Guidelines for Voluntary Reporting of Greenhouse Gas Emissions and Reductions, and Carbon Sequestration

DEPARTMENT OF ENERGY

Office of Policy, Planning, and Program Evaluation

Guidelines for Voluntary Reporting of Greenhouse Gas Emissions

and Reductions, and Carbon Sequestration

AGENCY: U.S. Department of Energy (DOE).

ACTION: Notice of availability of draft guidelines and request for

comment and notice of public hearing.

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SUMMARY: Pursuant to section 1605(b) of the Energy Policy Act of 1992,

the Department of Energy is developing guidelines for the voluntary

reporting of greenhouse gas emissions, their reduction, and carbon

fixation achieved through any measure. The data will be reported on

forms to be developed by the Energy Information Administration (EIA)

and entered into an EIA database.

The guidelines provide for the voluntary and accurate reporting of

greenhouse gas emissions and reductions, and of carbon sequestration.

The guidelines and supporting materials assist parties in analyzing

activities and determining emissions and reductions and carbon

sequestration in order to voluntarily report this data. EIA will

develop reporting forms consistent with the guidelines. Draft

guidelines and supporting materials are available for public review and

comment.

DATES: Written comments on the draft guidelines and supporting

materials (10 copies) are due on or before August 1, 1994. DOE does not

anticipate extending this date. A public hearing will be held on June

29, 1994, beginning at 8:30 a.m. at the address listed below. If

necessary to accommodate requests to speak, the hearing will continue

on June 30, 1994. Requests to speak must be received by the Department

on or before June 22, 1994.

ADDRESSES: Written comments (10 copies) should be submitted to: U.S.

Department of Energy, Office of Policy, PO-63/VRP NOA, Docket No. PO-

VR-94-101, room 4G-036, 1000 Independence Ave., SW., Washington, DC

20585.

A copy of the draft guidelines and supporting materials may be

obtained by telephone request to (301) 601-8284. Requests to speak at

the hearing should be made by telephone at (301) 601-8284.

The public hearing will be held at The Holiday Inn Capitol, 550 C

Street, SW., Washington, DC 20024. Copies of the transcript of the

public hearing and public comments received will be available for

inspection at the DOE Freedom of Information Reading Room, room 1E-090,

at the address listed above, between the hours of 9 a.m. and 4 p.m.

Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Mr. Elmer Holt at (202) 586-0714.

SUPPLEMENTARY INFORMATION: Under section 1605(b) of the Energy Policy

Act of 1992 (EPAct; Pub. L. 102-486), the Secretary of Energy with the

Energy Information Administration (EIA) is to establish a voluntary

reporting system and database on emissions of greenhouse gases (GHGs),

reductions in emissions of these gases, and carbon fixation. DOE has

consulted with the Environmental Protection Agency in developing the

draft guidelines, as provided under section 1605(c).

The draft guidelines and supporting methodologies provide guidance

on institutional and technical aspects of the voluntary program. They

are presented in discrete parts, as discussed below. DOE requests

comment on all provisions of the draft guidelines and supporting

material.

I. Background

Under section 1605 of the EPAct, two databases related to

greenhouse gases are to be established. These separately address (1)

the inventory of aggregate national totals of greenhouse gas emissions,

and (2) data voluntarily reported on emissions, reductions, and carbon

sequestration.

First, under subsection (a), the Secretary of Energy through EIA

and without any expanded data collection authority is required to

develop an inventory of national aggregate emissions of each greenhouse

gas for each calendar year of the baseline period of 1987 through 1990.

This inventory was published in September, 1993 (``Emissions of

Greenhouse Gases in the United States, 1985-1990;'' DOE/EIA-0573). This

inventory will be updated annually, as required by the legislation.

The voluntary reporting program database is required under

subsection (b) of section 1605, and will consist of voluntarily

reported information on annual greenhouse gas emissions and their

reduction, and carbon sequestration. It is separate from the national

aggregate inventory established and updated under subsection (a).

Because submission of data to the program established under subsection

(b) is voluntary, this database cannot be designed for use as a

comprehensive national greenhouse gas accounting system, and thus may

not serve to provide a statistically accurate representation of

aggregate U.S. greenhouse gas emissions or their reductions.

The Secretary of Energy is required to issue guidelines with

procedures for the accurate voluntary reporting of information on (1)

greenhouse gas emissions on an annual basis for the baseline period

1987 through 1990, and for subsequent calendar years; (2) annual

reductions of greenhouse gases and carbon fixation achieved through any

measures; and (3) reductions in greenhouse gas emissions achieved

voluntarily, or as a result of plant or facility closings, or as a

result of State or Federal requirements.

The guidelines and supporting materials assist those who wish to

report in determining or developing information necessary to report.

EIA will develop and make available forms for voluntary reporting

consistent with the final guidelines, and will develop a database for

the information voluntarily submitted.

II. Public Input Process

The process for public input in developing the draft guidelines

began with a Notice of Inquiry (NOI) in July 1993 (58 FR 40116; July

27, 1993), requesting comment on institutional and technical issues

related to a 1605(b) reporting system. These comments assisted in

developing the focus for discussion at six public workshops held in

November and December of 1993. A summary of workshop sessions and a

copy of all written comments submitted are available for public

inspection in the DOE Freedom of Information Reading Room, listed in

the ADDRESSES section above.

Additional public input to the guidelines is being sought through

the comments requested and the public hearing announced in this notice.

