# ![](media/image1.jpeg){width="0.5868055555555556in" height="0.9736111111111111in"}

June 22, 2005

Mr. Mark Friedrichs, PI-40

Office of Policy and International Affairs

U. S. Department of Energy, Room 1E190

1000 Independence Avenue, S. W.

Washington, D. C. 20585

Submitted by email: <1605bguidelines.comments@hq.doe.gov>

**Comments on the Interim Final and Technical Guidelines for Voluntary
Reporting of Greenhouse Gases under 1605(b) of the Energy Policy Act of
1992**

The American Forest & Paper Association (AF&PA) appreciates the
opportunity to submit comments on the Department of Energy's (DOE's)
proposed Interim Final Rules and Technical Guidelines for Voluntary
Greenhouse Gas Reporting.[^1] AF&PA, the trade association and leading
voice for the forest products industry, represents over 200 companies
and related associations. AF&PA members produce over 80 percent of the
wood, paper, and other forest products manufactured in the United
States; our members include both industrial and non-industrial private
land owners, large multi-product producers, and family-owned facilities.

AF&PA has considerable interest in greenhouse gas related issues. We
participate in the Administration's Climate VISION program. We have
previously submitted comments in response to DOE's Federal Register
notices of May 6, 2002 and December 5, 2003, have met with the
Administration's representatives on 1605(b) issues, and have
participated in several DOE and Department of Agriculture's (USDA's)
workshops related to 1605(b). Changes to the voluntary registry are
important to AF&PA and its members, and we hope that our comments are
helpful as the agency evaluates responses to its proposal.

We commend DOE and USDA for many of the changes incorporated into the
Interim Final General and Technical Guidelines. In particular, we are
pleased to see clear recognition that biogenic fuels are carbon neutral
and that sustainable management of forests results in no net carbon
flux. These are core issues for our industry. We are also pleased that
the definition of carbon stocks was expanded to include wood -- or more
appropriately forest products. We also commend DOE for separately
accounting for direct and indirect emissions.

AF&PA's detailed comments on the proposed changes to the guidelines are
attached to this letter. In general, our major comments address the
following areas:

**Completion of the Reporting Forms and Guidelines:**

-   The reporting forms should be made available for review and comment
    once they are complete, and additional comments on the guidelines
    should be accepted along with comments on the reporting forms.
    Testing the forms and relating them to the guidelines will clarify
    our understanding of the process and allow us to provide DOE and
    USDA with more meaningful comments.

**Forestry Issues:**

-   Manufacturers should be provided the option to register the carbon
    sequestered in products as long as the wood used to manufacture the
    product originates from certified sustainably managed forests or
    procurement systems.

-   Carbon indicators should not be required for sustainable forestry
    certification systems. As the Technical Guidelines state, "if a land
    area is certified sustainable, it is highly unlikely the inventory
    of carbon on that land is declining."

-   The Interim Final Guidelines need to clearly state that changes in
    sequestration for forests managed under certified sustainable
    management systems are *de minimis* and need not be reported
    annually.

-   Registration of carbon in preserved forests and managed forests
    should be treated equally.

**Interim General Guidelines:**

-   The definition of avoided emissions is too narrow and should be
    expanded to include other activities such as those associated with
    recovery of paper for recycling.

-   A start year of 2002 for registering reductions does not recognize
    actions already taken and using this date may discourage many from
    participating in the registry.

-   The General Guidelines should allow reductions in emissions from
    plant closings to be reported and registered.

**Technical Guidelines:**

-   An "A" rating should be given to methods employing fuel usage and
    emissions factors to calculate emissions.

-   Emissions should be allocated more evenly between electrical and
    thermal generation of combined heat and power. The efficiency
    benefits of steam generation need to be recognized.

Finally, we want to express our view that the 1605(b) registry is not
the appropriate place to report progress on Climate VISION commitments.
We understand from conversations with DOE that there is no expectation
for trade associations to use the registry to report collective data.
However, in response to statements in the preamble to the guidelines,
our comments re-state our concern in this area.

If you have questions about our comments or we can assist you in any
way, please contact me at 202-463-2709 or via email at
Dee_Gavora@afandpa.org.

