February 17, 2004

United States Climate Partnership Association (USCPA) Comments to
Department of Energy, Federal Register Notice (68203), 10 CFR Part 300,
General Guidelines for Voluntary Greenhouse Gas Reporting; Proposed
Rule.

**USCPA Key Points:**

**1. A Voluntary Program should not use a "Rule Making" Process**

DOE is calling this a "proposed rule." Since 1605(b) is a voluntary
program, USCPA does not believe that using a "rule-making" process to
revise the general guidelines is necessary, and it may lead to the
establishment of law and result in reduced participation.

**2. Entity Boundaries**

USCPA believes that entities have responsibility for reporting that
which is under the entity's direct ownership and/or
management/operational control. Reporting entities should have the
flexibility to share best practices or other voluntary initiatives, but
there should be no obligation in this regard.

3\. Baseline year of 2002

USCPA believes it is important for 1605(b) to accommodate the proactive
voluntary actions that a company has taken and reported before 2002. If
a company recasts its earlier 1605(b) reports using the updated
Guidelines, it should be able to include them in the revised system.

4\. Absolute Reductions versus Intensity Indicators

USCPA supports the reporting of entity wide emissions and reductions in
both absolute tons and intensity. Reporting entity-wide GHG emissions is
needed to establish a credible GHG accounting system. The only way to
show how we are really doing is by reporting absolute emission
reductions or increases. A metric ton of carbon dioxide equivalent is
the commodity that should be created within the revised 1605(b) system.
Intensity indicators are also an appropriate measurement and an
important tool. However, USCPA believes that intensity indicators should
only be submitted by the entity if the entity also submits absolute
entity-wide tons.

5\. Large Emitter Status

USCPA believes an entity should be allowed but not required to report on
any and all aspects of their owned and/or management/operationally
controlled corporate boundary regardless of emitter status. The proposed
concept of ownership and/or management/operational control provides a
reasonable approach to establishing corporate boundaries that are
appropriate for reporting GHG emissions, reductions and offsets. The DOE
should not create a more prescriptive approach to the definition of
entities, such that they correspond to those used for "Federal Tax
Purposes," as a requirement for participation in reporting to 1605(b).

It is important not to penalize or discourage participation of companies
with many sites (and larger employee bases) versus companies with only
single sites.

6\. CEO Certification

USCPA believes that entities should be allowed to submit annual GHG
emission and reduction reports to 1605(b) with sign-off certification by
a registered professional (for example: engineer (P.E.), lawyer, or
certified environmental, financial or technical professional) or an
officer of the company. CEO certification should not be required.

Please note "Federal law prohibits any person or entity from knowingly
and willfully making any false or fraudulent statement of any material
fact to any department or agency of the U.S. Government (18 U.S.C.
1001)". This prohibition, with its substantial penalties, should deter
anyone from knowingly making false or fraudulent submissions to 1605b.

**7. 3^rd^ Party Certification/Verification**

USCPA believes that 3^rd^ party certification/verification should not be
required for reporting. 3^rd^ party certification/verification should
occur at the discretion of the entity. The process of third party
certification can be expensive and require considerable internal
resources. Such a requirement would only discourage participation - and
at this time, the focus should be on maximizing participation. GHG
reporting under the updated DOE 1605(b) Guidelines should be
'verifiable.' Verifiable means that each company is responsible for
maintaining all underlying documentation to support their CO2 emissions
and reductions.

**8. Single U.S. Reporting System**

USCPA believes that 1605(b) should be the only official GHG reporting
system used in the United States, superseding programs operated by
states, NGOs and other federal government agencies, and should be
administered by DOE through the EIA.

**9. GHG Offsets**

USCPA supports the eligibility of offsets within 1605(b). The inclusion
of offsets can be a key component of cost-effective, diverse options for
participants, including value chain GHG management actions.

**10. Non-U.S. Emissions**

USCPA believes that 1605(b) must remain flexible and should enable, not
require, those entities that report their emissions, reductions, and
offsets for U.S. operations to [also]{.underline} submit non-U.S.
emissions, reductions, and offsets. Entities should also be allowed to
submit reports per business unit and/or operating structure but should
designate in which countries the business unit/operating structure
operates.

**11. Full Disclosure**

A clear 'definition' of full disclosure needs to be included in the
guidelines if such term is to be used.