III. Organization of the Draft Guidelines

The draft guidelines and supporting materials, ``Voluntary

Reporting of Greenhouse Gases Under Section 1605(b) of the Energy

Policy Act of 1992: General Guidelines and Sector-Specific Issues and

Reporting Methodologies,'' are presented in eight discrete parts. The

first part, ``General Guidelines,'' provides basic guidance for

reporting under the program. Six parts, ``Sector Specific Issues and

Reporting Methodologies Supporting the General Guidelines'' (or

``supporting materials'') discuss issues particular to specific sector

or activity areas, as indicated: Electricity Supply, Residential and

Commercial Buildings, Industrial, Transportation, Forestry,

Agriculture.

The seventh supporting document, ``Global Warming Potential and

Other Indices for Representing Greenhouse Gas Effects on Climate''

completes the guidelines set.

The public review draft does not include the sector-specific part

on the Agriculture Sector; this document is expected to be available by

the end of June. Notice of its availability for review and comment will

be announced in the Federal Register.

IV. Goals of the Voluntary Reporting Program

The draft guidelines and supporting materials have been developed

to reflect the dual goals of maximizing participation without

compromising the usefulness of the data. These goals reflect public

input received in response to the July 1993 Notice of Inquiry and the

subsequent workshops discussed above.

Achievement of the participation goal will be measured by the

numbers of voluntary reporters and the variety of economic sectors and

activities they represent, and in the quantity of emissions and

reductions and carbon sequestration reported. The draft guidelines and

supporting materials assist participation by minimizing administrative

burden and repetitive submissions among data acquisition programs, and

by providing flexibility for the use of self-generated data with

optional default and prescribed data alternatives.

Usefulness of the data is defined not only by the quality,

quantity, and variety of the data included, but also by its ability to

serve the varied purposes of the program. These purposes include

providing a database of information for entities seeking to reduce

their own greenhouse gas emissions; formal recordation of emissions,

reductions and carbon sequestration achievements for various

objectives; and informing the public debate in future discussions on

national greenhouse gas policy.

V. Summary Description and Discussion

A. What Are The Guidelines?

The guidelines define who may report, what information may be

reported, and considerations in identifying or developing reportable

data. Consistent with the guidelines, EIA will develop reporting forms

for the program, receive submissions and evaluate them for compliance

with the guidelines and reporting instructions, and develop and

maintain the database of information reported.

The guidelines suggest to reporters data identification, collection

and retention needs, and address the use by reporters of information

which may be part of existing recordkeeping systems or standard

business practices. They also provide a framework for analyzing

activities with the goal of developing reportable data. Finally, the

guidelines provide information for comparing emissions of gases on the

basis of their differential greenhouse (radiative forcing) effects

within the climate system. This discussion on differential effects is

provided for information purposes only. The guidelines provide that

data reported be in units of gas emitted or reduced, and not

transformed by any radiative forcing index reported.

B. What is Covered by the Guidelines?

The reporter. The guidelines define ``reporting entity'' flexibly

in order to accommodate total organization and project reporting, as

well as reporting focused on specific activities or on specific sites.

A reporting entity, or ``reporter,'' may be any U.S. organization or

individual that has taken actions which result in emissions, emissions

reductions, or carbon sequestration, and that can define a project and

report physical data in enough detail to quantify results of the

activity. The following may report under the program: any U.S. citizen

or resident alien; any company, organization, or group incorporated

under or recognized by law; and any U.S. Federal, state, or local

governmental entity.

Sector coverage. The guidelines may be used for all economic

sectors. The supporting methodologies provide additional direction for

reporting data on activities in the following sectors: electricity

supply, residential and commercial buildings, transportation,

industrial, forestry, and agriculture.

Size threshold. In order to encourage participation and to capture

small-scale demonstration projects, DOE is not proposing minimum levels

for participating in the reporting program. At the outset of the

program design process, DOE assumed that the program would have a

threshold level of participation to prevent overburdening EIA in

managing a costly, inefficient database.

However, commenters recommended strongly that no threshold levels

be set, in order to avoid unnecessary limitations that might discourage

participation, particularly by those engaging in pilot projects and

innovative approaches. In addition, setting threshold standards for the

broad range of activities--for each gas, each sector, and for all

activities within a sector--would be difficult.

DOE seeks comment on the possible need for a threshold level for

participation. If thresholds are recommended, DOE requests suggestions

for appropriate levels.

Direct and indirect emissions activities. The draft guidelines

address activities that result in either direct or indirect emissions

and reductions of greenhouse gas emissions. Direct greenhouse gas

emissions may result from activities such as fossil fuel combustion and

the venting of methane. DOE acknowledges that a program with

submissions limited to direct emissions, and to activities directly

producing or reducing those emissions, would be more manageable and

transparent than the broad, flexible approach reflected in the draft

guidelines.

The statute, however, provides some examples of activities which

are to be covered which indirectly affect, or may indirectly affect,

emissions or reductions. Among the activities mentioned are the

manufacture of vehicles with reduced greenhouse gas emissions,

appliance efficiency, and energy efficiency measures.

DOE believes that Congress intended that the program cover the

broadest set of activities which impact greenhouse gases, both directly

and indirectly. Thus, the guidelines address both indirect and direct

emissions activities, which will be appropriately distinguished in

submissions. Comment is specifically requested on the proposed approach

which allows reporting emissions and reductions from indirect and

direct emitting activities, with appropriate identification of each.

Multiple party activities. The guidelines permit the reporting of

activities undertaken in association with others. The guidelines

provide suggestions to the parties for assigning the ability to report

among the parties, and ask that the reporter identify others who may

also report the data. Examples of multiple party activities include

utility demand-side management actions, and the manufacture, sale, and

use of more efficient vehicles.

