Preparing for the EPAs Mandatory Greenhouse Gas Reporting

Beginning on January 1, 2010, over 10,000 manufacturing facilities across the U.S. will be required to report their emissions data as part of the mandatory Greenhouse Gas Reporting rule passed by the U.S. Environmental Protection Agency in September. Environmental managers face many challenges, but there are sources to help operators understand the challenges.

Facilities must either measure CO₂ emissions directly (Tier 4) or use facility-specific measurements of fuel inputs and processes (Tier 3) that are more detailed and complex than many of the voluntary programs that were previously in place.

The largest emitters must use Tier 4 reporting methods, which for some source categories requires upgrades to existing CEMS — continuous emission monitoring systems. This will add CO₂ monitors and flow rate meters. Facilities without CEMS for CO₂ can avoid installing them if they have them in place for SO₂ and NOx, but they will be required to upgrade for CO₂ monitoring.

Overall, any facility required to use Tier 1, 2, or 3 may optionally choose to use a higher, more accurate tier. When the proposed rule was announced last April, many industry associations submitted public comment to request a deferment of a year to prepare, which included hiring more staff to help environmental managers. With the program starting with 2010 data, the additional work will fall to the managers in place.

The EPA will verify the data themselves, and the final rule states that EPA staff will be allowed to do more crosschecking of the data without having to visit as many sites to get a complete picture of how the measurements had been done. Stated another way: the EPA clearly notifies facilities that they must be ready in case the agency selects them for an audit of their annual reports. This creates even more pressure on environmental managers to set up filing systems that meet the record keeping requirements. (See table.)

Once the EPA collects the data, it will be published publically along the lines of data in programs like the Toxic Release Inventory (TRI). But, not all types of data will be made public. Some data that is deemed Confidential Business Information (CBI) will be withheld from publication. In 2010, the EPA plans to seek public comment on how CBI should be defined.

At this time, it is known that the EPA will use the data to: improve accuracy for the annual inventory of U.S. GHG emissions and sinks — required by treaty to report to the UNFCCC; reports to policy makers; and distribution to state environmental agencies. The preamble also states that data will be made available to unnamed regional and other programs. This could include the Regional Greenhouse Gas Initiative, The Climate Registry, and others.

If Cap-and Trade legislation is passed, it is likely that the Mandatory Reporting Rule (MRR) data could be used, with small modifications, to support some of the requirements. This could include: reporting entity requirements to report data; determination of the compliance obligation of covered entities; and pre-2012 calculation basis for the distribution of free allowances to the electricity and the energy-intensive industry sectors.

Extra precaution should be taken with annual reports to the EPA for MRR. Future use of this data could be used as a basis to determine obligations and entitlements of financial value (free allowances), exposing legal risk if inaccuracies are discovered in annual reports. Some firms that submit reports to the Acid Rain Program carry business insurance on the person named in the Certificate of Registration to manage that type of risk.

The EPA is developing its Electronic Data System (EDS) that environmental managers will use to submit their annual reports. Every existing GHG reporting program already has its own computer-based data system, but they are not able to draw out the parts that the EPA needs. The agency is currently working on an ideal, onestop- shopping concept, but it may not come to fruition before 2014. During 2010 you may expect the EPA to be focused on getting users trained on their EDS system, but the first two years will be a time-intensive process for environmental managers.

The EPA has an abundance of training material and programs for managers and the agency makes a genuine effort to address specific questions. Environmental managers are encouraged to attend regional training sessions.

Additionally, consult your specific industry associations. Many have experts who are familiar with MRR regulations and some have educational support for members.

There are also firms that specialize in climate work. These environmental consulting firms and engineering firms have expert staff that can provide temporary one-on-one guidance and extra manpower. This could be a vital resource for over-extended environmental managers who may make a critical oversight in the first year of reporting that could expose your facility to risk down the line.

Terry Moore is principal and co-founder of Carbon Shrinks LLC, an Austin, TX-based firm specializing in strategies for profitable carbon reduction.