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Government Affairs

601 Pennsylvania Avenue, NW

North Building, Suite 300

Washington, DC 20004

Phone: 202/628-3500

FAX: 202/628-0400

June 5, 20002

Office of Policy and International Affairs

Office of Electricity and Natural Gas Analysis

Forrestal Building, PI-23

Room 7H-034

1000 Independence Ave., NW

Washington DC 20585

**SUBJ**: Voluntary Reporting Comments

Dear Ms. Venet:

Waste Management (WM) is pleased to comment on the Department of
Energy's notice of inquiry and request for comment on possible
modifications to the Voluntary Reporting of Greenhouse Gases Program
(VRGGP). In 2001, WM reported over 84 millions metric tons of carbon
dioxide equivalents for the periods 1995-2000. This report consisted of
direct and indirect reductions achieved from the destruction and/or
energy recovery of methane at municipal solid waste landfills. Since
1997, WM's Wheelabrator Group has been reporting approximately 11
million metric tons TCO2E annually from its waste-to-energy plants from
avoided emissions and indirect emissions reductions of greenhouse gases.
The combined sums establish WM as one of the largest sources of
greenhouse gas emission reductions in the nation. With the addition of
improved methane capture technology and landfill management methods, and
with the continued use of waste-to-energy projects, WM expects that its
annual submission totals will grow substantially over the coming years.
In short, effective waste management practices are and will continue to
be a primary source of global greenhouse gas emission reductions.

The role that waste management practices will play in the nation's
voluntary reduction program is the guiding principle of our comments.
DOE/EPA estimate that methane from landfill may represent approximately
3% of the nation's anthropomorphic generation of GHG. The waste
industry's ability to minimize that contribution will be vital to
meeting the President's goal of an 18% reduction in GHG intensity by
2010. **As a result, and as an overarching comment, modifications to the
VRGGP must continue to identify opportunities and provide incentives for
voluntary action for methane recovery, destruction, and avoidance by the
waste management industry**. Comments on the specific issues raised in
the notice follow.

[Scope]{.underline}

> **1. Modifications to the VRGGP should maintain the current program's
> emphasis on inclusiveness of a wide variety of GHG reduction
> initiatives.**
>
> At this stage of its development, the primary goal of the VRGGP should
> be to develop a comprehensive database of real emission reductions.
> The program must unleash initiative and creativity and should not
> impose unnecessary prescriptive qualifications on reporting that may
> inhibit valuable research, development, and implementation of
> reduction technologies. Overly prescriptive reporting criteria and
> other barriers will be especially daunting for emerging technologies
> where the absence of a mature trading market may already be a
> deterrent to capital investment and risk taking.
>
> Direct, indirect, and avoided emission projects should be encouraged
> so that any future policy analysis, particularly on trading regimes,
> can take into account the impacts and incentives for each type of
> project.
>
> **2. The development of general rules for transferable credits should
> not serve to**
>
> **limit or foreclose future policy actions on acceptable
> credit-generating activities.**
>
> The essence of the President's directive to DOE remains a voluntary
> program that is amenable to a market system for transferable credits.
> However, there is no explicit or implicit direction to mandate the
> volumes and types of GHG reductions that would be needed to achieve
> the 18% intensity reduction goal. In the absence of such a directive,
> it would be inappropriate for DOE, through reporting rules, to
> establish by default the inclusion or exclusion of certain types of
> reduction activities from the market.
>
> **3**. **Certain industrial processes or services may lend themselves
> to life cycle analysis as the basis for identifying and implementing
> opportunities for GHG reductions.**
>
> The collection and processing of municipal solid waste (MSW) lends
> itself to life cycle analysis for determining the opportunities for
> GHG reductions. Methane capture, destruction, or avoidance are all
> reduction opportunities which are measurable through models developed
> by the EPA, or by direct measurement at the point of generation. The
> use of MSW directly as a fuel, or landfill methane as a fuel for
> electricity, or as an alternative fuel for mobile sources, for direct
> use, or eventually for fuel cells, are all activities for which the
> VRGGP should provide encouragement. The recycling and sequestration of
> MSW also provide an opportunity for measurable indirect GHG
> reductions.