Some commenters urged that the guidelines prohibit ``double

reporting'' of the results of joint activities, in order to prevent the

accounting for the same emissions, reductions or sequestration more

than once. DOE agrees. Thus, while the draft guidelines permit any

party to the activity to report, they require reporters to identify the

other parties to the activity. In addition, the guidelines suggest ways

for reporters to help protect against ``double counting.'' These

methods are based on the nature of the relationship of the parties, and

the comparative ability of the parties to perform adequate project

analysis and to have, or have access to, necessary data. Methods

suggested in the guidelines include contractual agreements.

Comment is specifically requested on the proposed approach on

reporting multiple party activities. In particular, comment is

requested on whether the guidelines and the reporting forms to be

developed by EIA should contain additional protections against double

counting.

Reporting through third parties. In order to increase

participation, particularly of small reporters and small projects, the

draft guidelines permit third party and aggregated reporting, at the

reporter's discretion. For example, a trade association or other

organization may, at the reporter's request, aggregate data from

multiple entities. Such organizations may provide technical or

administrative assistance in reporting, and aggregation of data may

provide some degree of confidentiality of the data. However, third-

party reporters may not be able to record individual achievements in

the detail that individual reporters desire. The draft supporting

documents provide a discussion of third-party reporting as it may apply

in each sector, as well as a discussion of the appropriateness of

third-party reporting for different reporting purposes.

The gases. The draft guidelines cover emissions of the following

greenhouse gases: carbon dioxide, nitrous oxide, methane, and the

halogenated carbon substances. A more comprehensive list of greenhouse

gases would include additional gases, most notably some of the

conventional, or ``criteria,'' pollutants for which emissions data is

collected by EPA and State agencies under various air quality programs.

Because the Act does not provide a definition of ``greenhouse

gases,'' DOE has initially limited the coverage of the guidelines to

those long-lived greenhouse gases specifically mentioned in the

statutory provisions, or inferred to in the statutory language which

provides examples of emissions reductions measures. Consistent with

specific statutory language, the guidelines cover halogenated carbon

substances such as CFCs.

Calculating radiative effects among different gases. The draft

supporting materials for the guidelines provide methods for reporters

to estimate, for their own use, the global warming potential of

greenhouse gases, with a discussion of the radiative forcing system and

the derivation and uncertainties of the estimates. In simplified terms,

radiative forcing is the change in the balance (incoming versus

outgoing) of solar and infra-red radiative energy in the troposphere

(the layer of the atmosphere closest to Earth). Emitted gases have

different direct radiative effects and atmospheric lifetimes. The Act

requires the guidelines to establish procedures for taking into account

these effects.

Because this area of science is complex and evolving, reporting

activity results by any relative index would create an unnecessary

additional burden in an area where few reporters are likely to have

expertise. More importantly, the state of the science in this area is

uncertain and rapidly changing; thus, any calculations performed will

likely need revision. Therefore, while the draft guidelines provide

information necessary for a reporter to perform these calculations, all

data reported to this program will be in units of the gas emitted or

reduced, and will not be transformed in voluntary submissions by any

common radiative forcing index, such as the Global Warming Potential

(GWP) index.

The draft supporting document on GWPs is based on the anticipated

outcome later this year of ongoing international scientific inquiry and

discussions. The Intergovernmental Panel on Climate Change Working

Group I report, entitled ``Second Supplemental Report to the IPCC

Scientific Assessment (1994); Radiative Forcing of the Climate System''

is scheduled to be released in November 1994. This document will

provide the latest current scientific consensus on the issues of

differential radiative activity of greenhouse gases.

The global warming potential supporting document will be finalized

after release of the IPCC report, and will reflect that report. Since

reporting will be by unit of gas emitted, neither the reporting program

nor EIA forms development is dependent on this information. DOE seeks

comment on this approach for assuring consistency with international

scientific consensus and minimizing the immediate need for revision of

guideline material.

Temporal and spatial coverage. The guidelines address reporting

annual emissions for the historic baseline period of 1987 through 1990

(`` historic baseline''), and subsequent years. The guidelines also

cover the reporter's aggregate annual emissions and emissions

reductions from all of its activities. Annual reductions of greenhouse

gases and annual carbon sequestration, by activity and project, are

also covered. Results of activities occurring outside the U.S. are

covered in the same manner as those occurring within the U.S., as

discussed below.

Reporters are encouraged to report and update historic baseline

emissions and to report on an entity-wide (total organization) basis.

The clarity and credibility of data provided by an organization will be

enhanced by the optional submission of comprehensive greenhouse gas

emissions data on the historic baseline and total annual emissions of

the organization. While the guidelines do not require this

comprehensive information to accompany reports of other, more focused

data on projects and activities, reports will be identified within the

database on the basis of the coverage of the submittal.

Causation. The guidelines require that reporters identify the cause

for the activity resulting in greenhouse gas emission reductions.

Section 1605(b) provides that the guidelines cover greenhouse gas

emission reductions achieved as a result of: (1) plant or facility

closings, (2) Federal or state requirements, and (3) voluntary

reductions. Accordingly, the guidelines require reporters to identify,

if appropriate, which of these factors caused the reported emissions

reduction. Reports will identify the causative factor if it falls

within these areas, but will not include any further information.

Comment is specifically requested on the appropriateness of this

limited identification of cause.

International activities. The draft guidelines provide that U.S.

entities may report international activities to which they are a party

if the submission meets the general reporting criteria. The Act is

silent on the reportability of offshore activities to this program.

There is considerable interest in the potential for cooperation

among firms in industrialized countries and governments, firms, or

individuals in less developed countries in sequestering carbon and

reducing global carbon emissions. Reporters are advised that there may

be special difficulties in defining project boundaries, determining an

appropriate reference case, and using appropriate estimation methods

for offshore activities.

