by Ken Weiss
The Obama administration’s first serious policy foray into climate change has landed a significant obligation on US industry. From 1 January 2010 some 13,000 facilities - accounting for about 90 percent of industrial greenhouse gases emitted in the United States - must report accurate GHG data.
As well as providing the administration with a more robust foundation on which to build Climate Change policy, the new rule will help industry to put in place cost-effective GHG measurement and reporting controls that will enable easy participation in emissions trading. Reported GHG emissions will form the foundation for the soon to be enacted cap and trade program.
Failure to build an optimum GHG emissions estimating and reporting program means that companies will not have information necessary to make informed choices about future carbon reduction options and may well expose facilities to substantial enforcement penalties in the millions of dollars. The refining and utility sectors are well aware of the sting related to EPA enforcement of these type of issues. Large facilities such as refineries are expected to have carbon streams representing as much as $50,000,000 per year in emissions allowance terms . Accurate assessment now will set the stage for future carbon management strategies necessary to prosper in the coming carbon constrained world.
To date, the US has seen the emergence of a variety of Regional Programs (some mandatory and some voluntary) addressing the need to collect GHG emissions data. The new EPA rule, adopted as a new requirement of the USEPA’s Air Program and to be codified at 40 CFR 98, is the first nationally applicable reporting requirement. On an industry by industry basis, the new rule mandates specific emissions estimating methods, Quality Assurance and recordkeeping requirements. The required level of assurance is much greater than most facilities have in the past seen for voluntary reporting programs. In addition to the sector specific requirements, fuel suppliers will need to provide annual reports to EPA regarding the emissions associated with the ultimate end use combustion of their annual fuel production and distribution. As the deadline for reporting is set in a federal law, it is nearly impossible for EPA to delay implementation of the rule. This means that affected facilities need to begin collecting quality assured data commencing 1 January 2010.
The available time is very short to get the systems and processes into place to ensure accurate data collection, in particular for those sites such as refineries and chemical operations which have complex plants. By January 1, 2010, emissions units must be identified, meters calibrated and systems put in place to collect and store data in accordance with the requirements of the new rule or facilities face the very real prospects of a new enforcement initiative.
What is needed?
In order to meet this impending deadline, companies need to determine now which facilities are impacted, what pollutants need to be quantified, what required methodologies need to be used, what data need to be collected, what meters and instruments need to be installed and/or calibrated, and what records must be retained.
The data will be self-certified as are most USEPA reports; Company Management will therefore need to attest to the accuracy of the inventory and should expect routine EPA audits of the data based on past experience with similar programs.
The highest priority actions include:
- Carrying out a gap assessment against the rule requirements. This will include identification of all sources of GHGs, ensuring methods used are consistent with the rule and that data management systems are adequate. The end result of the gap assessment is a compliance roadmap for the future.
- Any existing reporting system must be upgraded for the new requirements, or a new one needs to be developed.
- Data collection processes and calculations must be developed and documented
- Meters and instruments need to in place and calibrated prior to January 2010, with a formal Quality Assurance Program Plan detailing the estimated accuracy of each measurement device
- Start collecting before January in order to ensure adequacy and completeness of data collection
- Perform third party reviews to assess compliance readiness.
ERM is already helping many companies and sites address these new requirements as they roll-out across the country. For example we have performed GHG inventories for a variety of sources in California and elsewhere as we prepare for the new program. We believe the time to act is now to ensure the development of a cost-effective GHG reporting program.