> **Industrial Energy Consumers of America**

One Thomas Circle, NW, Tenth Floor, Washington, D.C. 20005

> Telephone 202-223-1661 Fax 202-530-0659 www.ieca-us.org

February 17, 2004

Mr. Mark Friedrichs

PI-40

Office of Policy and International Affairs

U.S. Department of Energy

Room 1E190

1000 Independence Avenue, SW

Washington, DC 20585

Department of Energy (DOE) proposed rule, General Guidelines for
Voluntary Greenhouse Gas Reporting, Published December 5, 2003, Federal
Register (Vol. 68, No 234)

Dear Mr. Friedrichs:

The Industrial Energy Consumers of America (IECA) would like to commend
the DOE for the comprehensive effort it has made to develop the enhanced
1605 (b) process. It appears that the DOE has worked very hard to
solicit input from the public and use it to construct a program that is
very useful to companies GHG reduction efforts while remaining
consistent with the President's direction. We are particularly pleased
with the focus on GHG intensity measurement and the decision not to
implement a system of transferable credits. The establishment of a
system of transferable credits is inconsistent with a healthy
manufacturing sector.

*The Industrial Energy Consumers of America (IECA) is a 501 (C) (6)
nonprofit organization created to promote the interests of manufacturing
companies for which the availability, use and cost of energy, power or
feedstock play a significant role in their ability to compete in
domestic and world markets. IECA membership represents a diverse set of
industries including: plastics, cement, paper, food processing,
chemicals, fertilizer, insulation, steel, industrial gases,
pharmaceutical, and brewing*

Our members are pleased to see that the program encourages the reporting
of greenhouse gas (GHG) emission intensity. With a growing population
and increasing demands for food, housing, transportation and other
components of life, reductions in the amount of emissions per unit of
production are consistent with the inevitable growth in demand our
country will experience.

We strongly support your decision not to award transferable credits --
this would have been a poor public policy and we are glad the DOE
recognized this. Doing so would have resulted in loss of jobs, higher
energy costs and reduced economic growth. Transferable credits are the
wrong policy tool for accomplishing true nationwide emission reductions.
The way we are going to lower GHG emissions is by improving energy
efficiency and investing in emission free energy sources. Tax credits
for investments (both equipment and research) to improve energy
efficiency and lower the cost of emission free or low emission
technologies are more appropriate.

Natural gas is very important to our members. This energy source has
seen very significant increases in its pricing due to the current and
growing imbalance in its supply. The 1605 (b) program should not do
anything that supports additional fuel switching further increasing
demand for natural gas. The general guidelines are silent on fuel
switching and may need a more definitive statement. Consideration should
be given to including documentation of fuel changes similar to those
requested of plant shut downs and government requirements. It will be
important for DOE to be aware of further changes in the country's fuel
mix.

The 1605 (b) GHG Registry and process should not attempt to replace the
annual inventory of U.S. GHG emissions. The annual inventory of GHG
emissions is a very thorough analysis of GHG emissions better suited for
making policy decisions. Individual company reports will never be as
complete as the U.S. inventory's top down view of energy and other
emission sources in this country. The 1605 (b) process should stay with
its goals of improving individual entity understanding of their GHG
emissions, documenting on-going actions and demonstrating that real
reductions are taking place.

Updating the base year to 2002 will make reporting under 1605 (b)
possible for many companies who are not able to establish earlier
baselines. Hopefully the technical guidelines will show what types of
information and records will be needed to document individual
inventories.

While we await the release of the technical guidelines, which are
integral to the utility of the enhanced process, it will be very
important that the technical guidelines compliment the general
guidelines.

Attached is our specific input on many important issues. We look forward
to working with you.

Sincerely,

Paul N. Cicio

Executive Director

##### 

##### 

##### Industrial Energy Consumers of America (IECA)

#####  

##### "Comments on the DOE GHG Registry 1605 (b) Guidelines

#### GHG Intensity Measurement and Revised GHG Accounting Registry

IECA strongly supports the approach the Bush Administration is taking
regarding the improvement of the DOE GHG Accounting Registry 1605 (b)
that allows for an entity to register its GHG intensity and entity wide
emissions. It also supports reporting of projects. Measuring GHG
intensity is the most important alternative because it will allow
economic growth while companies make progress in reducing GHG emissions.