The United Nations Framework Convention on Climate Change (FCCC),

Article 4, paragraph 2(A), requires some nations to take measures to

mitigate climate change, and it allows the parties to implement these

measures jointly with other parties. Criteria for ``joint

implementation,'' as this concept is known, will be formally addressed

by FCCC's Conference of the Parties in 1995. Thus, it is impossible at

this time to ensure that guidelines for the voluntary reporting of

actions taken by U.S. entities in other countries will be consistent

with the eventual requirements for joint implementation under the FCCC.

Accordingly, the guidelines may be updated to reflect future decisions

made by the Conference of the Parties.

VI. Relationship of the Voluntary Reporting Program to Other Greenhouse

Gas Initiatives

EPAct, which requires the establishment of the voluntary reporting

program, was enacted on October 24, 1992. It predates several domestic

initiatives designed to respond to the threat of global climate change.

Some of these initiatives refer to the voluntary reporting program as

an associated tool in implementation. This reporting program can be

used to record emissions reductions achieved under a variety of

programs that may result in reducing greenhouse gas emissions or

increasing carbon sequestration, whether as a primary goal or as a

secondary result.

While activities that reduce or avoid greenhouse gas emissions or

sequester carbon under existing programs would be reportable, the

guidelines were not specifically designed to accommodate any particular

program. Although the ability to report beneficial greenhouse gas

impacts of activities may encourage activities under existing programs,

the guidelines were designed to encourage reporting regardless of cause

or motivation for an activity.

The language of section 1605(b)(1)(C) provides that the guidelines

are to address reporting reductions achieved as a result of plant

closings, and Federal and state requirements, in addition to those

which result from voluntary actions. Thus, the guidelines do not limit

submissions based on either the motivation of the parties involved or

on the reason for the activity.

A. The Climate Change Action Plan

A year after passage of the Energy Policy Act of 1992, the

President, with the goal of returning U.S. greenhouse gas emissions to

their 1990 levels by the year 2000, released the Climate Change Action

Plan (CCAP). This plan contains over forty new or expanded initiatives,

most seeking voluntary participation. Three actions under the CCAP--

Climate Challenge, Climate Wise and the U.S. Initiative for Joint

Implementation--specifically refer to participant reporting under

section 1605(b). DOE anticipates that most accomplishments under CCAP

initiatives will be reported under section 1605(b), but reporting is

not limited to these specific activities.

The 1605(b) program is flexibly designed to accommodate broad

participation consistent with the purposes of 1605(b). It was not

designed to meet the accounting goals of any particular program. Some

programs such as Climate Challenge and Climate Wise may need to adopt

supplemental accounting procedures for the purposes of those programs.

The Climate Challenge and Climate Wise programs are designed to

elicit commitments by members of the utility and industrial communities

to take actions which will reduce or avoid greenhouse gas emissions.

While the 1605(b) voluntary reporting program will provide a mechanism

for recording information on those achievements, it does not provide a

mechanism for registering commitments.

DOE is exploring establishment of a separate reporting system for

the pledge portion of the commitment programs. While as yet

undeveloped, that system may look similar to the reporting program and

database established under 1605(b). This similarity, however, should

not be confused as allowing commitments to be reported into the section

1605(b) database; only achievements will be part of this database and

any information system developed for commitments will be distinct.

B. United States Actions Under the United Nations Framework Convention

on Climate Change (FCCC)

Under the FCCC, the United States will be submitting a national

communication which contains a mitigation plan of policies and

measures. While data submitted to the voluntary reporting program may

provide some limited information concerning accomplishments under U.S.

measures, it is not designed to be a primary data source for

communications of the United States under the FCCC.

VII. Discussion of Report Development and Analysis

The Act requires that DOE develop guidelines on procedures for four

reporting categories: baseline emissions for the period 1987 through

1990, annual emissions, emissions reductions, and carbon sequestration

activities. It also requires the procedures to take into account the

differential radiative effects of each gas covered. However, it does

not require that each report include all of these activities or address

radiative effects. The legislation does not require that historic

baseline, annual, or total organization emissions be reported as a

prerequisite to reporting emission reductions or carbon sequestration

project information.

DOE is requesting comment on the guidelines approach, which allows

voluntary reporters to determine how comprehensive their submissions

will be relative to historic baseline, annual and total organization

emissions.

A. Annual and Total Organization Emissions

The guidelines encourage, but do not require, reports of annual

emissions for the historic baseline period 1987-1990, and for

subsequent years. In reporting emissions for this historic baseline

period, the reporter may choose to report annual emissions for each of

these years, or the average of the four years' emissions. Where

adequate data exists (for example, for regulated industries such as

utilities), the inclusion of emissions reports for the period 1987

through 1990, and for each subsequent year, will provide enhanced

clarity to submissions on reductions and carbon sequestration projects.

The guidelines encourage annual emissions reports on a total-

organization basis, covering all greenhouse gas producing activities of

the reporter. However, recognizing that adequate information may not be

available or may be overly burdensome to collect and analyze (in the

case, for example, where an organization has multiple sites and

decentralized management), the guidelines allow emissions reporting on

a project basis. A project is variously defined, at the discretion of

the reporter, as a site, an activity, or a group of activities.

B. Emissions Reduction or Increased Carbon Sequestration Projects

Reports will be accepted on a project-by-project basis as defined

by the reporter. The reporter may credibly define a project at the

entity level, at a subentity level (such as a plant or production

line), at a supra-entity level (including, for example, joint reporting

of the manufacture and use of fuel-efficient vehicles), or at a

specific activity level (such as replacement of equipment). When

defining a project, the entity must consider the amount and accuracy of

available data and possible secondary effects of the project as

described below.

