Outline

1. Greenhouse Gas Emissions Data for Policy Development and ImplementationBill IrvingClimate Change DivisionFebruary 3, 2011

2. Outline Overview of GHG Reporting Program Applicability Monitoring Data System/Reporting Tool Verification/ Compliance Data Publication U.S. Greenhouse Gas Inventory NAS Study / Utrecht / Cancun Outcomes Measurement needs for AFOLU EPA analysis of Cap and Trade proposals Additional resources

3. Overview of Existing EPA GHG Data Programs Total GHG fluxes, natural and anthropogenic Aggregate-level National GHG Inventory “100%” - UNFCCC Facility-level GHG Reporting Program (85-90%) Unit-level CO2 data from Acid Rain Program (35-40%)

4. Overview: U.S. EPA GHG Reporting Program (GHGRP) • In the 2008 Appropriations Act, Congress directed EPA to issue a reporting rule on greenhouse gas emissions in all sectors of the economy under the Clean Air Act. Goalof GHGRP is to collect accurate and timely data on GHG emissions to inform future policy decisions. • Generally requires facilities across certain sectors of the economy emitting ≥ 25,000 mtCO2e annually to report to EPA GHG emissions and other related data. • Measurement began in 2010 for most categories with first reports due by March 31, 2011. • EPA estimates that over 13,000 facilities will be reporting, accounting for 85-90% of U.S. GHG emissions. • Reporting only, no control requirement. • Control measures already in place often required to be reported

5. What GHGs are Reported? CO2 CH4 (methane) N2O (nitrous oxide) Fluorinated GHGs HFCs (hydrofluorocarbons) PFCs (perfluorocarbons) SF6 (sulfur hexafluoride) Other fluorinated gases (except CFC and HCFC and gases <1 mm Hg @25o C)

6. Key Elements of Part 98 Annual reporting by: Direct emitting source categories Suppliers of certain products that would result in GHG emissions if released, combusted or oxidized Facilities that inject CO2 underground for geologic sequestration Facilities that inject CO2 underground for any purpose other than geologic sequestration 25,000 metric tons CO2e or more per year reporting threshold for most sources; capacity-based thresholds where feasible Direct reporting to EPA electronically EPA verification of emissions data 6

7. More Than 13,000 U.S. Facilities Covered 7

8. What is not reported? • Primarily, agriculture & LULUCF sector sources and sinks • Natural CO2 fluxes – Primarily forest CO2 uptake • Agricultural soil management – N2O • Enteric fermentation – CH4 • Rice cultivation – CH4 • Composting – CH4 and N2O • Field burning of agricultural residues – CH4 and N2O • Why are these sources excluded? • Available methods to estimate facility-level emissions for some of these sources yield uncertain results • Large number of small emitters

9. How much is 25,000 Metric Tons of CO2e? • 25,000 mtCO2e are equivalent to: • Emissions from annual energy use of about 2,200 homes. • 58,000 barrels of oil. • 131 railcars’ worth of coal.

10. General Monitoring Approaches Continuous emission monitoring systems (CEMS) Required if already used (e.g., NSPS, Acid Rain Program) and meet specified criteria Optional for other sources Source category-specific GHG calculation methods Monitor process parameters, fuel use Calculate GHG emissions using equations in applicable subparts Example approaches (varies by source category) Mass balance calculation Site-specific emission factors Default emission factors

11. Electronic Reporting System • All reporting under the GHG Reporting Program will be electronic. • Web-based system for facility/supplier reporting to EPA • Web-forms will guide reporters through data entry and submission. • Will include a mechanism to submit file directly using Extensible Markup Language (XML) format. • XML schema is available on the EPA website.

12. How Will Emissions Be Verified? Self certification Designated representative certifies and submits report Rule allows one designated representative for each facility and supplier EPA verification Reports submitted through an electronic system Built-in calculation and completeness checks for reporters Electronic QA and consistency checks On-site audits

13. Data Publication & Academia • NAS Study (2010) suggests: • Inventories should be “gridded” • Emphasis on measurements from “urban domes” • Our tool can aid in these efforts

14. Inventory Reporting under the UNFCCC • All Annex I countries (i.e., developed countries) are required to report annual emissions and sinks of greenhouse gases to the UNFCCC Secretariat • 40 Annex I countries (+ European Commission) • Anthropogenic sources and sinks • CO2, CH4, N2O, HFCs, PFCs, SF6 • Include “indirect GHGs” for informational purposes: ozone precursors (CO, NOx, NMVOCs) & SO2 • Calculated using consistent and comparable methodologies

15. IPCC Methodologies • IPCC guidelines/guidance provide calculation methods: • List of emission source types and factors for the estimation of emissions • Step-by-step directions for national inventory development • Assists in development of inventories that are transparent, documented, consistent over time, complete, comparable, assessed for uncertainties, subject to quality control and quality assurance, • Various data collection methods allowed • Apply default emission factor to aggregate data • Specific measurements can be made at the emission source • Measurements can be made for specific activity conditions and then modeled

