Greenhouse Gas Accounting – Page 4

C40 and World Bank Sign Agreement to Form Climate Change Action Partnership

On June 1, 2011, the C40 Cities Climate Leadership Group (C40) and the World Bank signed an agreement that will help cities accelerate activities to reduce greenhouse gas emissions and adapt to climate change. The C40 is an organization of large and engaged cities from around the world committed to implementing meaningful and sustainable climate-related actions locally that will help address climate change globally. C40 cities account for 8 percent of the global population, 12 percent of global greenhouse gas emissions and 21 percent of global GDP. In 2006, the C40 partnered with the Clinton Climate Initiative to tackle climate change in cities.

The agreement was signed by C40 Chair New York City Mayor Michael R. Bloomberg and World Bank Group President Robert B. Zoellick during the C40 Cities Mayors Summit in Sao Paulo, Brazil. Mayor Michael R. Bloomberg said: “This unique partnership with the World Bank will help solve many of the problems that cities face in obtaining financing for climate-related projects, both from the World Bank and other lenders. It will also make it easier for C40 cities to access the resources of the World Bank.” World Bank Group President Robert B. Zoellick said: “This agreement will help us work with C40 cities to integrate growth planning with climate change adaptation and mitigation, with special attention to the vulnerabilities of the urban poor.”

The key objective of this new partnership is to enable megacities to expand mitigation and adaptation actions while at the same time, strengthen and protect economies, reduce poverty and protect vulnerable populations. In particular, it will address structural issues that make it difficult for cities to finance climate actions that have been identified by both C40 and the World Bank Group.

Under the agreement, the C40 and the World Bank will establish:

• A consistent approach to climate action plans and strategies in large cities to enable stronger partnerships between cities on shared climate goals, and to permit potential investors to identify opportunities across cities. The lack of a standard approach or process – such as exists for national government action plans – has made it difficult for investors and grantors to assess city action plans and thus has made them reluctant to fund projects.

• A common approach to measuring and reporting on city greenhouse gas emissions to allow verifiable and consistent monitoring of emissions reductions, identify actions that result in the greatest emission reductions, and facilitate access to carbon finance. This is necessary because carbon finance requires quantitative assessments of impacts, but currently no single standard for reporting citywide carbon emissions exists; the Carbon Disclosure Project’s Measurement for Management report identified several different protocols in use by C40 cities, with no single protocol used by a majority.

In addition, the World Bank will establish a single, dedicated entry point for C40 cities to access World Bank climate change-related capacity building and technical assistance programs, and climate finance initiatives by December 1, 2011. Furthermore, the C40 will identify and work with national governments who are interested in funding climate change projects and identify private sector partners to provide project financing in C40 cities. In turn, the World Bank will identify opportunities from among sources of concessional finance, carbon finance, and innovative market and risk management instruments as well as the private sector through the International Finance Corporation. These may be accessed by project developers supporting climate action in cities.

For more information on this partnership and other C40 initiatives, please refer to the C40 web site

California to Appeal Superior Court Decision to Halt Carbon Market

On May 20, 2011, San Francisco Superior Court judge Ernest Goldsmith issued a decision requiring the California Air Resources Board (CARB) to halt action on implementing its planned emissions cap-and-trade program until it has explored alternatives to meet California’s emission reduction targets. The decision follows a ruling delivered in March 2011 in which the judge said CARB had violated the California Environmental Quality Act by failing to adequately assess alternative emission reduction mechanisms, such as a carbon tax. The ruling is the result of legal action brought by the Association for Irritated Residents and other environmental justice groups, which argued that the proposed cap-and-trade program could damage air quality in some parts of the state.

The cap-and-trade program is part of AB 32 (Global Warming Solutions Act), California’s landmark climate change law, which is designed to lower California’s greenhouse gas emissions to 1990 levels by 2020. AB 32 also includes increased fuel efficiency standards and a renewable electricity target of 33% by 2020. Under the ruling, CARB must set aside its December 2010 decision approving the trading system for emitters over 25,000 metric tons per year, and must cease all rule-making and implementation activities related to cap-and-trade until it complies with the law. In particular, the judge said that CARB must go back and show why it made the decision to implement cap-and- trade. The trading program is designed to cover 85 percent of the state’s industrial emissions by 2020 and would include emissions from power plants, oil and gas refineries, transportation fuels and other heavy industries.

