Underground coal mines

– Oil and natural gas systems (i.e. offshore oil and natural gas production facilities, onshore natural gas processing and transmission compression facilities, underground natural gas storage facilities, liquefied natural gas storage and import/export facilities)

– Wastewater treatment facilities

– Producers and manufacturers of ethanol, electronics, fluorinated GHGs and magnesium

– Industrial landfills

– Food processors

In general, GHG reporting is to occur at the “facility” level, except that certain fossil fuel suppliers and manufacturers that use GHGs for industrial purposes, along with vehicle and engine manufacturers, will report at the “corporate” level.

Fossil fuel suppliers must report GHG emissions that would result from complete combustion or oxidation of products they supply. In some cases, this may result in double reporting of emissions (i.e. by a fuel supplier and user). As a result, the EPA will require some entities to report their actual emissions as well as those associated with their products (for example, petroleum refineries). The EPA Reporting Rule also requires that manufacturers of heavy-duty trucks, motorcycles and off-road engines report CO2 emission rates for the 2011 model year and emission rates for other GHGs in subsequent model years. The EPA Reporting Rule does not cover cars and light-duty trucks, but it is anticipated that the EPA will propose a comprehensive light-duty GHG emission control program commencing in 2012, which is likely to contain GHG monitoring and reporting requirements.

A facility may cease reporting if one of the following has occurred: (i) five consecutive years of emissions below 25,000 tons CO2e per year; (ii) three consecutive years of emissions below 15,000 tons CO2e per year; or (iii) its GHG-emitting processes or operations are shut down.

In recognition of the short timeframe for regulated facilities to start complying with data collection and monitoring requirements, the EPA has agreed to allow facilities to use “best available monitoring methods” to track GHG emissions data through March 31, 2010 in lieu of the monitoring methods specified in the EPA Reporting Rule. The monitoring methods required by EPA Reporting Rule vary depending on the type of facility. Certain facilities will be able to calculate their emissions based on fuel source type and other data, while others will be required to install continuous emissions monitoring equipment.

The EPA Reporting Rule does not require third party verification, as the EPA will verify the data submitted by regulated facilities. Regulated facilities will be required to self-certify that the data submitted to the EPA is accurate and emission records will need to be kept for a period of three years.

In August 2009 the EPA Assistant Administrator for Enforcement and Compliance Assurance, Cynthia Giles, underscored the need for an accounting system with real integrity, particularly in the context of a cap-and-trade program. It is clear that enforcement will have a key role in the regulation of GHGs. Failure to report would face enforcement under the U.S. Clean Air Act, which can lead to civil penalties of up to $37,500 per day for each violation. The EPA Reporting Rule represents the first time that industrial emission sources will be required to monitor and report GHG emissions data to the EPA. As such, it is advisable for companies with U.S.-based operations that fall within the categories set out above to review their operations and determine whether they will be caught by the EPA’s new reporting requirements. Finally, it is important to note that the EPA has the power to expand the scope of the EPA Reporting Rule to include additional source categories in the future. As a result, it will be prudent for industrial emitters to monitor regulatory developments on a continuing basis to ensure that they are in compliance with all reporting and other regulatory requirements.

For more information on the EPA Reporting Regulation or if you require assistance with your GHG reporting, please “Contact Us”.