16. UNFCCC Reporting – Developed Countries • Annual electronic report of emissions and extensive supporting data (1990 – present year), accompanied by a National Inventory Report with narrative explanation, uncertainty estimates • Submissions reviewed annually by accredited international specialists • Transparency: National submissions and review reports posted on UNFCCC website • Europe, Japan, Canada, Australia have strong systems; issues of data continuity and quality in some EITs

17. UNFCCC Reporting - Developing Countries • No requirement for annual submission of inventories • This situation is more political than technical • Most countries have qualified technical expertise, and could – with additional support – produce better and regular inventories • Challenges • Infrequent reporting results in lack of institutional capacity. • In some cases, key economic statistics on which inventories rely (fuel use, industrial and agricultural production) are weak • Limited resources for basic research to improve key sources (e.g., refined emission factors, country-specific models) • Deforestation and agriculture represent a greater share of emissions in many developing countries, and they are the most challenging to monitor

18. Inventory Review Phases • Domestic reviews occur after preparation of draft U.S. National Inventory Report • Expert Review (December) • Targeted at technical experts familiar with inventory calculations • Public Review (February/March) • Open to all US citizens; opportunity to communicate report’s findings • UNFCCC review after annual inventory submission (April) • Initial checks • Assures Submission Complete/Proper Format • Synthesis & Assessment • Part I – Compiles basic inventory information • Part II – Preliminary automated assessment on potential issues • Individual Review • International team of experts examines data, methodology and procedures. • Can be a in-country review or centralized review at Secretariat’s offices

19. U.S. Greenhouse Gas Inventory Basics • Annual GHG inventory required under the UNFCCC since 1994 • This is the official U.S. government GHG Inventory • Impartial and policy-neutral • Interagency effort led by EPA • Data and input provided by DOE, USDA, DOT, DOD, and others • Open for 30 day public review and comment period • As well as “peer review” targeted at technical audience • International peer review through the UNFCCC • Submitted to UNFCCC on time by April 15th each year

20. The National GHG Inventory • Dominated by CO2 from fossil fuels • Significant CH4 and N2O from agriculture • Different economic sectors have very different fuel consumption profiles

21. U.S. GHG Emissions by Gas • Emissions are expected to decline from 2008 to 2009 as well • First draft of 90-09 report will be available on EPA’s climate change site in mid-February Taken from: Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2008 (April 2010)

22. National Academies Study • Verifying Greenhouse Gas Emissions: Methods to Support International Climate Agreements • Released by NRC, March, 2010 • Policy relevant conclusions: • “Each country could estimate fossil-fuel CO2 emissions accurately enough to support monitoring of a climate treaty” • Study recommends strengthening inventories – particularly in the developing world • Global land use / land cover change maps (every 2 years) • Also suggests expanding global C-14 sampling (LULUCF) • Establish interagency group to review existing information and design a research program to improve emissions estimates from agriculture, forestry and other-land use sources

23. IPCC Meeting – Utrecht • IPCC Task Force on National Greenhouse Gas Inventories – Expert Meeting on Uncertainty and Validation of Emission Inventories • March 23-25, 2010 in Utrecht, the Netherlands • Participants included scientists & inventory compilers • Agreement that while remote sensing, ambient measurement and inverse modeling techniques have been successfully demonstrated they are currently not sufficiently developed to provide comprehensive verification of emissions reported in inventories. • Direct measurementtechniques could help quantify emissions from: • Forest fires, biomass burning and other land disturbances • Land use and land-use change (maps) • Agricultural soils (N2O) • Coastal fluxes • Peatlands • Permafrost melting (CH4)

24. COP-16 (Cancun) • International negotiators agreed at COP-16 on “Cancun Decisions” • Countries agreed to ramp up work on approaches to assess mitigation • Established work programs to further develop elements for countries to measure, report and verify mitigation actions • Developed countries will continue to build upon their existing agreements with the UNFCCC • Further elaboration of their reduction commitments and actions • Developing countries will increase their mitigation actions and obligations to report on them to the UNFCCC • More frequent information to be provided on emissions sources • Further guidance being developed on how to institute measurement, reporting and verification for these actions

25. Nationally Appropriate Mitigation Actions (NAMAs) • NAMAs can be broad policy changes and/or programs that aggregate results of specific actions (regionally, nationally) • Sample NAMAs: • Brazil: reduced deforestation, energy efficiency, biological N fixation, no-till agriculture • Indonesia: sustainable peat land management, shifting to low-emission transportation modes • Sierra Leone: expanded clean energy utilization, waste incineration, composting, recycling • Mongolia: portable wind generation for nomadic herders, coal briquetting • Intensity targets (e.g., NAMAs expressed as “tons of emissions per unit of economic output”) will increase complexity, because both the emissions and the economic metric should be MRV’d

26. Cancun & LULUCF Developing Countries • Agreed to a broad scope for developing country mitigation actions in the forest sector (REDD+) • MRV systems would need to address not only deforestation but forest degradation and enhancement of C stocks • Established core elements a Party should develop to participate in REDD (national strategy/action plan, reference level and monitoring system ) • Called for a 1 year REDD+ technical work program to develop modalities/procedures for (1)reference levels, (2) monitoring systems, and (3)MRV of emissions/removals Developed Countries • Workshops and review processes called for, including the role of LULUCF, in meeting reduction targets • Kyoto Parties continued to consider key technical questions for LULUCF accounting for their 2nd commitment period (e.g., harvested wood product carbon, natural disturbances, reference levels for forest management)

27. Terrestrial-based Offsets & monitoring issues • Ensuring permanence of reductions • Ongoing monitoring required to assess whether stored carbon is re-released • Leakage-prone activities • Leakage may negate the emission reduction benefits achieved and outside of ownership boundaries would be difficult to directly monitor • Extensive sampling may be required for sufficiently accurate measurements • Emission reductions or sequestration achieved at a site will vary based on soil type, climate, etc.