12\. Project Level vs. Entity Reporting

USCPA supports the reporting of projects (both inside and outside of
organizational and geographic boundaries) as a valuable category to
represent action taken by industry to manage GHG emissions, as well as
to generate public awareness of 'best practices' which could be adapted
by other entities.

USCPA supports providing participants with the flexibility of reporting
emissions reductions from projects alone, projects plus entity, or
entity alone. 1605(b) should have the flexibility for a company to list
"non-U.S. projects" that use the new guidelines. Such projects would not
be included in entity's U.S. GHG inventory.

**13. Definition of Indirect Emissions**

USCPA suggests that indirect emissions should be explicitly defined as
"emissions from purchased electricity". The term "Other" emissions
should be used for those emissions other than Direct Fuels and Indirect
Electricity.

For manufacturing, USCPA supports the reporting of aggregate Indirect
Emissions from facilities in multiple states and suggests the following:
Develop a base year weighted emissions factor based on a weighted
average of state electricity usage and state electricity emissions
factors (using published grid factors) for a designated base year. The
base year weighted average emissions factor for electricity can be held
constant in all of the reporting years to eliminate a year-to-year
variable outside of the control of the reporting entity unless a
'recordable' shift in electricity mix has occurred by the reporting
entity. As an option, where an entity can isolate the power supply to a
particular source with a known and documented emissions factor, such as
a contracted adjacent cogeneration plant, then that factor should be
used.

**14. Transportation/Travel**

USCPA does not support the obligation to report 'other' emissions but
does support the option to report such emissions if a reasonable level
of accuracy and relevance of the data can be demonstrated by the
reporting entity.

**15. Trade Associations Reporting**

Trade associations should be allowed but not required to report to the
1605(b). Trade associations should be allowed maximum flexibility,
without obligations and restrictions for reporting their members' GHG
emissions to 1605(b).

**16. Confidentiality**

1605(b) should protect the confidentiality/trade secret concerns of the
reporting company by only requiring the reporting of corporate-level (or
aggregated) GHG totals.

**17. Carbon Sinks**

USCPA believes reporting entities should not be required to report
terrestrial carbon sources or sinks in entity wide reporting or with the
intensity indicator for any property not being actively managed for
carbon sequestration.

Section by Section Comments

###### 

###### Section A: Overview

No comment

###### Section B: Defining Reporting Entities

USCPA believes that entities who have responsibility for reporting are
under the entity's direct ownership and/or management /operational
control. Reporting entities should have the flexibility to share best
practices or other voluntary initiatives, but there should be no
obligation in this regard.

###### Section C: Defining Entity Boundaries

USCPA defines its "material" boundaries by stating that an entity should
not be required, as a condition of reporting reductions, to report all
activities under its ownership, management and/or operational control if
emissions from activities/sources are not "material" by satisfying
certain de minimis criteria. The General Guidelines allow reporters to
"exclude emissions from multiple sources or gases as long as the total
emissions excluded did not exceed 3% of its total emission inventory or
10,000 tons of CO~2~ equivalent, whichever is smaller." The USCPA
recommends increasing the de minimis threshold to 5% of an entity\'s
total emission inventory and eliminating the 10,000-ton absolute
threshold. This particular recommendation received extensive support
during the January 2004 DOE Public Workshop.

USCPA believes that inclusion of a de minimis threshold(s) is
advantageous; however, the requirement as to why an estimate was
excluded from an entity's report should be limited to a short
explanation and justification.

###### Section D: Emission Sources and Sinks Covered

1605(b) must be able to deal with GWP factor changes. The Technical
Guidelines and procedures for quantifying the effects of the category of
"other gases," which would include those gases under the Montreal
Protocol (i.e. CFC's, HFC's, HCFC's), should use the latest estimates of
Global Warming Potentials (GWPs) established by the IPCC or other
internationally recognized changes. If the reporting year begins in
2003, then the IPCC Third Assessment Report's estimation of GWPs should
be used. If the GWPs change over time, the DOE should not require
historical reported emission data to be updated using the new GWP
factors.