1. Defining the Project

The draft guidelines allow reporters latitude in defining the

project to be reported and in performing analyses to substantiate

claimed emission reductions or carbon sequestration. This latitude

extends to permitting narrow delineation of a reportable activity which

does not reflect the greenhouse gas effects of all of the operations of

the reporter. Some commenters stated that requiring reports to cover

all greenhouse gas emitting activities of the reporter is the only way

to ensure that the program records only ``real'' reductions, that is,

reductions from the entity's total emissions. Other commenters pointed

out that participation in the program would be unnecessarily limited by

the universal imposition of significant data collection and analytic

burdens. In order to achieve the goal of maximum participation, as

discussed above, the draft guidelines allow for a broad choice in

designing the scope of submissions.

Project-level reporting provides maximum flexibility to reporters

based on individual circumstances. Participation is facilitated since

growing entities would be able to report, even though their total

emissions are growing; and parties who do not have or cannot develop

data at the total organization level will be able to report quality

data on an individual project. The focus of the program on individual

achievements is preserved.

DOE acknowledges that the breadth of reporter discretion permitted

could result in some submissions which selectively provide only data on

environmentally beneficial activities, without addressing secondary and

other effects. By providing an analytic framework on project boundary

definition and secondary effects, and in encouraging the submission of

reports showing total organization emissions and emission reductions,

the guidelines seek to minimize inappropriate use of narrow reporting.

DOE specifically seeks comment on whether the proposed degree of

flexibility provided for the scope of reports is appropriate.

2. Reporter's Data Identification, Analysis, and Certification

To encourage voluntary reporting, the guidelines minimize reporting

demands, both in terms of ease and cost of data identification,

collection and analysis. Three strategies have been developed to

accomplish this objective:

(a) Provide that a reporter may use, to the extent possible,

information it already collects for other purposes.

(b) Provide two paths for data analysis and report preparation: the

first with detailed assistance for smaller or less analytically

sophisticated reporters without adequate data or expertise, and the

second with more general guidance for reporters with experience in

analyzing and reporting the type of data sought by this program.

(c) Accept self-certification as an adequate accuracy check for the

current purposes of the program, recommending that reporters consider

retaining records where they may be appropriate for future use.

a. Using existing information. Many reporters, such as utilities

and members of other regulated industries, currently collect data

relevant to this program. This data may be on greenhouse gas emissions

specifically, or activity parameters which can be translated to

emissions. Some reporters collect data for internal purposes, for

example, in order to monitor energy use or expenditures. To minimize

data collection burdens, the guidelines encourage the use of existing

data for submissions.

Data are collected and reported in various industrial and economic

sectors under existing programs at the Federal, state, and local

levels. The following discussion illustrates the types of information

which will be useful for submissions under this program.

Many reports already required of utilities will readily provide

relevant data. These include, for example, specific carbon dioxide

emissions reports from electric utility units affected under the Clean

Air Act acid rain program (40 CFR part 75). Information needed to

estimate emissions of greenhouse gases is reported by all major fossil

fuel electricity generating plants in several reports submitted to EIA,

for example, on EIA Form 767 (fuel use by generating unit) and EIA Form

861 (utilities' net generation and sales to ultimate customers). In

addition, utilities gather relevant data in order to report to public

utility commissions and other state an local bodies.

For the industrial sector, examples of information useful for

reporting include that provided to the Census Bureau via the Census of

Manufactures (CM), the Annual Survey of Manufacturers (ASM), and the

Manufacturing Energy Consumption Survey (MECS). Industrial reporters

may be collecting relevant data pursuant to existing programs such as

the Clean Air Act requirements for halogenated substances, annual

reports to the EPA Toxic Release Inventory System, and state programs

such as California's Directed Inspection/Maintenance Programs. Data

collected for reporting to the Federal Mining Safety and Health

Administration and the Department of Transportation's Office of

Pipeline Safety on methane may also be useful to the reporter.

In the transportation sector, reporters may have information

gathered in planning and compliance activities undertaken for numerous

programs, such as the corporate average fuel economy (CAFE) standards;

EPAct and Clean Air Act mandates for alternative fuel use, employer

carpooling and telecommuting; state-level subsidies for gasohol; and

required fuel use reports by airlines an railroads.

Participants in voluntary programs in both the public and private

sectors are or will be collecting information useful to reporting under

this program. For example, DOE expects that data generated by

participation in many initiatives under the CCAP will be reported under

the EPAct 1605(b) program. Participation in private voluntary programs,

such as trade association energy efficiency programs, will also result

in participants generating data useful to reporting.

Ongoing Federal programs, generally concentrated at DOE and EPA but

also at other agencies, afford participants the opportunity to use data

generated for those programs in reporting under Section 1605(b). Among

these are the Motor Challenge and the Golden Carrot programs. DOE's

Energy Analysis and Diagnostic Center (EADC) energy audits, as well as

independent energy audits, may provide data useful for the additional

purpose of reporting here. EPA's voluntary programs, such as Green

Lights, Natural Gas Star, Energy Star Transformers, and others, will

also provide useful data.