Sincerely,

![](media/image2.wmf)

Dee Gavora

Director, Environmental Policy

American Forest & Paper Association

**American Forest & Paper Association**

**Comments on Voluntary Greenhouse Gas Reporting**

**Interim Final General Guidelines and Draft Technical Guideline**

**June 22, 2005**

**Table of Contents**

# Topic Page

**Completion of Reporting Forms and Guidelines** 2

# Forestry and Sequestration 

-   Reductions from Increases in Carbon Stored in Wood Products 2

-   Carbon Indicators for Sustainably Managed Forests 4

-   Reporting Emissions and Sequestration 5

-   Frequency of Monitoring 6

-   Forest Preservation 6

# General Guidelines 

-   Avoided Emissions 7

-   *De minimis* Emissions 8

-   Carbon Stocks 9

-   Net Emissions Reductions 9

-   Total Emissions 9

-   Emissions Inventories 9

-   Limiting Registration to Post-2002 Reductions 10

-   Aggregated Reporting 10

-   Emission Reductions Associated with Plant Closings

> and Reductions in Output 11

-   Determining Entity Responsible for Emissions Reductions 11

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-   Confidentiality 12

-   Independent Verification 12

**Technical Guidelines**

-   Emissions Rating System 12

-   Landfill Methane 13

-   Indirect Emissions from Electricity and Heat Purchases

> of Offsite CHP Plants 13

-   Approaches for Wood Products 15

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-   Avoided Emission Factors 15

-   Use of NERC Regions for Electricity Factors 15

-   Use of Economics as a Measure of Output 16

**Appendix A: Comparison of Sequestration in Preserved and**

> **Managed Forests** 17

**Completion of Reporting Forms and Guidelines**

AF&PA appreciates the opportunity to comment on the interim final
General and Technical Guidelines. With over 300 pages of technical
material, the guidelines are extensive and highly involved; thus, it is
difficult to conclusively form opinions and file comments when the
actual reporting forms are not available. Testing the forms and relating
them to the guidelines will clarify our understanding of the calculation
process and allow us to provide DOE with more meaningful comments.

AF&PA recommends that the reporting forms and tools be made available
for review and comment once they are complete, and we strongly recommend
that additional comments on the guidelines be accepted with comments on
the reporting forms.

Additionally, the Interim General and the Technical Guidelines will be
more easily understood if DOE provides examples for reporters to use. At
the April 26-27, 2005 workshop there was a brief discussion of "primers"
that are to be made available. AF&PA encourages the use of examples to
make the reporting process more understandable.

**Forestry Comments**

#### Reductions from Increases in Carbon Stored in Wood Products \[Technical Guidelines -- Section 2.4.4.2\] The Technical Guidelines specify that "the entity reporting changes in forest carbon stocks also report the changes in carbon stocks that are expected in the wood-products pool. Because harvested wood is typically transferred between owners as the wood is harvested, processed and used, several entities could potentially affect the quantity and timing of the carbon emitted from wood products. The decision to allow the forest-carbon reporter to also report expected changes in wood-products carbon simplifies overall reporting burdens and allows the increases in wood-products carbon storage to be captured in the 1605(b) reporting systems."

[AF&PA Comment:]{.underline}

AF&PA members disagree with the assertion that positioning only the
landowner to report expected changes in forest products simplifies the
overall reporting burden.

Requiring forest owners to track the product pool unnecessarily
complicates the calculation and reporting of such reductions and may
lead to a miscalculation of the carbon sequestered in forest products.
Both the forest entity and manufacturing entity make important
contributions to carbon sequestration, and the guidelines should be
modified to allow those contributions to be recognized separately in the
1605(b) registry. In most instances, the landowner is unlikely to have
sufficient data to register accurately the carbon sequestered in
products. Providing the manufacturer with the option to register such
carbon allows recognition of the product contribution, ensures greater
accuracy in registering such carbon, and reduces associated transaction
costs.

Further, neither the General nor Technical Guidelines recognize the
vital role that streamlined project accounting and reporting for forest
sequestration can play in enhancing carbon sequestration.

To capture the contributions of both landowners and forest products
manufacturers in a manner that portrays the full recognition of carbon
sequestration, AF&PA members recommend the following:

-   Landowners using sustainable forest management (SFM) practices --
    and thus operating carbon neutral forests on a long term basis --
    should be provided the option of undertaking and being recognized
    for projects that increase forest carbon over and above what
    sustainable management provides.