###### Section E: Entity Wide Reporting of Emission Inventories

USCPA does not support the proposed mandatory requirement that
entity-wide emissions inventories must include all six GHGs specified in
the Guidelines (CO~2~, CH~4~, N~2~O, HFCs, PFCs and SF~6~) whether
emitted directly or indirectly (indirect includes only purchased
electricity, steam and heat). Industries should be required to report
material GHGs for their specific industries (e.g., steel, paper, power
generation, etc.). Entities should not be required to report de minimis
non-CO2 gases. While the other gases provide some opportunity for
reduction, individual manufacturer circumstance will ultimately
determine the most cost-effective opportunities.

CO~2~ is the primary GHG emission, predominantly produced directly by
the combustion of fossil fuels and indirectly by the consumption of
purchased electricity. Members of USCPA would like to focus their
efforts on the reduction of CO~2~ emissions rather than expend time and
resources tracking and reporting de minimis non-CO~2~ emissions.
Therefore, USCPA suggests that entities be allowed to report material
GHG emissions alone to 1605(b) and report the smaller non-CO~2~ GHGs at
their option.

The DOE may wish to specify the material GHGs that must be reported for
particular industries in order to eliminate expenditure of time and
resources on reporting information that provides minimal benefit to
1605(b). It may be appropriate for the pending Technical Guidelines to
address this particular issue. The intent of requiring mandatory
reporting of the six GHGs within entity-wide emission inventories is to
encourage voluntary emission reductions for each of these GHGs. However,
many manufacturing facilities cannot contribute meaningful emission
reductions of non-CO~2~ GHGs due to relatively low emission levels, and
therefore, may not report non-CO~2~ GHGs. A potential undesirable
outcome is that companies may choose not to report their CO~2~ emissions
due to the burdensome entity-wide reporting requirements for non-CO~2~
GHGs.

###### Section F: Entity Wide Emission Reductions

USCPA supports recognition for earlier reductions. If an entity was
proactive in reducing emissions and/or reporting to the 1605(b) program
prior to the proposed base-year of 2002 (or base period ending in 2002),
the entity should not be penalized by having their reported and
verifiable CO~2~ reductions deemed ineligible. USCPA supports the option
to update historical emission reductions previously reported to the
1605(b) program, as necessary, in order to comply with the revised
Guidelines.

Many companies have devoted considerable resources to energy
conservation and efficiency projects prior to and since the inception of
the 1605(b) program and such efforts should be recognized under the
revised 1605(b) Guidelines. 1605(b) should build upon the reporting
efforts that many entities are already engaged in. The DOE should retain
the historical database in order to protect the existing record of
documented emission reductions already attained by current participants.

The President has maintained the position that entities that report
reductions should not be penalized under a future climate policy. To the
contrary, the proposed Guidelines penalize those companies that have
already achieved substantial levels of energy efficiency at their
manufacturing facilities by not allowing recognition of pre-2002
emission reductions. Therefore, USCPA suggests that the revised
Guidelines continue to allow entities to recast previously reported
1605(b) emissions in conformance with the revised Guidelines, and also
allow reporting of other historical, verifiable reductions as well. In
order to reinforce the President's initiative, companies must not be
penalized for their achievements prior to 2002.

###### Section G- Guidelines for Small Emitters

USCPA does not support a threshold requirement defining emitter status
in order to allow for reporting to 1605(b).

The use of multi-year averaging to establish an entity baseline is an
acceptable and appropriate approach that will tend to normalize any
year-to-year anomalies. Multi-year averaging of an entity's baseline
should be optional, not required.

The guidelines should establish the expectation that shifts should be
declared and the baseline adjusted accordingly by entities requesting
recognition of their reductions. This should be an element that the EIA
checks when an entity reports.

###### Section H- Emission Reduction Calculations

USCPA encourages the use of both absolute emission reductions and the
Intensity Indicator in representing the actual performance of an entity.
Absolute emission reductions are the only metric that can be added and
compared as a "progress" metric across industry sectors. A metric ton of
carbon dioxide equivalent is the commodity that should be created within
the revised 1605(b) system

Intensity Indicators should only be submitted by the entity if the
entity also submits absolute reduction totals. The intensity metric can
and should only be used within the boundaries of entity to determine the
entity's performance, against itself, or an established industry related
standard if one exists, over time. The Intensity metric should not be
used to compare the performance of Corporate Entity "A" against
Corporate Entity "B."