In the forestry sector, participation in tree planting and urban

forestry programs managed by agencies within the U.S. Departments of

Agriculture (USDA), Interior, Transportation, and Defense, as well as

by State forestry agencies, may provide useful data. Extensive physical

data on land use and agricultural practices kept for and by the USDA's

Soil Conservation Service and State agricultural agencies, developed

for other purposes, may be useful in providing data on activities

affecting greenhouse gas emissions and carbon sequestration in the

agriculture sector.

b. Two paths for reporting. Public input into development of the

draft guidelines indicated that at least two categories of reporters

exist. The first includes large utilities and industrial organizations

with extensive data collection programs and the capability to perform

thorough organizational and project-specific analyses of activities and

greenhouse gas and carbon sequestration achievements. The second

category of reporters encompasses smaller entities with adequate

physical information, but needing assistance in transforming this data

into estimates of emissions and reductions or sequestration. To

accommodate both categories of reporters, the guidelines ask reporters

to provide adequate physical data about projects/activities, and

provide two paths for estimating greenhouse gas emissions or carbon

sequestration.

In all cases, submissions will include adequate physical data about

projects; for example, how many and what type of trees were planted at

a location, what quantities of materials were processed, or how many

kilowatt hours were used. This information must be sufficient to derive

a gross estimate of greenhouse gas emissions or carbon sequestration

results.

However, two paths are open to reporters for deriving their

estimates of the effects of reported projects. The first is to develop

the data and methods needed to estimate credibly and accurately project

effects. A variety of tools may be used--such as computer models,

actual measurements, and engineering estimates--based on the

circumstances of the project and the reporter's purpose for reporting.

The second path for reporters is the use of default values to

derive estimates. The guidelines and supporting materials provide, or

give references for, emission factors, stipulated savings, equations,

and other default systems to be used at the option of the reporter.

While the default path is likely to produce conservative estimates

(i.e., underreporting beneficial accomplishments) which are less

precise than those derived from project-specific analyses, it will

enhance the ability of less sophisticated reporters to report.

Identification of the types of tools used in either path will be

part of the report.

c. Certification of submissions. EPAct 1605(b) requires self-

certification of reported data. Consistent with the Act, the guidelines

provide only for self- certification by the reporter of the accuracy of

the submission.

DOE considered the private and public resources necessary for

various types of verification of data submitted. The goal of broad

participation would be adversely affected by imposing upon reporters

additional requirements for certification or verification of submitted

data.

Although the draft guidelines do not go beyond the self-

certification specified in the statute, other verification and

certification parameters may be set by and through other greenhouse gas

programs in which a reporter participates. The reporter may identify

data in its submission that has been verified by a third party. In

addition, reporters may wish to retain auditable data supporting their

reported data, based on the anticipated uses of the data.

VIII. Discussion of the Project Analysis Approach

This section discusses the basic approach of the draft guidelines

for project analysis, and of the sector-specific supporting

methodologies for applying this approach.

A. What the Reporter Must Be Able To Provide

The minimum requirements for reporting the achievements of a

project include the following:

Identifying information about the reporter and the

project.

Sufficient physical data on the project for calculating

emission reductions or carbon sequestration results achieved.

Definition of a reference case against which to measure

reductions.

Identification of the measurement and estimation methods

used.

B. Reporting Emissions

Reporters are encouraged to provide total organization emissions

data when reporting project emission reductions, as well as total

project or activity emissions for the historic baseline period of 1987-

1990 and subsequent years. Comprehensive reporting of all relevant

emissions data will increase the credibility of any emission reduction

reports, by providing a complete picture of the reporter's activities.

Reporters have the flexibility to determine and identify

organization-wide reporting boundaries. The rationale for the

boundaries they draw will depend, in part, upon the reasons the

reporter is preparing and submitting information. If reporters are able

to report emissions for their entire organization, they are encouraged

to do so. Reporters do not need to report total organization emissions

in order to report emission reduction and carbon sequestration

projects. DOE recognizes, however, that reporting total emissions for a

specific industrial plant, for example, may be more consistent with

specific emissions reduction project elements of the report, and based

on more readily available data than would a report on the

organization's total emissions.

C. Reporting Emission Reductions or Carbon Sequestration: Project

Analysis

Accurate and credible reporting under the EPAct 1605(b) program

depends upon performing good project analysis. Entities may report

emission reductions and carbon sequestration for projects which they

define and for which they develop a basis of emissions with and without

the project. The guidelines do not provide rigid rules for such an

analysis, but provide general methodologies and considerations for use

by the reporter, as discussed below.

After defining the project to report, a reporter will need to

address three elements of project analysis: (1) Establishment of the

reference case (the basis for comparison with the project); (2)

definition of the project and reference case boundaries; and (3)

estimation of emissions for the reference case and the project.

These elements are interdependent. For example, the selection of a

reference case will depend upon both how widely the project boundaries

are drawn and what data are available to measure or estimate emissions.

The extent of the reporter's analytic efforts will be based on the

purposes for reporting.

Defining the project to be reported. A project may consist of only

one activity, undertaken for its projected cost savings (such as a

relighting project) or as a pilot project (such as an experimental

process change); several activities, perhaps as parts of an energy

efficiency program (these may include activities, such as materials

processing, outside the organization); or all emission-producing

activities for the organization. The definition of a project depends on

factors such as how clearly the reporter draws the boundaries, how

credibly it defines a basis for comparison, and how well it can measure

or estimate the effects of the activities.

Step 1. Establishing the reference case. A pivotal consideration in

establishing project boundaries is how well the reporter can establish

a reference case--that is, an emission level against which to measure

the effects of a project. A reference case is often referred to as the

``but for'' scenario, as in, ``but for this project, emissions would

have been * * *.'' Two possible ways to finish this sentence are: (1)

``* * * the same as a previous year'' (the basic, or historic,

reference case), or (2) ``* * * different than any previous year'' (the

modified reference case, which is adjusted from historic data or

projected). Each of these cases is discussed below.