On May 23^rd, California’s top attorney initiated an appeal of Judge Goldsmith’s decision. Depending on the length of the appeal process, the cap-and-trade program could be delayed, perhaps until 2013. In the meantime, California can continue with its renewable energy targets, low-carbon fuel standard and energy efficiency measures, all of which are unaffected by the judge’s ruling.

Another Study links High GHG Emissions with Negative Impact on Company’s Value

A study by researchers at the University of Wisconsin-Madison, Georgetown University and the University of Notre Dame has found that high levels of greenhouse gas (GHG) emissions can have a negative impact on a company’s value. According to the study – Voluntary Disclosures and the Firm-Value Effects of Carbon Emissions (April 2011) – a company’s value decreases on average by $202,000 for every additional thousand metric tons of emissions it produces.

Researchers used hand-collected carbon emissions data for 2006-2008 that Standard and Poor’s (S&P) 500 companies disclosed voluntarily to the Carbon Disclosure Project to examine two issues: (1) firm-level characteristics associated with the choice to disclose carbon emissions, and (2) relationship between carbon emission levels and firm value. With respect to the first issue, researchers found a higher likelihood of carbon emission disclosures by firms with superior environmental performance, conditional on firms taking environmentally proactive actions. However, researchers found no association between inferior environmental performance and the likelihood of disclosing carbon emissions, conditional on firms taking environmentally damaging actions. Furthermore, researchers found that companies are more likely to voluntarily disclose their carbon emissions as the proportion of industry peer firm disclosers increases. In connection with the second issue, the researchers found a negative association between carbon emission levels and firm value. From its sample of S&P 500 companies, the study found that a company’s value decreases on average by $202,000 for every additional thousand metric tons of GHG emissions it produces.

In the study, researchers also pointed out that according to the 2009 Goldman Sachs’ GS Sustain Report it is expected that the relationship between carbon emissions and global climate change will drive a redistribution of value from firms that do not control their carbon emissions successfully to firms that do.
The study may be accessed online

Revisions to BC Reporting Regulation now in force for 2011 Reporting Year

Recent amendments made to BC’s greenhouse gas Reporting Regulation have come into effect for 2011 calendar year emission reports (to be reported by March 31, 2012)

The amendments made in order 849 dated 17th of December 2010 to BC’s greenhouse gas Reporting Regulation have come into effect for 2011 calendar year emission reports (to be reported by March 31, 2012). These amendments include:

Establishment of a third class of reporting operation – electricity import operation – for the purpose of including imported electricity under the regulation.
Establishment of a reporting-only class of emissions for the purpose of including aboveground coal mine fugitive emissions, along with mobile equipment and carbon dioxide from Schedule C biomass sources.
Miscellaneous improvements including: (i) addition of further requirements to ensure that changes between methods on the part of reporting operations will result in improved emissions estimates; (ii) clarification on handling of terminals/storage tanks; (iii) addition of red liquor to Schedule C; and (iv) an update of quantification method references to incorporate new and revised quantification methods developed by the Western Climate Initiative.
Various changes to data to be reported, including: (i) addition of Income Tax Act business numbers, DUNS and Bradstreet numbers to reports; and (ii) addition of process flow diagrams to reports starting in 2012.
Clarifications have been made to site visit requirements for linear facility operations and changes have been made to the required contents of verification statements.

Additional updates to the Reporting Regulation may be introduced by the government based on the proposed Emissions Trading Regulation and Offsets Regulation, which are expected to be finalized in 2011. These changes could include further reporting-only sources, additions to the Schedule C list of biomass, and additional verification and compliance requirements.

BC and Washington State sign Cross-Border Climate Action Plans

The province of British Columbia (BC) and the state of Washington have signed two climate action plans to strengthen cross-border efforts to reduce carbon emissions while advancing the low-carbon economy.

On February 2, 2011, BC Minister of State for Climate Action John Yap and Washington Department of Ecology Director Ted Sturdevant signed plans on limiting carbon emissions from government operations and promoting awareness of the impacts of sea level rise on coastal areas.