-   Landowners undertaking such projects also should be provided the
    option of registering their project reductions in the 1605(b)
    registry and transferring the reductions to other entities through
    appropriate agreements.

-   Manufacturers should be provided the option to register the biomass
    carbon sequestered in forest products in-use as long as the wood
    used to manufacture the product originates from certified
    sustainably managed forests or procurement systems.

-   Landfill owners should be provided the option to register the
    biomass carbon sequestered in forest products discarded in
    landfills.

Sustainable forestry management and carbon-balanced forests lie at the
core of this recommendation. We think this recommendation represents an
equitable arrangement for all forest industry parties. Additionally, it
encourages landowners to embrace and implement sustainable forestry
systems.

The system we have outlined also reduces the risk of double counting
carbon, as the landowner, manufacturer, and landfill owner are each
responsible for separate aspects of the carbon pool. If a landowner
undertakes a project to increase carbon in forests, the resulting
increase could not be claimed by any other entity until time of
transfer. Once carbon is transferred, the landowner would register the
carbon decrease associated with the harvest and sale in its 1605(b)
report.

The diagram shown below outlines the process and shows its relationship
to sustainable forest management.

![](media/image1.wmf)

**[Carbon Indicators for Sustainably Managed Forests]{.underline}**
\[Technical Guidelines -- Section 1.I.3.5\] The Technical Guidelines
recognize that "if a land area is certified sustainable, it is highly
unlikely the inventory of carbon on that land is declining." Thus a
reporter may assume there is neither an increase nor a decrease in
carbon flow on those lands. Reporters using certification systems --
such as SFI -- as a basis for reporting no net carbon flux "should
verify that the certification process includes indicators that would
detect long-term declines in carbon stocks."

[AF&PA Comment:]{.underline}

The draft Technical Guidelines appropriately recognize that sustainably
managed forests are carbon balanced over the long term and thus have a
default carbon flux of zero. AF&PA commends USDA and DOE for confirming
the value of sustainable forestry management.

However, one element in this section is unwarranted and unnecessary. The
guidelines state that reporters using sustainably managed forest
certification systems as a basis for reporting no net carbon flux should
verify that the certification process includes ***indicators*** that
would detect long-term declines in carbon stocks.

Sustainable forestry certification systems have been developed to
provide assurance that forests will be maintained in a manner that
preserves or improves their condition over the long term. They may
naturally experience fluctuations in carbon stocks, but the very
definition of "sustainable" is "to keep in existence, maintain,
prolong." If a land area is third-party certified to a recognized SFM
system, there should be no further need under 1605(b) for reporters to
further verify the certification program's provisions with respect to
carbon.

Any obligation to develop and include specific carbon accounting
indicators additional to SFM certification requirements would impose
overly burdensome and costly requirements on the certification process
and would discourage use of the 1605(b) registry.

AF&PA recommends that the section addressing certification be modified
as shown below.

**[Reporting Emissions and Sequestration]{.underline}** \[General
Guidelines Section 300.6\]

Section 300.6 states that an entity should provide an annual accounting
of its emissions including direct emissions, indirect emissions, and all
sequestration or other changes in carbon stocks.

[AF&PA Comment:]{.underline}

We find the intent of this section confusing and unclear. Accounting for
changes in forest carbon stocks is a time intensive and expensive
process and requiring entity-wide sequestration to be reported with
emissions places an extreme burden on the forest products industry -- a
burden that is not shared by other industries.

As recognized in the Technical Guidelines (Section 1.I.3.5), sustainably
managed forests are carbon neutral, and "it is highly unlikely that the
inventory of carbon on such land is declining." The General Guidelines
should explicitly include this concept as a *de minimis* exclusion.
AF&PA recommends that section 300.6(g)(1) be modified to clearly state
that any changes in sequestration for forests managed under certified
sustainable management systems are *de minimis* and need not be a part
of entity's annual report. At a minimum, reporting that forests remain
SFM certified should be simply accomplished through the reporting form,
which we have not yet seen.

