What do companies need to know about mandatory GHG reporting?

Find out at Action for a Sustainable America. We’re going to talk about how companies can develop sustainability strategies to anticipate regulation in Seattle and there has been a lot of news in the last couple of weeks on climate policy on the national and regional level. Alex Schay of Carbon Solutions Northwest has joined our ASA Seattle program and we asked him to preview some of the things he’s going to be talking about. Here’s his interview:

What are some of the key developments that companies need to be watching right now in terms of mandatory GHG reporting?

Oregon already has regulations which require mandatory reporting of GHG emissions at industrial sources, such as boilers, kilns, driers, etc., and this reporting requirement kicks in whenever a specific emissions source has GHG emissions that are greater than 2,500 metric tons of carbon dioxide equivalence (MTCO2e). Washington State’s Department of Ecology is currently finalizing preparation of GHG-reporting requirements for Washington State. When enacted later this year, Washington’s rules will initially impact only those industrial sources with annual GHG emissions greater than 25,000 MTCO2e.

By 2012, however, companies with a presence in Washington State will be compelled to report both their onsite (Scope #1) and their electricity-related (Scope #2) emissions whenever an entity’s emissions exceed 10,000 MTCO2e per year. This will mean that hotel, restaurant, and grocery chains will be impacted. Washington’s rules also require corporate and municipal fleets to report transportation-related emissions when annual emissions exceed 2,500 MTCO2e; railroads, ships, airplanes, and offroad equipment, such as cranes, excavators, etc., will report their emissions when annual emissions exceed 10,000 MTCO2e. Importantly, Washington’s rules will require that heavy emitters (i.e.: those with emissions greater than 25,000 MTCO2e) have their GHG inventories verified to Climate Registry (TCR) standards, using an accredited, independent, 3rd-party verifier.

Importantly, the Federal Environmental Protection Agency (EPA) is developing its own set of reporting standards. Expected to be released in fall of this year, these standards will be similar, though not quite as stringent, as standards in Washington State.

How will mandatory reporting on the national and regional level change sustainability planning?

Companies must set aside time and money to prepare, and in some cases, verify their GHG inventories. Because they are reporting these emissions, companies will begin to see their GHG emissions as a potential liability under a future mandatory cap-and-trade regime. Consequently, forward-thinking companies and organizations will begin to think about avenues for mitigating their carbon footprint – both as a means for mitigating risk and as a means to stay ahead of the curve, reduce energy costs, take advantage of related branding opportunities, and in some cases, generate revenue from sale of carbon credits.

How can management anticipate the cost and resources to ensure GHG reporting is in line with these new guidelines?

Essentially, we’re establishing an accounting system for carbon. As with all accounting systems, some of the work can be performed in-house. In some cases, however, it may make sense for management to outsource GHG-reporting work to qualified firms with experience developing and verifying such GHG inventories. As with all internal budgeting, the costs and benefits of performing work in-house versus outsourcing can be gauged in advance.

What do you think will be the biggest challenges of this new regulatory environment?

Some companies (e.g.: industrial companies) will find little challenge in reporting yet another type of emissions. After all, they’ve been reporting N2O, SO2, Mercury, and particulate emissions for years. Other companies, such as food processors, forest-products companies, pulp & paper concerns, retail chains, and wastewater-treatment facilities are new to this game. As such, they may need assistance developing and implementing reporting procedures that ensure their compliance to state-based and national reporting regimes.

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