Under the climate action plans, entitled “Joint Action Plan on Carbon Neutral Government” and “Joint Action Plan on Awareness and Outreach for Coastal Impacts of Climate Change”, BC and Washington will:

demonstrate how to make government operations as carbon-neutral as possible, sharing information and drawing on BC’s success in achieving a carbon-neutral public sector.
further strengthen engagement with British Columbians and Washingtonians about how sea level rise threatens critical shore areas and communities.
BC and Washington State have been working together on climate issues since signing a Memorandum of Understanding on Climate Action in 2007. These new action plans build on existing climate-related partnerships between BC and Washington, including:
Pacific Coast Collaborative – representing joint efforts by BC, Washington, Oregon, California, and Alaska on energy, transportation, climate change, and ocean issues.
Washington-British Columbia Memorandum of Understanding on Coastal Climate Change Adaptation – holding joint science workshops, exchanging information on sea-level rise projections and mapping, sharing information on Green Shores programs, and Washington and B.C. “king tide” photo initiatives.
Salish Sea Ecosystem/Puget Sound-Georgia Basin Ecosystem Research Conference – the largest, most comprehensive scientific research and policy conference that focuses on issues impacting the region known as the Salish Sea. BC and Washington take turns hosting the biennial conference.

In addition, BC and Washington state are active participants in the Western Climate Initiative, a cooperative effort to reduce greenhouse gas emissions in seven U.S. states and four Canadian provinces.

The action plans can be viewed online.

Study Finds that Lowering Levels of GHG Emissions can Increase a Company’s Stock Value

A recent study by researchers at the University of California (Davis and Berkeley) and the University of Otago in New Zealand entitled “The Relevance to Investors of Greenhouse Gas Emission Disclosure” has found that the amount of greenhouse gas (GHG) emissions a company produces and whether a company discloses their emission levels or not has a significant effect on the value of the company’s stock. In particular, the researchers found that the greater the GHG emissions, the lower the value of a company’s stock. Likewise, lower emission levels lead to higher stock values, all other factors being equal. Even if companies do not disclose this information, GHG emission levels are estimated by investors themselves, resulting in an even stronger risk discount to the stock value for high level emitters. This trend is particularly strong in energy intensive industry sectors. The study was led by Paul Griffin, a professor in the University of California, Davis Graduate School of Management.

Professor Griffin and his colleagues also discovered that markets respond almost immediately when a company releases information on their GHG emissions, with stock values responding the same day as the disclosure. “It really does appear to be a valuation factor,” Professor Griffin says. “Greenhouse gas emissions are important to investors in assessing companies.”

The findings bolster the arguments of investor groups, environmental advocates and watchdog organizations that have been seeking greater disclosure of company actions that affect climate change. The U.S. Securities and Exchange Commission (SEC) does not require all companies to report GHG emissions, but companies are required to disclose any information that is considered material to stock values. The findings of this study strongly suggest that GHG emissions data is relevant information to investors, therefore it could be argued that all public companies should disclose their GHG emissions to comply with SEC requirements. Approximately 50% of large U.S. firms report GHG emissions through the Carbon Disclosure Project.

The researchers analyzed four years of data (from 2006-2009) on firms listed in the Standard & Poor’s 500, and five years of data (2005-2009) for the top 200 publicly traded firms in Canada. While the researchers found the link between stock values and GHG emissions to hold true in most industries, the correlation was strongest for energy companies and utilities. According to Griffin, “after controlling for normal valuation factors like assets and earnings, we found the value of stocks to be a function of greenhouse gas emissions”.

Investors care about GHG emissions because markets are forward looking. Professor Griffin has indicated that in this case, investors are anticipating a time when companies will face increased costs for climate change mitigation, regulation and taxes.
The full study can be downloaded at Link.

ICLEI seeks public input on draft Community-Scale GHG Emissions Accounting and Reporting Protocol

In response to the needs of its member local governments, ICLEI-Local Governments for Sustainability USA (ICLEI was originally established as the International Council for Local Environmental Initiatives) has released a draft Community-Scale GHG Emissions Accounting and Reporting Protocol for public comment.