[Relationship of the GHG Registry to Other Approaches]{.underline}

> **With the variety of international programs and domestic pilot
> programs underway or in development, the VRGGP should not yet conform
> to any particular approach, but should be a tool to analyze the
> efficacy of various methods and programs over time.**
>
> It is likely that the domestic and international institutions that are
> currently experimenting with GHG reduction programs will use a variety
> of reporting mechanisms, policies, and rules, but without practical
> experience in their efficacy. Emission reduction trading programs will
> use rules that may vary considerably from program to program; the
> recent spate of State registry programs will likely include a variety
> of rules and exceptions. Again, it would be inappropriate at this
> juncture for the VRGGP to impose reporting requirements that may
> appear to be biased toward any particular approach in the absence of a
> record of success. Instead, the reporting changes must accommodate the
> variety of reportable activities as the basis for any future domestic
> policy decisions for GHG reductions.

[Institutional Issues]{.underline}

1.  **Time Frame. There is no immediate policy purpose for DOE to modify
    the time**

> **frames for reporting or reductions. Re-reporting that may be
> prompted by revisions to the reporting protocol should be kept to a
> minimum so as not to discourage reporting.**
>
> The President's plan proposes new utility for the VRGGP but does not
> suggest replacing the existing use. There remains value for retaining
> an inventory of GHG reduction activities that occurred prior to the
> President's announcement, and the selection of new time frames would
> pre-suppose a policy decision on baseline emissions and other critical
> components of a trading program. As stated above, DOE should avoid
> imposing trading program rules by indirect means.
>
> Re-reporting to abide by revised protocols should only be necessary
> where the owner of the reported reductions seeks legitimacy for a
> trading program or wishes to have the reductions protected against any
> future mandatory program.

2.  **Reporting Entity Definition. The current broad definition of a
    reporting entity**

> **should be retained, as it allows reporters to identify the reporting
> entity that is consistent with their existing organization without
> requiring changes for the sake of reporting. This approach has
> encouraged participation and does not reduce the value of reported
> reductions.**

3.  **Level of Reporting. Reports should cover emissions reductions,
    avoidance, or**

> **sequestration by project.**
>
> The VGRRP is not a vehicle for establishing entity-side emissions
> inventories against which reductions are recorded. The purpose is to
> identify and inventory actions that result in emission reductions, and
> to legitimize those reductions for a potential trading program. For
> such a construct, project emission results provide the necessary data,
> focus, and verifiability for inventory and trading purposes. Entities
> are free to roll up their individual project results for their own
> purposes or trades, but the VRGGP has no particular policy purpose for
> identifying entity-wide emission inventories or rolling up project
> results, nor does the President's directive imply such a change.

4.  **Reportable GHGs. WM supports the reporting of all gases identified
    by the**

> **IPCC**

5.  **Indirect Emissions. A legitimate claim to an indirect emission**

> **reduction is established when a project, due to the entity's
> initiative, results in an off site or off system reduction of
> emissions from fossil fuels use.**
>
> For example, a project powered by MSW or landfill gas is the activity
> that produces the emission reduction credit associated with the
> reduction of TCO2E from the displacement of fossil fuel electricity
> generation. By the same token, any energy-saving activity that occurs
> on site that reduces the demand for electricity from fossil fuels
> combustion would warrant the claim to the reduction, unless specified
> otherwise by contract, such as in a Demand Side Management program.
>
> **6. Avoided Emissions. The VGRRP must continue to encourage
> initiatives that**
>
> **result in avoided emissions.**
>
> An entity that can provide documentation of initiatives that avoid GHG
> emissions should be able to claim and report such reductions. As noted
> above, MSW landfill management techniques (i.e., the use of methane
> oxidizing landfill cover), recycling, and MSW waste-to-energy may all
> provide emission avoidance. But for those voluntary activities, the
> degradation of MSW in a landfill could result in methane emissions.
> (Any documentation for the methane avoidance, however, would have to
> document that the potential methane emission or some portion of it
> would not have been otherwise destroyed at the source.)
>
> Similarly, the use of methane as a source fuel for natural gas powered
> vehicles would result in both methane destruction as well as avoided
> emissions from the use of conventional fuels. Such reductions are real
> and measurable for reporting purposes, and should be retained in any
> modifications to the VRGGP.