**[Frequency of Monitoring]{.underline}** \[Part I: Appendix - Section
3.2.4\]

The guidelines are inconsistent with respect to periodic versus annual
reporting of sequestration. While the Technical Guidelines for Forestry
recognize the validity of periodic measurements for forest carbon, the
General Guidelines appear to require annual reporting.

[AF&PA Comment:]{.underline}

Annual reporting of forest carbon stock changes is overly burdensome and
unwarranted. As a generally accepted premise, for entities that elect to
include forest operations or projects in their reporting, annual
reporting should not be necessary nor would it be consistent with the
intent of the 1605(b) program. For the most part, the forestry
guidelines recognize that periodic measurements are sufficient. For
example, the Part I: Appendix, Section 3.2.4, states that: "given the
dynamics of forest processes, they are generally measured over periods
of 5-Year intervals." It notes as well that intervals for monitoring
carbon pools in soil could be even longer. However, as noted above, the
General Guidelines seem to suggest that annual reporting for all aspects
of an entity's operations is necessary.

Changes in forest carbon stocks can vary considerably from year to year
even though over a long period of time, they remain relatively stable.
Given the complicated nature and expense of measuring forest inventories
with a degree of precision and accuracy suitable for 1605(b) purposes,
periodic calculations are more than sufficient.

**[Forest Preservation]{.underline}** \[Technical Guidelines - Section
1.I.4.5\]

The guidelines treat carbon measurement for preserved forests
differently than for managed forest stands. The technical guidelines
would allow entities to report and register conservation of existing
terrestrial carbon stocks through permanent easements and deed
restrictions. Entities can register 1/100^th^ of the baseline carbon
stocks plus any incremental increase over the base period in preserved
forests.

[AF&PA Comment:]{.underline}

AF&PA members believe that carbon stocks in preserved forest should be
measured and treated the same as other forest lands. Only incremental
gains over the baseline should be registered. It makes no sense to give
credit for existing carbon stocks in preserved forests and not in
managed forests. The latter provide greater opportunity for emissions
reductions through increased forest productivity, the benefits of
biomass energy substitution, and carbon sequestration in products. Yet,
only the increase over existing carbon stocks can be registered on
managed stands.

Under the guidelines, any emissions reduction registered for a preserved
forest remains in place even if a natural disturbance causes the
registered carbon to be lost. In fact, there is a higher probability
that carbon stocks in preserved forests will decline as a result of
natural events. Absent a natural event, carbon stocks in preserved
forest will at best reach a maximum level or saturation point. In
contrast, the products generated from managed forests will continue to
accumulate carbon long after the unmanaged forest has exhausted its
ability to sequester additional carbon.[^2]

AF&PA recommends that registration of carbon in preserved forests and
managed forests be treated equally. The proposed 100-year formula for
registering existing carbon stocks in preserved forests should be
eliminated and only increases (or decreases) in existing carbon stocks
should be eligible for registration, or alternatively, the same
treatment and opportunity for registering existing carbon stocks should
be given to managed forest stands.

# General Guidelines

##### [Avoided Emissions]{.underline} \[Section 300.2\]

The General Guidelines describe avoided emissions as "the emissions
displaced by increases in the generation and sale of electricity, steam,
hot water or chilled water produced from energy sources that emit fewer
greenhouse gases per unit than other competing sources of these forms of
distributed energy." We support recognition of avoided emissions from
the export of electricity or steam under the proposal. As suppliers of
electricity generated from renewable sources and cogeneration, AF&PA
members have great interest in this type of avoided emissions.

However, the proposed definition is too narrow and should be expanded to
include other activities such as those associated with recovery of paper
for recycling. AF&PA members' Climate VISION commitment is based in part
on recovery of paper which avoids methane emissions at landfills.

In fact, to help meet our Climate VISION commitment, AF&PA announced a
new paper recovery goal of 55 percent of all paper consumed in the
United States by 2012. AF&PA expects that achieving the recovery rate of
55 percent will lead to corresponding reductions in greenhouse gas
emissions at landfills.