Rationale for the Community Protocol

Local governments are increasingly looking to create policies that will reduce emissions from the activities of their residents, businesses, and visitors. The emissions reduction process begins with identifying primary sources of emissions and quantifying the scale of emissions from these sources. By establishing standards for community-scale inventories, communities can ensure the consistency and quality of their inventories. In addition, such standards will allow for accurate monitoring of progress against emissions targets, and provide standard guidance as local governments pursue environmental review, inventory certification and other relevant processes in their day-to-day operations. A national standard will form the foundation of future climate actions, thereby enabling communities to address the challenges of climate change more effectively.

The Community Protocol will complement the Local Government Operations Protocol and serve as a U.S. Supplement to the International Emissions Analysis Protocol. The draft framework is available for review online.

California Adopts Cap & Trade Program after Landmark Vote

In a landmark 9-1 vote on December 16, 2010, California’s Air Resource Board (ARB) voted to adopt the first large-scale cap-and-trade program in the U.S.

In a landmark 9-1 vote on December 16, 2010, California’s Air Resource Board (ARB) voted to adopt the first large-scale cap-and-trade program in the U.S. This vote represents the culmination of an eventful year for California’s AB 32 legislation, which aims to reduce the state’s greenhouse house gas emissions to 1990 levels by 2020. In California’s general elections held in November 2010, AB 32 survived a ballot measure that would have indefinitely delayed the program. California’s progress towards cap-and-trade comes as federal efforts to establish a nation-wide emissions trading program have stalled in Congress.

Under the proposed California cap-and-trade rules, the state would initially give away allowances to regulated industries. In later years, California would auction allowances. Industries that could show the regulations were putting them at a significant competitive disadvantage to companies in other, less carbon-constrained, jurisdictions could qualify for additional free allowances. The proposed rules would establish a $10 per metric ton auction floor price on carbon. Regulated emitters would be able to purchase carbon offsets, which are expected to trade at a discount to emission allowances, to comply with 8% of their annual emission obligations.

Offsets under the California Program

In addition to the regulations for the cap-and-trade program, ARB adopted four protocols that will be used to generate offsets for compliance, marking the first time forest carbon offsets will be included as a part of a compliance carbon market.

Offsets will come from early action efforts, compliance offsets and a category known as sector-based offsets, which will come from programs managed in developing countries. Early action offsets include those from the 2005-2014 vintages of Climate Action Reserve (CAR) credits from projects in methane digestion, destruction of ozone depleting substances, forestry and urban forestry.

In anticipation of California’s cap-and-trade program, the carbon market has responded with a jump in offset prices. Analysts note that offset prices have doubled from about $4 per ton of to $8 per ton amid higher volumes of trading in recent weeks.

Analysts have also predicted a shortfall in the supply of offsets. CAR projects that the ARB-approved protocol types will be able to generate approximately 30 million tons of credits through 2014, which credits can be used in the California program. However offset demand is projected to exceed 200 million tons through 2020. Now that there is regulatory certainty, the market must now work to fill the gap between offset supply and demand.

New Mexico Approves its Cap-and-Trade Program

In other news, New Mexico narrowly approved its cap-and-trade program in early November 2010 as well as the state’s participation in the regional Western Climate Initiative market. These measures will not go into effect unless other U.S. states or Canadian provinces move ahead with similar systems for capping emissions. The New Mexico program would regulate approximately 63 large industrial sources.

UK Study finds that Measuring and Reporting GHG Emissions Delivers Cost Savings and Business Benefits

A research study released by PwC and the Carbon Disclosure Project (CDP) found that voluntary reporting of greenhouse gas (GHG) emissions is helping to cut costs and improve relationships for businesses.

On November 30, 2010, a research study released by PwC and the Carbon Disclosure Project (CDP) found that voluntary reporting of greenhouse gas (GHG) emissions is helping to cut costs and improve relationships for businesses. The research, commissioned by the UK Department for Environment, Food and Rural Affairs (Defra), surveyed more than 150 large companies and found that over 50% said the benefits of GHG reporting outweigh the costs involved. Participating businesses said the emission reports initiated board level interest in environmental issues and drove environmental change company-wide. Furthermore, 72% said they now have a corporate climate change strategy designed to reduce GHG emissions.