Basic (or ``historic''). Emissions from within the project boundary

may be compared with the corresponding level for some previous year(s);

for example, the 1987 to 1990 period, the year(s) just prior to

commencement of the project, or some intervening year more indicative

of normal operations. The reference case may be defined as the average

annual emissions during some multiyear period or the highest or lowest

annual emissions during that time. Alternatively, a single reporting

year (e.g., 1990) could be chosen by the reporter as the reference case

year.

Modified (or ``projected''). Even in the absence of the project,

emissions levels may differ from past levels, for example due to growth

or decline in output and changed operations. In this case, the

reference case might be extrapolated with the use of models from past

trends and external data to determine what emissions ``would have

been'' but for the project in the year in which the project's effects

are being measured. Adjustments may involve estimating the emissions

per unit of production using historic or current-year data and

adjusting for growth by multiplying this rate by the rate of production

in the year reported.

Under the guidelines, reporters may choose between these approaches

depending on the reporter's purpose for reporting. For many purposes, a

basic reference case using an average of emissions for the years 1987

to 1990 or the annual emissions in the year before the reported year

may be more appropriate than a modified reference case.

In analyzing activities of a new entity or added capacity of an

existing organization, extra care in constructing a reference case is

necessary. Use of industry standards or of the alternatives actually

considered during planning for the new capacity will increase

credibility of the reference case. Another approach is the use of a

unit-production (or unit of service) reference case. For example, if an

entity is adding capacity in order to increase production or service to

customers, it may calculate emissions per unit or customer and show

reductions based on this common standard.

Step 2. Defining project and reference case effects. The second

major step in project analysis is identifying the types of effects the

project had. The project may be primarily designed to reduce greenhouse

gas emissions or increase carbon sequestration. It will, however, have

both expected and unanticipated secondary effects. The reporter will

need to address both primary and secondary effects in analyzing the

project for reporting.

Primary effects. These are the obvious, immediate, direct and

intended effects of the project, resulting in direct and indirect

emissions and carbon sequestration. For example, the primary effect of

an electricity conservation project is the reduction of electricity use

and of the carbon dioxide emissions associated with the electricity

generation avoided. The primary effect of a tree planting program is

the sequestration of carbon.

Secondary effects. These are the more subtle, indirect,

consequential, and perhaps unintended effects of projects. They may be

positive (augmenting the primary effects) or negative

(counterproductive to primary effects). Secondary effects may be large,

in some cases as large as the primary effects, and include activity

shifting, outsourcing, shifting emissions to different points of the

life cycle, and offsetting emission reductions by residual market

demand.

The guidelines ask the reporter to clearly state the primary effect

of the project and identify any significant secondary effects. If the

entity is quantifying the emission reductions or carbon sequestration

associated with the project, the entity should try to quantify the

secondary effects, particularly those that amount to ten percent or

more of the primary effects. DOE recognizes that quantifying the

effects of a project can be difficult. However, the credibility of

emission reduction or carbon sequestration reports may be impaired if

negative secondary effects rose, or appeared capable of rising, thereby

offsetting a significant portion of the reported primary effects.

Ultimately, the reporter must choose the balance between increased

analysis cost and increased thoroughness of the analysis, depending

upon the reasons for reporting.

Step 3. Quantifying reference case and project effects. The

guidelines provide reporters with a wide range of options for

identifying input data and defining methods for quantifying the

project's impact on emissions or carbon sequestration. The types of

data and methods used will be reported.

First, the guidelines recognize three types of data: physical,

default, and measured/engineering.

Physical data. This is information that describes the activities

involved in a project. For example, how many exit lights were replaced?

What was the power requirement of the old and the new lights? How many

hectares of which species of tree were planted?

Default Data. This is information provided in the guidelines and

supporting methodologies to assist reporters in evaluating the effects

of projects. While using default data will ease reporting for many

reporters, it is generally conservative, and may not provide the

reporter's desired precision. There are two types of default data:

Emissions Factors. These are factors that allow reporters to

convert information about a change in energy use to an estimated change

in greenhouse gas emissions. Emissions factors for direct emissions are

more precise than for indirect emissions. For example, the change in

direct emissions of carbon dioxide from a reduction in methane

combustion is essentially constant, regardless of when or where the

change takes place. Other emission factors, particularly those for

indirect emissions, are less precise. For example, the draft guidelines

provide emissions factors for electricity on a state-by-state basis.

However, the effect that a specific change in electricity consumption

has on emissions will vary by location within the state, the time of

day, and the season in which a change occurs. Generally, the draft

guidelines and supporting documents contain relatively conservative

figures for indirect emissions factors.

Stipulated Factors. These are factors that allow reporters to

convert physical data about projects into estimates of changes in

energy use, greenhouse gas emissions or carbon sequestration. The

guidelines provide this information for a few types of projects where

the scope and nature of the project can be clearly defined and the

effects on emissions predicted with relative certainty. For example,

the guidelines provide stipulated factors for converting physical data

about tree planting into estimates of carbon sequestration. They also

provide stipulated factors for converting information about certain

energy-efficiency projects into estimates of fuel savings. These

estimates can be combined with default emissions factors to estimate

reductions in greenhouse gas emissions.

Reporter-Generated Data. This is information developed by the

reporter and used in estimating the effects of the reporter's projects.

There are two types of reporter-generated data.

Measured Data. These are data on emissions operating parameters

collected directly from the project or a control group, that a reporter

can use in estimating project accomplishments.

Engineering Data. These are data that reporters derive from sources

such as engineering manuals, manufacturer's equipment specifications,

surveys, academic literature, and professional judgment.