The method that AF&PA is using to calculate the amount of methane
avoided was adopted from EPA's Waste Reduction Model (WARM). EPA's
website specifically states that the model was created "to help solid
waste planners and organizations track and voluntarily report greenhouse
gas emissions reductions and energy savings from several different waste
management practices."[^3]

Entities operating recycling facilities are able to accurately measure
the volume of paper recovered for recycling and quantify the avoided
greenhouse gas emissions; thus, AF&PA recommends that these entities
should have the option to register such avoided emissions.

To facilitate this process, AF&PA suggests the following more expansive
definition of avoided emissions be used:

> Avoided emissions are greenhouse gas emission reductions associated
> with a specific activity or project undertaken by an entity and
> calculated relative to a reference case (or baseline) that describes
> what the emissions would have been in the absence of the entity's
> activity or project.

Such a definition acknowledges that the recycling of paper, aluminum,
and other products reduces disposal in landfills and also may reduce
energy usage.

**[*De minimis* Emission*s*]{.underline}** \[Section 300.2\]

In the General Guidelines, *de minimis* emissions are defined to be
emissions of greenhouse gases that are less than or equal to three
percent of a reporting entity's annual CO~2~ emissions.

AF&PA recommends that *de minimis* emissions be defined to be five
percent or less of an entity's annual emissions. Increasing the *de
minimis* percentage would encourage reporters to spend more time
determining material emissions and less time estimating immaterial
emissions. Widely accepted greenhouse gas protocols -- such as the World
Economic Forum's Greenhouse Gas Register[^4] and the California Climate
Action Registry[^5] -- use five percent as the *de minimis* amount.
Other protocols have used five percent as a rule of thumb for
determining materiality.[^6]

If an entity determines that a source of emissions is immaterial or five
percent or less of total emissions, such emissions should be classified
as de minimis and not included in the entity's annual inventory.

**[Carbon Stocks]{.underline}** \[Section 300.2\]

AF&PA commends DOE for expanding the definition of carbon stocks to
include wood products. However, the more appropriate term is "forest
products," which recognizes the contribution of both wood and paper
products. AF&PA recommends that carbon stocks be defined as:

> the quantity of carbon stored in biological and physical systems
> including: trees, plants, ***forest products*** and other terrestrial
> biosphere sinks, soils, oceans, sedimentary and geological sinks, and
> the atmosphere.

**[Net Emissions Reductions]{.underline}** \[Section 300.2\]

Based on the stated definition, the word "net" appears misapplied. A
more appropriate term would be "total emission reductions," which is the
sum of all annual changes in emissions, avoided emissions and
sequestration. Additionally, AF&PA recommends that the term emissions be
divided into direct and indirect emissions. Thus the term "total
emissions reductions" means all annual changes in direct and indirect
emissions, avoided emissions, and sequestration.

**[Total Emissions]{.underline}** \[Section 300.2\]

The guidelines define total emissions as "including both direct and
indirect entity-wide emissions." This definition is confusing and is not
in keeping with other international protocols such as the WRI/WBCSD
*Greenhouse Gas Protocol* or ISO/DIS 14064 (Parts 1 to 3).

AF&PA recommends that the term "total emissions" be deleted and that the
emissions be defined separately as *direct emissions* and *indirect
emissions*. These two types of emissions are not additive, and separate
definitions avoid any implication that the two should be combined.

**[Emissions Inventories]{.underline}** \[Section 300.6(d)\]

AF&PA commends DOE for the clear recognition that biogenic emissions are
carbon neutral. The Technical Guidelines (Part1.C.5.5) state that
biogenic emissions do not count as anthropogenic emissions, as they are
"part of the natural carbon cycle." The process for reporting such
emissions should also be clearly acknowledged in Section 300.6(d) of the
General Guidelines by noting that biogenic emissions of CO~2~ are
reported separately and are not reported as part of an entity's direct
emissions.

To make this clear, we propose the following addition:

> Only the methane and nitrous oxide emissions from combustion of
> biogenic fuels are reported as direct emissions. The CO~2~ emissions
> from combustion of biogenic fuels should not be reported as direct
> emissions.

**[Limiting Registration to Post-2002 Reductions]{.underline}**
\[Section 300.7\]

DOE has indicated its intent to permit the registration of only those
emission reductions achieved after 2002.

AF&PA members think that the registry should provide for the reporting
and registration of data prior to 2002. Specifically, the General
Guidelines should provide for a baseline period of 1987 to 1990 as
established under section 1605 (b) of the Energy Policy Act of 1992, and
the criteria for reporting and registration should be the same for
reporting periods in the past and the future.