###### Section I: Record keeping, Report Certification, and Verification

USCPA supports the DOE's role in establishing criteria for identifying
and certifying 'appropriate' independent verification firms and
individuals. This will encourage quality and consistency on a national
basis. In all cases, the choice of which verification firm or individual
a reporting entity may choose to use is exclusively a company decision.

###### CEO Certifications

USCPA believes that entities should be allowed to submit annual GHG
emission and reduction reports to 1605(b) with sign-off certification by
a registered Professional (for example: Engineer (P.E.), lawyer, or
certified environmental, financial or technical professional) or an
officer of the company. CEO certification should not be required.

Federal law prohibits any person or entity from knowingly and willfully
making any false or fraudulent statement of any material fact to any
department or agency of the U.S. Government (18 U.S.C. 1001). This
prohibition, with its substantial penalties, should deter anyone from
knowingly making false or fraudulent submissions to 1605b.

### **Data Confidentiality**

1605(b) is a voluntary program that should not require the reporting of
the emissions and reductions at each facility level or source level data
in order to evaluate progress in the reduction of GHG emissions. Each
entity would need to collect and maintain emissions and reduction data
from each of its facilities, but it should be allowed to report only the
aggregated totals for its US operations.

1605(b) should protect the confidentiality/trade secret concerns of the
reporting company by only requiring the reporting of corporate-level or
aggregated GHG totals.

###### Section J: Starting to Report

USCPA supports the use of multi-year averaging to establish an entity
baseline as an acceptable and appropriate approach that will tend to
normalize any year-to-year anomalies. Multi-year averaging of an
entity's base year to establish the entity's baseline should be
optional, not required. Once chosen, any change to the baseline chosen
needs to be adequately justified and recorded.

Section L: Emission Reductions (section 300.12)

Entities who have good historical data or have already reported their
emissions prior to 2002 should be able to recast their earlier emission
reductions (or earlier 1605(b) reports) to conform to the Revised
Guidelines and submit them to 1605(b).

**Section M: Sustaining Entity Reports of Emissions and Emission
Reductions**

USCPA supports the statement that "only additions to cumulative emission
reductions (relative to the chosen base year or base period) would be
recognized in future years," for reporting purposes.

DOE should not delete previously reported emission reductions if an
entity does not continue to submit annual reports. It is unwise to
change historical information except for correction of material error.
Otherwise, DOE reports of annual achievements under the 1605(b) program
will constantly be subject to change.

**Section O: Cross-Cutting and Other Important Issues**

**1. Entity-Wide vs. Sub-Entity or Project Only Reporting**

USCPA believes the Guidelines should encourage entities to report
reductions resulting from individual actions or projects affecting a
part of the entity's emissions. Reporting should be encouraged even if a
net reduction was not achieved in their total emissions or relative to
their physical or economic output.

2\. Treatment of Certain Small Emissions (refer to section 300.2:
Definitions-De Minimis)

USCPA supports the alternative to permit entities to exclude up to 5% of
CO2 equivalents. This should serve as a de minimis limit on the
reporting of emissions from certain distinct business functions. For
example, if an energy company determined that its fugitive natural gas
emissions from its distribution system were less than 5 % of its total
emissions, it should be able to omit tracking and reporting on these
emissions. The use of Ownership and/or Management/Operational control
should provide a 'reasonable' approach to establishing boundaries that
are appropriate for reporting GHG emissions reductions, and offsets.
Therefore, an entity should be allowed, but not required, to report on
any and all aspects of their owned and/or management/operationally
controlled entity regardless of emitter status.

**3. Excluding the Effects of Changes in Output on Emissions**

In response to the DOE's Request for Comment: (excerpt from Part 1
Section H-Emission Reductions Calculation)

Many industries are cyclical, with significant fluctuations in demand
and therefore, output over time. If a company is successful, demand for
its products may grow over time. Companies with less energy-intensive
processes can have their GHG emissions in any given year impacted by
external factors such as weather (the requirement for greater heating
and/or cooling of facilities/machinery). Companies may decide to
consolidate operations to reduce cost, including energy per unit
produced. Companies may decide or be required to install abatement
equipment to reduce some emissions while requiring greater energy
consumption. In industries with relatively long capital investment
cycles, some companies may be ahead of others in installing new, more
efficient processes - or have made the decision earlier than their
competitors to focus on achieving GHG reductions. Many companies do not
have control over the energy sources for power generation - they are net
takers of indirect emission factors, which may vary considerably
regionally and internationally. All of these factors, along with many
others can impact emissions per unit produced.