6.  **Baselines or reference case definition. Baselines or reference
    case development**

> **will add value to the data**.
>
> Reporting entities that use the definitions should incorporate those
> items in their reports. DOE should be sensitive to the implicit impact
> of baseline/reference cases on trading programs and the value of
> credits.

7.  **Thresholds. The use of threshold reporting criteria will result in
    a more reliable**

> **database.**
>
> The entry of many small reporting entities, regardless of how noble
> the effort, will lead to daunting workload and verification problems
> for DOE in its efforts to review all reports. At some later point, if
> sector reporting rules are well established and streamlined, the
> system may be able to accommodate lower thresholds without burdening
> the review process.

8.  **Reduction Activity Reports. The VRGGP is not the place for
    establishing entity**

> **level activity reports, as it will discourage development of real
> emission reduction projects and/or their reporting.**
>
> As noted above, the primary purpose of the VRGGP is to establish a
> reliable inventory of emission reduction projects. Even with the
> President's added mandate, the need for an entity level activity
> report is still unnecessary. All of the elements for reporting real
> emission reductions that may be tradable in a voluntary market can be
> established without the onus of entity level emissions reporting.

9.  **Transferable Credits. DOE should establish temporary, reasonable
    criteria for**

> **transferable credits. Business-as-usual limitations should not be
> established at this point in time.**
>
> As noted above, DOE should first learn from the experience of
> developing trading programs before determining a final set of
> prescriptive criteria for transferability. Many programs now underway,
> particularly non-domestic programs, may have attributes that reflect
> policy choices that have not been debated or decided in the U.S. Such
> policy choices then influence the criteria that will be established
> for transferability, to include critical issues of inclusion or
> exclusion of certain types of projects. Significant debate and
> analysis is required on issues such as surplus, environmental and
> financial additionality, and sequestration.
>
> Consideration of *business-as-usual* limitations for credit
> transferability purposes would be counter-productive. Such limits
> would inevitably involve DOE in an unwanted, highly subjective
> exercise in determining which factors, and to what degree, influenced
> a business' decision to undertake an emissions reduction project. In
> addition, a reduction is a reduction. Whether achieved, for example,
> by technology upgrades does not change the environmental outcome, and
> would in fact be consistent with the President's desire to have
> reductions occur through technology and voluntary action.
>
> The waste services business is especially sensitive to the
> business-as-usual issue because of our focus on methane destruction
> and avoidance. Methane is not regulated as a pollutant under the
> existing Clean Air Act controls on municipal solid waste landfills,
> but the means by which landfill owner/operators choose to comply with
> controls on non-methane emissions from landfills may or may not result
> in significant methane reductions. The degree to which that business
> decision is influenced by GHG reduction incentives may not be
> measurable, but the environmental benefit remains and real reductions
> occur.

10. **Joint Activities and Duplication. Duplication may be unavoidable
    in a**

> **voluntary reporting program. Guidelines should be established for
> consideration by project developers, such as the rules for indirect
> emission claims that WM suggested above.**
>
> Duplication is more critical for trading programs, where clear
> ownership will be an issue. It may be necessary to have a tiered
> review or separate verification of emission reduction claims for
> credits that may be traded. However, this increased rigor must be
> balanced with the need to encourage reporting.

11. **Verification. Some form of verification will be necessary for
    those credits that**

> **may be traded in a market. It is unnecessary for the VRGGP to
> mandate extensive verification programs, to include third party
> verification, for voluntary reporting.**
>
> DOE should review and examine the verification protocols which
> purchasers of credits are demanding in current and developing trading
> markets. These protocols will be a reliable reference point for
> guidance for market acceptability at a later date. Third party
> verification approaches are likely to be prohibitively expensive until
> a dynamic market in tradable credits is established.

12. **Confidentiality. Reporting entities must have confidence that the
    reporting**

> **will not put trade secrets or confidential operating practices at
> risk.**

If you have any questions or concerns regarding the above comments,
please contact me at your convenience.

> Sincerely yours,
>
> Edmund J. Skernolis
>
> Director of Government Affairs.