As the President noted in his February 2002 policy statement, reforms to
the registry system should address baseline protection. Additionally,
the four Agencies that reviewed the President's objectives concluded
that credit should be given for early action. AF&PA members think that
it is important to protect established baselines and give credit for
early action to establish the integrity and reliability of the registry
and encourage participation. Without recognition and credit, those
entities that acted early to reduce greenhouse gas emissions are
penalized.

The forest products industry over the past thirty years has made
significant strides in replacing fossil fuels with biomass fuels, both
waste wood and spent pulping liquor and in developing cogeneration of
electricity in the industry mills. Even within the realm of fossil fuel
use there has been significant replacement of fuel oil with natural gas,
which has reduced greenhouse gas emission intensity.

A start year of 2002 is not in keeping with actions already taken, and
using this date may discourage many from participating.

**[Aggregated Reporting]{.underline}** \[Section 300.7(d)\]

In the preamble, DOE notes that 1605(b) will be the primary vehicle for
reporting on commitments made under the Climate VISION and Climate
Leaders programs, and DOE defines an aggregator as a trade association
or organization that collects or compiles information and reports to EIA
on behalf of third parties that have chosen not to do so.

AF&PA does not agree that the 1605(b) registry is the appropriate place
to report progress on these commitments.

The aggregated reporting provisions laid out in the General Guidelines
are incompatible with the *collective* commitment made by AF&PA members
under their Climate VISION commitment and with commitments made by
individual companies under the Climate Leader's Program.

Additionally, it is inappropriate for AF&PA as a trade association or
EPA as the head of the Climate Leaders program to register the
individual emissions reductions of third parties. Not only is it unclear
how this would work, it appears to give the aggregator inappropriate
control of the reductions.

**[Emission Reductions Associated with Plant Closings and Reductions in
Output]{.underline}** \[Section 300.8(j)(2)\] The interim guidelines
exclude reductions of emissions that were the result of plant closings
from registration. AF&PA members strongly recommend that DOE change the
General Guidelines to allow reductions in emissions from plant closings
to be reported and registered.

It is highly unlikely that any benefit derived from the registration of
greenhouse gas emission reductions will influence the opening or closing
of a plant. Further, excluding reductions in emissions that result from
plant closings conflicts with the statutory language of the Energy
Policy Act of 1992. The statute calls for the establishment of
procedures for the reporting of "reductions in greenhouse gas emissions
achieved as a result of...plant or facility closings."

Closure of facilities is a routine business decision that occurs in a
viable market-based economy. If facility closures result in emission
reductions, the reductions should be fully recognized. Failure to
recognize such reductions unnecessarily penalizes businesses that make
changes that both reduce greenhouse gas emissions and improve their
ability to compete in an increasingly global economy.

Additionally, WRI/WBCSD's *Greenhouse Gas Protocol* specifically states
that "the base year emissions should not be adjusted for...plant
closures."[^7] In other words, according to the *Greenhouse Gas
Protocol*, emission reductions associated with plant closures should be
counted as reductions.

Similarly, the ISO/DIS 14064 reflects this position both for facility
closures and reductions in output. To be consistent with these
international protocols and standards, the General Guidelines should
allow for the reporting of emissions reductions from plant closings as
well as from decreases in output.

**[Determining the Entity Responsible for Emission
Reductions]{.underline}** \[300.8(k)\]

In keeping with AF&PA's position on the rights of landowners and
manufacturers to register reductions from sequestration, we recommend
that the wording in section 300.8(k) be modified. As it now stands, the
paragraph limits sequestration to "the place where the sequestration
action occurred." In the case of manufacturers, this is too limiting.

AF&PA suggests the following changes to the paragraph (noted in bold
italics):

> The entity that DOE will presume to be responsible for emission
> reduction, avoided emission or sequestered carbon is the entity with
> financial control of the facility, land or vehicle which generated the
> reported emissions, generated the energy that was sold so as to avoid
> the other emissions, or ***took action to increase sequestered carbon
> in forests, products in-use, or landfills.***.

