In the grand scheme of things, if neither next month’s Copenhagen summit on climate change or pending U.S. legislation on the same topic fails to establish firm, enforceable consensus on carbon reductions, accounting and reporting, it may not matter very much.
That’s because the U.S. Environmental Protection Agency has already done most of the heavy lifting, at least on the monitoring and reporting end. It issued binding rules in September that require companies to report their CO2 emissions, whether or not Copenhagen is a success or U.S. legislation gets to the president’s desk.
It’s estimated there are some 10,000 facilities and suppliers subject to the EPA rule. They produce about 85 percent of GHGs emitted in the U.S.
Time is short: Get ready to start collecting GHG data on Jan 1, and annual GHG Reports for 2010 are due March 31 2011. The rules are detailed and comprehensive: They cover 261 pages in the Federal Register.
Once that reality sets in, and hopefully it has by now, the question becomes whether those thousands of facilities are ready. A recent online seminar by the research firm Deloitte & Touche LLP addressed that question directly while laying out the job that lies ahead.
It’s much more than filling out a government form or two and attaching an Excel spreadsheet, as it turns out.
“Companies at this point are trying to figure it all out,” said Steve Engler, a Deloitte director. “There’s a lot of uncertainty about the verification process, the development of [quality assurance/quality control] protocols, and consistency of data sources,” he continued during the seminar. “It all starts with the data – the management and the consistency of the data will be vital.”
The EPA’s reporting threshold covers facilities and suppliers emitting 25,000 metric tons of CO2 equivalent emissions (known as CO2e) or more, annually. That standard also includes importers and exporters.
To put that number in perspective, Deloitte Senior Manager Janelia Tse explained that 25,000 metric tons of C02 is equivalent to annual GHG emissions from the energy use of about 2,300 homes; or about 4,600 passenger vehicles; or consumption of more than 58,000 barrels of oil; or burning about 130 railcars worth of coal or about 1 million propane cylinders used for home BBQs.
About one-third of facilities covered under the rule are stationary combustion facilities, followed closely by landfills.
So unless you’re a ridiculously big backyard BBQ’er, don’t worry about reporting your emissions to the EPA. “The majority of commercial building owners are not likely to meet the reporting threshold,” Tse says. “The most critical part of the rules cover GHG monitoring,” she adds.
The rule requires a written GHG monitoring plan, and self-certification with verification by the EPA. To verify completeness and accuracy of reported GHG emissions, EPA may review certification statements and conduct a comprehensive review of GHG reports and periodic audits of selected reporting facilities.
Companies must retain documentation for three years in electronic or hardcopy format.
Engler says the rule encourages ‘one version of the truth’ across each entity because the emissions data “likely will serve as the foundation for carbon markets, and for compliance with financial regulatory and management reporting requirements.”
That’s a vital aspect of the rule: It won’t exist in a vacuum.
Tse explains that the “conversation has shifted from if to when carbon cap and trade will occur.” Cap and trade legislation likely will pass Congress by mid-2010, she says. The EPA rule was not drafted with cap and trade legislation in mid, but “there are obviously relationships and linkages” between the EPA rule and the pending bills, she says.
“We anticipate a significant price for carbon,” Tse continues. “The mandatory reporting rule will likely serve as the foundation for a federal carbon cap and trade program, so accurate and reliable emissions data are especially important.”
An answer to Deloitte’s question, ‘Is your company ready?’ is not clear-cut or easy at this point.
What is clear is that thousands of facilities and suppliers have a huge amount of reporting, monitoring and data collection to do starting in January.