It is important that reporting parameters provide a fair picture of the
conditions and management actions shaping an entity\'s GHG emissions. It
is also critical that GHG reporting requirements do not cap or
discourage an entity\'s ability to grow, invest and provide jobs in
America. Accordingly, we believe that in many cases, companies will want
to provide both measures of energy intensity as well as absolute
emissions in their reports and be able to justify certain changes to
their baseline.

However, it is important that a clear picture be available of total
absolute reductions (or increases) in GHG emissions for each reporting
entity. Accordingly, USCPA believes that intensity indicators should
only be submitted by the entity if the entity also submits absolute
totals.

**4. Emissions and Reductions Associated with Electricity Generation and
Use**

USCPA supports the reporting of both direct emissions from the burning
of fuels (i.e. coal, etc) and indirect emissions from the purchase of
electricity and steam. We also understand the requirement to determine,
up front, who "owns" and uses the emissions and reductions associated
with both direct and indirect energy usage in order to avoid double
counting.

**5. Reporting Changes in Terrestrial Carbon Stocks**

USCPA does not believe reporting entities should be required to report
carbon stocks in entity wide reporting or intensity indicators. USCPA
supports the use of the existing spreadsheets within the DOE 1605(b)
guidelines for reporting Carbon Sequestration. However, the spreadsheets
need to be able to comprehend a broader categorization of sinks (trees,
soils, etc) in order to allow for the reporting of international
sequestration projects.

USCPA believes the Guidelines should allow for the reporting of
year-to-year increases in carbon stocks, as well as a comparison over
time from a selected base year or base period.

**6. Recognizing Emission Offsets**

USCPA also supports the eligibility of offsets for reporting. The
inclusion of offsets is a key element of the GHG management lifecycle
and offers a means to convey the proactive actions taken by an entity to
avoid emissions through its management practices. Whoever pays for the
offset owns the emissions reduction.

100% ownership and management control may play a lesser role in the
Offset Emissions Category for reporting, but communication of who is
reporting what and when becomes critical. Either way, the separate and
identified inclusion of offset emissions in the guidelines for reporting
to the 1605(b) encourages voluntary actions that may not occur
otherwise.

**7. International Emission Reductions**

USCPA believes that 1605(b) should allow for the reporting of
international emission reductions if the reporting entity chooses to
report for its international operations. We also believe that the
emission reductions achieved from international activities should be
allowed to count against the Administration's 18% target, if the entity
expressly allocates them as such. However, care must be taken to ensure
that entity does not double count credits in more than one jurisdiction.

Opportunity for Public Comment:

**In response to the DOE's Specific Questions**

Question: (a) How would the concept of entity-wide reporting be extended
to include non-U.S. activities?

Answer: USCPA believes that the reporting entity should be allowed to
report their global emissions. The information would include all direct
and indirect emissions and reductions, all projects within and outside
the entity boundary, and all categories of offsets that the reporting
entity wishes to include.

Question: (b) Should an entity wishing to report non-U.S. emission
reductions achieved in its own non-U.S. operations be required to
inventory and report all non-U.S. emissions and to assess changes in its
emissions worldwide? Or should such entity only be required to report on
its non-U.S. operations in specific countries?

Answer: USCPA believes that an entity should be allowed, but not
required, to inventory and report all non-U.S. emissions.

Question: (c) What requirements should third party non-U.S. offsets be
required to meet?

Answer: USCPA believes that third party non-U.S. offsets should be
required to undergo independent verification from a 'DOE-qualified'
third party verifier. The DOE should, however, take into serious
consideration emerging global standards for verification.

Question (e) What would be the implications, including for participating
in the 1605(b) program, if non-U.S. activities were excluded from
reporting and/or registration**?**

Answer: USCPA believes that the 1605(b) must remain flexible and allow
for those entities that choose to report U.S. only, or U.S. plus
non-U.S. Note the inclusion of U.S. reporting in both options. USCPA
supports the reporting of non-U.S. activities if and only if the
reporting entity also includes U.S. activities.