#### No Transferable Credits, Early Credits or Baseline Protection

IECA supports the legal finding that the DOE does not have legal
authority to establish a system of transferable credits, early credits
or provide baseline protection. Transferable credits is a precursor to a
cap and trade system that would result in fuel switching and increased
demand for natural gas, energy rationing, higher energy costs, loss of
manufacturing competitiveness, manufacturing jobs and distortion of
energy markets. Establishing transferable credits would be an incentive
to companies to fuel switch to natural gas and result in even higher
prices than exist today. U.S. natural gas prices are already the highest
in the developed world and have resulted in job loss and a weak
manufacturing sector.

#### Two-Tiered Approach

IECA supports the two-tiered approach that has been developed under the
updated Guidelines for registering and reporting GHG emissions,
reductions and offsets.

#### Aggregated Information Only / Confidentiality

IECA supports providing aggregated information to 1605 (b), not specific
facility information. Doing so will keep entity information
confidential. Each entity needs 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 U.S. operations

#### The Guidelines Need to Give Recognition for Non-Utility CHP (CHP that is Owned by the Manufacturing Sector) 

The proposed guidelines do not give proper recognition for CHP (Combined
Heat and Power). CHP is the most energy efficient commercial technology
for the production of electricity and steam. It is widely used by the
manufacturing sector to lower its energy costs and improve energy
efficiency. As a result, it is the single most important action the
manufacturing sector can do to help meet the President's goal of an 18%
reduction in GHG intensity per GDP.

The Guidelines need to give recognition for non-utility owned CHP in two
areas. The CHP unit should receive recognition for the increased energy
efficiency and ensuing GHG reductions when compared to the local/or
state electric utility grid that it would have purchased electricity
from, had it not built a CHP unit. The CHP unit should also receive
recognition for the lower GHG content of the fuel used compared to that
of the local/state electric utility.

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

DOE is calling this a "proposed rule." Since 1605 (b) is a voluntary
program, IECA does not believe that using a "rule-making" process to
revise the general guidelines is appropriate. It may also have the
result of reducing participation.

**Single U.S. Registry**

IECA supports the establishment of only one national GHG Registry. The
DOE GHG Registry should be the only GHG registry used in the United
States including those programs operated by states, NGOs and other
federal government agencies. IECA believes it should be administered by
DOE through the EIA.

**1605 (b) Should not Encourage Practices that Damage Economic Growth or
Competitiveness**

Examples:

Provisions that are an incentive for fuel switching to natural gas.

Provisions that are inconsistent with increasing our nation's energy
supply diversity

Recognition of emission reductions for plant shutdowns.

**Entity Boundaries**

IECA believes that entities have responsibility for reporting that which
is under the entity's direct ownership and/or management /operational
control.

**Baseline year of 2002**

IECA supports allowing an entity to recast its earlier 1605(b) reports
using the updated Guidelines. Registering aggregated entity-wide GHG
emissions is needed to establish a credible GHG accounting system.
Registering an intensity indicator are an excellent measurement and an
important tool for showing progress.

**CEO Certification:**

IECA supports CEO certification. Doing so increases the integrity of the
information.

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

IECA supports use of 3^rd^ party certification/verification but it
should not be required. 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. Entity wide and intensity registration should be verifiable.
Verifiable means that an entity is responsible for maintaining all
underlying documentation to support their GHG emissions registration.
IECA encourages the DOE to address these and other documentation issues
in the technical guidelines.

**GHG Offsets**

IECA supports the "reporting" of eligible offsets within the 1605(b).

**Indirect Emissions**

IECA believes that indirect emissions, such as purchased electricity
should be a requirement of registering entity wide emissions and
intensity indicator. However, IECA does not support a requirement for
entities to account for 'other' emissions such as transportation and
travel. It should be optional.

**Trade Associations Reporting**

Trade associations should be allowed but not required to report to the
1605(b).

**Carbon Sinks**

IECA 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.

###### Defining Entity Boundaries

IECA supports increasing the de minimis threshold to 5% of an entity's
total emissions inventory and eliminating the 10,000 ton absolute
threshold, from any one source or any one gas. This should serve as a de
minimis limit on the reporting of emissions from certain distinct
business functions.

###### Entity Wide Reporting of Emission Inventories

IECA supports the proposed 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 but subject to the de minimis rule.

###### Record Keeping, Report Certification, and Verification

IECA supports the DOE concept of establishing criteria for identifying
and certifying 'appropriate' independent verification firms and
individuals. However, it is a company decision whether and which such
company is used.

# Multi Year Baseline

IECA supports a multi-year baseline that is the average of 3 or 4 years
of emission data. However, using a multi-year baseline should be an
option, not a requirement.

# Manufacturing Process Changes

Major reported emission reductions must be reviewed for accuracy by the
DOE to ensure any manufacturing process change has not simply shifted a
'direct' emission to a 'indirect' emission.