Measuring emissions cost less than £50,000 (approximately CAD $80,000) for 65% of the companies surveyed and approximately 14% of companies calculated energy cost savings of more than £200,000 a year (approximately CAD $320,000) as a result of GHG accounting initiatives. Against quantifiable business costs and benefits, 60% of companies found there to be a net cost of reporting, but when considering wider benefits such as reputation and consumer awareness, 53% of companies said there was a net benefit. Companies also said the distinction between voluntary and mandatory reporting is already blurred, with schemes such as CDP becoming semi-mandatory.

Joanna Lee, Chief Partnerships Officer at CDP commented that: “Reporting drives the action of measuring, helping companies to identify opportunities for emission reductions. It also helps companies set meaningful and achievable reduction targets, as well as advancing better risk management and increased awareness of new market opportunities.”

The study has been submitted to the UK Parliament as part of a wider analysis commissioned to inform the government’s decision on mandatory reporting. A decision is expected in early 2011.

Creating or Buying Credits – Financing Your Next Cool Move!

Offset credits are created through the implementation of projects that result in emission reductions or removals beyond what would have been done under normal business activities (the so-called “business as usual” baseline). One credit represents the reduction or avoidance of emissions of one tonne of carbon dioxide equivalent (CO2e). Once offset credits are created and certified by accredited third parties, they can be sold to buyers in the market (usually regulated entities that need to meet certain compliance obligations). The system described above is often referred to as a “compliance market”. Offset credits can also be sold in the voluntary market to non-regulated entities who are looking to reduce their carbon footprint voluntarily.
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Climate Change mitigation strategies aimed at reducing greenhouse gas (GHG) emissions can take any number of different forms. The most drastic one would be to simply make the emission of GHGs illegal. This is an extreme example, one that would not be a viable option in an economy based on industrial growth. A more viable options that have been implemented by some, and considered by others, to bring about GHG reductions are market mechanisms. Market mechanisms are designed to utilize market forces to change behaviour, thus leading to reductions in emissions.

Driving Behavioural Change

The most important aspect of market mechanisms is to drive behavioural change – whether by individuals, governments, companies or others – in the direction of low carbon or less emissions-intensive technologies and processes. Offset credits are one of the instruments that have been employed in the carbon market to reduce emissions. However, the market mechanisms that have emerged so far vary quite a bit in their mechanics. As a result, the offset credits generated in these markets will vary accordingly.

How does a carbon market work?

In a so called carbon market (this usually encompasses all greenhouse gases); regulated entities can buy or sell allowances or permits for emissions, or credits for reductions in emissions of specified pollutants. Carbon trading can be done at a regional, national or international level. Under a typical carbon trading regime, regulated emitters will be allocated a limited number of emissions. Emission allowances may be created by a regulating entity, through emissions reduction activities or both. These emission allowances can be auctioned or given away for free. Once initially allocated or created, emission allowances are fully fungible commodities, meaning they can be bought, sold, traded or banked for future use. Often, carbon markets will also allow the use of offset credits as a compliance tool. Allowances effectively set a price on GHG emissions while credits set a cost reward for the investment made to reduce or avoid GHG emissions.

Creating Offset Credits

Opportunities in the Carbon Market

You can purchase credits to offset unavoidable GHG emissions to either meet your own carbon neutral targets or to comply with regulatory emission requirements. You have to make sure the credits you buy are appropriate for the purpose you want to use them for. GHG Accounting can help you make the right decision and evaluate this in the most cost-effective way.

You can also create offset credits. Offset credits can help generate revenue that you can put towards your next efficiency investment. Do you have to replace old machinery, installations or boilers? Or are you changing the way you deal with waste products, energy and emissions? Even if you have done so recently, your actions may still qualify as an emissions reduction project and can earn you real cash!

What GHG Accounting Can Do For You

The effective accounting and management of greenhouse gas (GHG) emissions requires unambiguous, verifiable specifications. This will ensure that a tonne of carbon equivalent can be consistently calculated. To that end, an internationally agreed upon standard for measuring, reporting and verifying GHG emissions was introduced in 2006 by the International Organization for Standardization (ISO) and is referred to as ISO 14064. GHG Accounting Services Ltd. provides specialized GHG consulting and accounting services, including (i) emissions reporting and footprint inventory quantification, (ii) emissions reduction project planning, and (iii) quantification, documentation and carbon offset credit registration.