Standard Project. These are projects for which the draft guidelines

provide the procedures and information necessary to transform physical

data into emissions reductions or carbon sequestration results, relying

entirely on physical and default data. A few types of projects can be

described through standard project reports; these are identified in the

sector-specific methodologies supporting the guidelines. Reporters must

recognize that, since the default values used are conservative, the

precision of their report is lessened. However, for reporters who do

not have direct project measurements or experience in estimation

methods, standard project methodologies will allow them to quantify the

effects of these activities.

Reporter-Defined Project. These are projects that use physical and

reporter-generated data, possibly in combination with default data, to

estimate the accomplishments of the project. For this type of project,

reporters will need to be able to clearly indicate the sources of all

data, and in the case of reporter-generated data, how it was measured

or derived. For reporter-defined projects, the principles and guidance

are provided in the sector specific methodologies supporting the

guidelines.

Estimation of reportable effects of most reporter-defined projects

will require gathering basic data, and using it to derive the levels of

project and reference case emissions. This may involve relatively

simple calculations or complex modeling.

The guidelines suggest recording the nature of the calculations or

the type/name of the model used.

In some instances, identified in the sector-specific supporting

methodologies, it may not be possible to estimate emissions for both

the project and the reference case. In these cases, it may be necessary

for the reporter to measure the emission reductions or operating

parameters directly.

IX. Significant Issues

DOE requests comment on all issues raised by the draft guidelines

and supporting materials and calls particular attention to several

significant issues. Commenters are requested to consider the impact of

any alternative approach they suggest on the goals of encouraging broad

participation and generating useful data.

(1) Is the scope of the guidelines with respect to emissions of the

gases and substances specified appropriate?

(2) Should threshold reporting levels of emissions or carbon

sequestration be set? If so, at what levels and why?

(3) Do the guidelines appropriately address and distinguish between

direct and indirect emissions of the applicable gases? Are there

additional ways which can address the statutory references to

reportability of activities which result in direct emissions and those

that result in indirect emissions?

(4) In order to report an emissions reduction or carbon

sequestration project, should reporters be required to report

comprehensive data on their historic (1987-1990) emissions? On their

organization's total greenhouse gas emissions? From all activities in

the year covered by the project report?

(5) What categories of data derivation should be identified (e.g.,

measurement, engineering estimate) as appropriate to achieve the dual

goals of the program?

(6) Is the approach to reporting activities taken in association

with others appropriate for minimizing double counting while

encouraging participation?

(7) How should activities outside the U.S. be handled by the

reporting program?

(8) Is the information and approach provided on different radiative

activity of gases appropriate? Should DOE delay finalizing this portion

of the guidelines until completion of the current international

deliberations?

X. Administrative Requirements

A. Regulatory Review

DOE has concluded that this is not a significant regulatory action

because it does not meet the criteria which define such actions under

Executive Order 12866, 58 FR 51735, and is therefore not subject to

regulatory review. Accordingly, the Office of Management and Budget

(OMB) has informed DOE that no clearance of the draft guidelines and

supporting materials is required.

B. Issues Under the Paperwork Reduction Act

In addition to providing information to parties which wish to

participate in voluntary reporting, the guidelines and supporting

materials provide direction to EIA in developing the reporting forms

and database for the program. Separate administrative requirements

apply to the development of EIA reporting forms, which will proceed

after DOE finalizes the guidelines.

Any information collection requirements proposed in EIA forms for

the voluntary reporting program are subject to the Paperwork Reduction

Act, 44 U.S.C. 3501 et seq., and will be submitted to the Office of

Management and Budget for review and approval of paperwork

requirements. Because the reporting forms developed by EIA will be

necessary for participation in the program and must be consistent with

the guidelines, the draft guidelines and supporting materials may

involve issues relevant to subsequent review of the forms for paperwork

requirements. Comments on any paperwork issues identified by the draft

guidelines and supporting materials are requested.

XI. Opportunities for Public Comment

A. Public Hearing Procedures

A public hearing on the draft guidelines and supporting documents

will be held at the time and place indicated in the DATES and ADDRESSES

sections above. Any person who has an interest in the draft guidelines

may request the opportunity to make an oral presentation. DOE reserves

the right to cancel the second day of the hearing if scheduled requests

to speak can be accommodated in the first day. All requests to speak

should be made by telephone at the number listed in the ADDRESSES

section.

DOE reserves the right to schedule speaker presentations, and to

establish procedures governing the conduct of the hearing. The length

of each presentation may be limited to 5 minutes, or longer based on

the number of persons requesting an opportunity to speak. Ten copies of

the speaker's statement should be submitted at the hearing.

A DOE official will preside at the hearing. The hearing will be a

legislative-type hearing; speakers will not be sworn in nor cross-

examined. Further procedural rules needed for the proper conduct of the

hearing will be announced by the presiding officer. A transcript of the

hearing will be made and will be available for public inspection as

indicated in the ADDRESSES section above.

B. Written Comments

Interested persons are invited to submit comments on the draft

guidelines and sector-specific issues and methodologies, and on the

questions presented in this notice.

Ten copies should be submitted to the address indicated in the

ADDRESSES section above, and must be received by the date indicated in

the DATES section of this notice. All written comments received will be

available for public inspection in the DOE Freedom of Information

Office Reading Room at the address provided at the beginning of this

notice.

Pursuant to provisions of 10 CFR 1004.11, any person submitting

information which that person believes to be confidential information

and which may be exempt by law from public disclosure should submit one

complete copy of the document as well as two copies from which the

information claimed to be confidential has been deleted. DOE reserves

the right to determine the confidential status of the information and

to treat it according to its determination.

Issued in Washington, DC, on May 26, 1994.

Susan F. Tierney,

Assistant Secretary, Office of Policy, Planning, and Program

Evaluation.

[FR Doc. 94-13304 Filed 5-31-94; 8:45 am]

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