February 17, 2004

1605bgeneralguidelines.comments@hq.doe.gov

Mark Friedrichs, PI-40

Office of Policy and International Affairs

U.S. Department of Energy

Room 1190

1000 Independence Ave., SW

Washington, DC 20585

10CFR PART 300, GENERAL GUIDELINES FOR VOLUNTARY GREENHOUSE GAS
REPORTING; PROPOSED RULE

### 

### American Chemistry Council Comments

Reference: 68 Federal Register, No.68, 68203-68231, December 5, 2003

The American Chemistry Council (ACC) is pleased to submit the following
comments on the subject proposed rule. ACC members are owners and
operators of production facilities and fuel combustion sources that emit
greenhouse gases. Some ACC member companies currently report under the
existing 1605(b) program.

ACC represents the leading companies engaged in the business of
chemistry. ACC members apply the science of chemistry to make innovative
products and services that make people\'s lives better, healthier and
safer. ACC is committed to improved environmental, health and safety
performance through Responsible Care^^, common sense advocacy designed
to address major public policy issues, and health and environmental
research and product testing. The business of chemistry is a \$460
billion enterprise and a key element of the nation\'s economy. It is the
nation's largest exporter, accounting for ten cents out of every dollar
in U.S. exports. Chemistry companies invest more in research and
development than any other business sector. Safety and security have
always been primary concerns of ACC members, and they have intensified
their efforts, working closely with government agencies to improve
security and to defend against any threat to the nation's critical
infrastructure.

ACC member companies have made significant improvements in energy
efficiency over the past 30 years, and significant reductions in process
greenhouse gas emissions over the past several years. The ACC has
committed to continue to reduce our greenhouse gas emission intensity in
response to the President's Climate Vision challenge.

ACC supports the development of responsible public policy and is pleased
to see steps by the administration to reduce GHG intensity. A robust and
flexible registry is an important element of making progress in
reductions and recognizing individual actions. We believe recognition of
voluntary efforts will be a key incentive to entities that are
contemplating voluntary actions to meet the President\'s target. If
properly crafted, 1605(b) reporting can serve as a powerful incentive
for greenhouse gas emitters to make voluntary reductions. It is
difficult to make detailed comments on the overall 1605(b) revisions
until the Technical Guidelines are issued.

ACC offers the following comments on the proposed modifications to the
1605(b) reporting General Guidelines. These comments address specific
issues of particular importance to ACC members as reporting entities, as
well as on the integrity of the submitted data.

1.  In the preamble (68 Fed.Reg. 68210), it is stated that entities
    would be permitted to register only those emission reductions
    calculated using a base year no earlier than 2002 (or base period of
    up to four sequential years ending no earlier than 2002). 2002 is
    recognized as the starting year for the President's program to
    reduce economy-wide GHG intensity by 18% by the year 2012. We
    understand the logic of tracking emission reductions from 2002
    forward so that government and business can reliably measure whether
    declines in GHG intensity over the subsequent ten years meet or
    exceed the President\'s goal. At the same time, some companies have
    implemented GHG reduction projects before 2002 to respond to
    governmental or public concerns about global climate change. DOE
    should continue to maintain projects previously reported under the
    §1605(b) program within the proposed database. In addition, DOE
    should make it clear that 2002 was selected as the starting year
    solely as a convenient accounting tool for the President\'s
    intensity reduction program. Finally, DOE should consider allowing
    companies to report data for earlier starting years if they meet the
    data quality requirements for accuracy, reliability and
    verifiability of the 1605(b) program.

2.  Natural gas is very important to our members. This energy and
    feedstock source has seen very significant increases in its pricing
    due to current and growing imbalance in its supply. The 1605 (b)
    program should support documentation of switching from other energy
    sources to natural gas. It will be important for DOE to be aware of
    further changes in the country's fuel mix.

3.  The 1605(b) reporting scheme is designed to provide flexibility for
    entities to report on either an absolute basis or an emissions
    intensity basis and we support that. However, the complexity of
    intensity-based reduction reporting also makes it important that the
    reporting protocol provide for adequate data quality and allow
    reasonable comparability between various reported reductions while
    retaining flexibility. It is assumed that the Technical Guidelines
    will provide detailed methodologies.

4.  In §300.6(a), it is stated that entity-wide reports are a
    prerequisite for the registration of emission reductions by entities
    with average annual emissions of more than 10,000 tons of CO2
    equivalent. Flexibility should be provided in order to encourage
    participation. In the case of non-CO2 greenhouse gas (i.e., CH4,
    N2O, HFC, PFC, SF6) emission reduction, the requirement should be an
    entity-wide report for the specific non-CO2 gas(es) reported.

