Tag: Greenhouse Gas Accounting

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”.