On January 1, 2010, many manufacturing facilities, facilities emitting green house gases (GHGs)1, and suppliers of fossil fuels and industrial GHGs will, for the first time, be required to begin monitoring their emissions of GHGs. Then, on March 31, 2011, these companies must submit the first annual report to the US Environmental Protection Agency (EPA) on the emissions data collected during the prior year.
With the goal of understanding the origin of GHGs, EPA issued these fairly complicated and potentially expensive requirements in a final rule (Rule) on September 22, 2009 pursuant to EPA's authority under the Clean Air Act to require reporting of GHG emissions (codified at 40 C.F.R. pts. 86, 87, 89, 90, 94, 98, 1033, 1039, 1042, 1045, 1048, 1051, 1054, and 1065).
You can access a copy of the Rule and related analysis and information from EPA at
http://www.epa.gov/climatechange/emissions/ghgrulemaking.html.
Companies with facilities emitting or products related to GHGs may consider taking the following initial steps to evaluate appropriate measures related to the Rule. Those not in compliance with the Rule may be required to shutdown facilities and operations until compliance can be achieved.
Step 1-Determine Whether the Rule Applies to YouThe Rule applies to a variety of categories of industries and types of facilities; however, in certain categories if the facilities do not emit more than a threshold amount they are exempt from the monitoring and reporting requirements.
Facilities Emitting GHGs:
Certain industrial facilities (17 different types2) must report GHG emissions regardless of the level that such facilities emit by facility.
Other specific facilities 3 and those not identified in the Rule will only be required to report emissions if they emit in excess of 25,000 metric tons of CO2 equivalent (CO2e) annually from all stationary fuel combustion devices. It is specifically noted in the Rule that any CO2 emitted from the combustion of biogenic fuels is excluded from the applicability calculations for this category (however biomass-related emissions must be included in any report generated by a facility subject to the Rule and should be independently identified).
Suppliers of Fossil Fuels and Industrial GHGs:
All fossil fuel suppliers, except for suppliers of solid-based coal, are required to report annual amounts of fuel sold and applicable emissions. This includes producers, importers, and exporters of fossil fuels.
Suppliers of industrialized GHGs who supply more than 25,000 metric tons of CO2e products must report the numbers of such products sold in the market and related emissions. This includes producers, importers, and exporters of industrial GHGs.
Manufacturers of New Vehicles and Engines:
Makers of heavy-duty trucks and engines must report CO2 emissions beginning in model year 2011 (reporting on additional GHGs will be required for later model years).
One should keep in mind that some facilities subject to the Rule may be able to continue to maintain timing and substantive reporting consistent with other EPA programs, such as the Acid Rain Program, rather than pursuant to the Rule. Additionally, any research and development activities related to GHG emissions are not covered by the Rule.
Step 2-Readiness for the Start of Monitoring and Reporting in First Quarter 2010Equipment Purchases and Installation-Facilities and companies subject to the Rule should be investigating and planning for the purchase and installation of required monitoring equipment. In fact, the EPA estimates that the expected cost to the private sector to comply with the Rule will be $115 million in the first fiscal year. The Rule does provide for the use of "best available" monitoring methods for the first quarter of 2010 and establishes an extension request process should facilities require additional time for purchasing or installing monitoring equipment.
Processes and Procedures for Evaluating Data and Preparing Reports-Facilities subject to the Rule should begin proposing appropriate processes and procedures for assessing and evaluating data now. While this is an important aspect of determining applicability of the Rule, it will also be critical for preparing reports in a timely manner. Further, records of data and related reports must be maintained for at least three years. The annual reports, which will be submitted electronically, should include:
Total facility emissions (without emissions derived from combustion of biomass);
Total facility emissions derived from combustion of biomass;
Total emissions from all supply categories;
Emissions broken down for each type of category; and Certain additional metrics and information (i.e. activity data, unit-based emissions) for particular categories.
Processes and Procedures for Informing Executives-While independent third-party auditing of collection and reporting methods is not required, similar to Sarbanes-Oxley certification requirements, the Rule requires senior executives to certify that reports were prepared in compliance with the Rule.
Step 3-Assessing Other Realities of DisclosureRead more...