5.  In §300.6(e), it is stated that a reporting entity may exclude
    particular sources of emissions or sequestration if the total
    quantities excluded represent less than 3 percent of the total
    annual CO2 equivalent emissions of the entity or less than 10,000
    metric tons of CO2 equivalent, whichever is less. The deminimis
    definition in §300.2 also refers to this level. In the case of many
    companies, the 10,000 metric ton limit would apply, so that there
    could be a tremendous effort to quantify many small and diverse
    emissions sources that are truly deminimis relative to the entity's
    total emissions. We recommend that the threshold deminimis levels be
    revised to be 3% per individual gas or 5% for the entity wide
    emissions of all gases. This will provide an adequate level of
    accuracy. The 10,000 metric ton threshold should not apply in those
    cases.

6.  In addition to revising the percent deminimis thresholds, there
    should be default exemptions for certain inherently small direct
    sources of emissions, such as fugitive emissions, trace combustion
    emissions such as N2O, portable welding machines and air
    compressors. Since emission sources such as these are likely
    deminimis for all reporting entities, significant reporting efforts
    could be reduced by granting a blanket exemption for such emissions.
    In addition, vehicles that are part of a company's fleet should not
    need to be included in the emissions reporting since those can
    easily be included with overall transportation sector emissions.
    However, if an entity desires to include those emissions in its
    report, that should be accommodated.

7.  §300.6(c) covers indirect emissions. It is totally appropriate for a
    purchaser of electricity, steam, hot or chilled water, and other
    energy or utility streams to be able to include those associated
    emissions is its report. Since those are indirect (emitted by
    another entity to satisfy the needs of the purchaser), they should
    be listed separately so that double counting can be avoided. The
    definition of avoided emissions in §300.2 is confusing. If direct
    and indirect emissions resulting from purchased electricity, steam,
    and other energy streams are included in the entity's report, then
    avoided emissions would just be the difference when a change is made
    from self-generated energy streams to purchased energy streams.
    Further clarification of the definition of avoided emissions may
    help unfamiliar users of 1605(b).

8.  DOE suggests in the preamble (68 Fed.Reg.68212) that they are
    considering applying an electricity generation CO2 emission factor
    based on the marginal supply energy source. This is inappropriate
    since if all consumers reported through 1605(b), resulting emissions
    would be in error vs actual generation of electricity. It is much
    more appropriate to continue using the past 1605(b) state emission
    factors. That not only provides a realistic average value for a
    particular site, but is consistent with past 1605(b) reporting. In
    the case where a purchaser is receiving power from a single
    generating facility by contract, it should be acceptable for that
    purchaser to use the actual associated CO2 emission rate for that
    generating facility.

9.  Where cogeneration facilities (CHP) are used to provide steam or
    electricity to a purchaser, DOE should refer to the protocols
    developed by WRI relative to different approaches for emissions
    allocation. As a general practice, the efficiency method of
    allocation provides a reasonable approach to allocation of energy
    and CO2 emissions, but flexibility should be allowed for election of
    other more appropriate methods for specific cases.

10. DOE questions whether trade associations should be required to
    submit some or all of the entity-specific data that might be
    required by the revised Guidelines. We believe that reporting
    through trade associations should be optional. There are some cases
    where individual companies desire to report independently through
    1605(b) so that their performance as a company is documented. Having
    a relevant trade association also report that same data in aggregate
    form would result in double counting. It would take considerable
    effort to prevent or correct for double counting. However, in those
    cases where all trade association members desire to report in
    aggregate through the trade association, the 1605(b) program should
    enable that to occur in as easy a manner as possible.

11. §300.5(c)(1)(iii) requires documentation of the transfer of economic
    activity to or from specific operations outside the U.S. This
    requirement could result in extensive and unnecessary reporting of
    activity for a global company. If needed at all, this should be
    limited to only changes that result in a significant impact on net
    GHG emissions relative to the entity's total emissions.

12. We strongly support the concept that manufacturers of products used
    in other sectors can report associated emissions reductions or
    avoided emissions through use of those products. Since many products
    are used in the buildings sector and those entities will likely not
    report under 1605(b), the manufacturers of energy saving or other
    products should be allowed to include those emissions
    reductions/avoided emissions in their report. Those quantities
    should be reported separately so that double counting can be
    avoided. Emission rates could be based on standardized conversions
    or assumptions provided by DOE. Since this can be a complicated
    approach due to the diverse nature of products, it is recommended
    that DOE hold a workshop with interested parties to discuss
    different approaches for this allowance.

Thank you for the opportunity to comment on these Guidelines. Please
contact me with any questions or if you need additional information.

Yours truly,

Thomas J. Gilroy

Thomas J. Gilroy

Senior Director -- Energy

\(703\) 741-5804

<tom_gilroy@americanchemistry.com>