28. Measuring Ag / LULUCF GHG Emissions • Agriculture and LULUCF are more challenging • Soil N2O –Biological processes are inherently variable; ability to estimate incomplete • Sequestration of CO2 in soils/forests – Sampling and modeling by USFS and NRCS. Data are good, but room for integration of additional approaches • Developing countries tend to have a greater fraction of their total emissions in these sectors • How to improve? • Inventory capacity building efforts (NAS Study) • Inventory software tools for developing countries • Land-use / land-use change maps (NAS Study) • Land classification by IPCC definition (NAS Study) • C-14 sampling (NAS Study) • Carbon stock monitoring (NAS Study)

29. Specific LULUCF Challenges • Partitioning “natural” and “human-induced” GHG emissions/ sinks • UNFCCC inventories require reporting of anthropogenic emissions and removals • Provision to minimize risk from natural disturbances is a key element in ongoing LULUCF negotiations • Reliable, predictive understanding of soil C stocks and fluxes at small-to-intermediate spatial scales • Such as stand-level, state-level • GHG emissions/ removals from wetland management • Specific activity type considered for inclusion in LULUCF sector • Examples: draining/ rewetting of peatlands, other flooded lands • Interior Alaska • Potentially important area, few data are available • Now classified as “unmanaged” so not included in EPA Inventory

30. H.R. 2454 – Bill Summary • Title III of the American Clean Energy and Security Act of 2009 (H.R. 2454) establishes a cap & trade system for greenhouse gas emissions • The cap gradually reduces covered greenhouse gas emissions to 17 percent below 2005 levels by 2020, and 83 percent below 2005 levels by 2050 • Offsets are limited to 2,000 million metric tons CO2 equivalent (MtCO2e) per year • Supplemental emissions reductions from reduced deforestation through allowance set-asides • Titles I & II of H.R. 2454 deal with clean energy and energy efficiency, and among other things establish a renewable electricity standard, and energy efficiency programs and standards for buildings, lighting and appliances • Not all provisions in Titles I & II are explicitly modeled in this analysis • Title IV addresses competitiveness issues • Creates an output-based allowance allocation mechanism based on H.R. 7146 (Inslee-Doyle bill) • The output-based allowance allocation mechanism is included in this analysis, but not in all scenarios. The rest of Title IV is not included in this analysis

31. EPA Analysis – Major Findings • H.R. 2454 transforms the structure of energy production and consumption. • Energy consumption levels that would be reached in 2015 are not reached until 2040 • Electric power supply and use and offsets are the largest sources of emissions abatement • Allowance prices are $13 per tCO2e in 2015, $16/tCO2e in 2020 • Across all scenarios modeled without constraints on international offsets, the allowance price ranges from $13 to $15 per tCO2e in 2015 and from $16 to $19 / tCO2e in 2020 • Across all scenarios modeled that vary constraints on international offsets, the allowance price ranges from $13 to $24 per tCO2e in 2015 and from $16 to $30 / tCO2e in 2020 • Offsets have a strong impact on cost containment. • The annual limit on domestic offsets is never reached. • While the limits on the usage of international offsets (accounting for the extra international offsets allowed when the domestic limit is not met) are not reached, the usage of international offsets averages over 1 billion tCO2e each year • Without international offsets, the allowance price would increase 89 percent relative to the core policy scenario. If international offsets were not available for only the first 10 years, the allowance price would increase by just 3%. If extra international offsets could not be used when the domestic offset usage was below one billion tCO2e, then the allowance price would increase 11%.

32. HR 2454 - Total US GHG Emissions and Sources of Abatement • Reference case based on AEO 2009 • International forest set-asides, discounted offsets, NSPS provisions for landfill and coal mine methane, and the HFC cap all provide additional abatement that does not help to meet the main cap

33. Key Uncertainties • There are many uncertainties that affect the economic impacts of H.R. 2454 • This analysis contains a set of scenarios that cover some of the important uncertainties including: • The availability of international offset projects • The degree to which new nuclear power is technically and politically feasible. • The amount of GHG emissions reductions achieved by energy efficiency provisions • Additional uncertainties include but are not limited to: • The extent and stringency of international actions to reduce GHG emissions by developed and developing countries. • The availability and cost of domestic offset projects. • The availability and cost of carbon capture and storage technology • The pace of economic and emissions growth in the absence of climate policy • The impact of the American Recovery and Reinvestment Act of 2009