**[Confidentiality]{.underline}** \[Section 300.9(e)\]

AF&PA members support provisions to maintain data confidentiality, which
is important to competitive enterprise. For example, energy-use data
from individual manufacturing facilities is particularly sensitive, and
it is inappropriate to disclose this information. If DOE requests
information about specific manufacturing facilities, a potential
reporter may be inclined not to report so that the facility information
will not become public.

AF&PA recommends that DOE evaluate the data collection format and allow
entities to report aggregated sub-entity data. Combining several
facilities together would reduce the likelihood of exposing competitive
information, and company and 1605(b) verification procedures would
guarantee the validity of such data.

##### [Independent Verification]{.underline} \[Section 300.11\]

AF&PA members concur with DOE's decision to encourage, but not require,
verification of annual reports by independent auditors. Internal company
verification is thorough. AF&PA member companies employ foresters,
professional engineers, scientists, accountants, purchasing managers,
and senior managers to gather and verify data and question the logic of
such data. Situations requiring independent verification, such as
verification of transferable credits, should be left to the more
stringent requirements set by the appropriate market regulator or
contractual requirements between parties to the transfer.

The Guidelines lay out extensive requirements for verifiers; however,
the higher the degree of assurance demanded, the higher the cost of the
verification. If the cost of verification is too high, fewer entities
are likely to have their reports verified.

**Technical Guidelines**

**[The Emissions Rating System]{.underline}** \[1.A.4\]

The Technical Guidelines lay out a system for rating the methods used to
estimate greenhouse gas emissions, and the highest rating is given to
methods based on direct measurement. Methods that use multiple direct
measurements and emissions factors to determine emissions are rated
lower. AF&PA strongly recommends that an "A" rating be given to methods
employing fuel usage and emissions factors to calculate emissions.

The forest products industry -- like many other energy intensive
industrial sectors -- has developed calculation tools that meet the
standards of WRI/WBCSD's *Greenhouse Gas Protocol*. These tools were
developed with input from international forest product associations and
also received international peer review. AF&PA strongly recommends that
calculation tools based on recognized protocols -- such as the WRI/WBCSD
protocol -- be incorporated by reference and recognized at the highest
rating level.

With regard to stationary combustion sources, methods based on fuel
emission factors are as good as, if not better than direct measurement
with continuous emission monitors (CEMs) for determining CO~2~
emissions. CEMs are expensive to purchase, install, and maintain, and
failures -- which can go unnoticed -- are not uncommon. More
importantly, CEMs are not usually used by the manufacturing or
commercial sectors; they are more commonly used by the electric utility
industry. Manufacturers and others without CEMs are unlikely to spend
large amounts of money to buy, install, and maintain equipment to gather
emissions data.

**[Landfill Methane]{.underline}** \[1.E.4.3.3\]

The Technical Guidelines allow reporters to choose between two basic
approaches for estimating methane emissions from landfills. The *Pulp
and Paper Mill Calculation Tool*, developed for the international forest
products industry recognizes a third method for landfills with gas
collection systems.

In some cases, company landfills are capped with low permeability cover
material to collect landfill gases.  In these cases, it may be possible
for companies that measure the amounts of methane captured in efficient
collection systems, to estimate the collection efficiency of the system
and then back calculate the amounts of methane generated.  For instance,
if a mill with a capped landfill has determined that its collection
system collects 90 tons of methane per year and the mill estimates that
the collection efficiency is 75%, then 120 tons of methane were
generated. Assuming that 10% of the uncollected 30 tons (120 minus 90)
was oxidized in the cover, a methane release of 27 tons is calculated.

Therefore, 1605(b) should also include an "adjusted direct measurement"
method for landfills that are covered with low permeability caps and
equipped with landfill gas collection systems constructed and operated
to normal standards. In these cases, companies should be allowed to
calculate methane emissions by (a) measuring the amounts of methane
collected, (b) back calculating the amounts generated using measured or
assumed collection efficiencies, and (c) calculating emissions by
adjusting the estimated methane generation rates via application of the
appropriate factors for methane oxidation in the landfill cover and in
combustion devices.

**[Indirect Emissions from Electricity and Heat Purchases of Offsite CHP
Plants]{.underline}** \[1.F.3.4.1\] The proposed method for allocating
emissions to electrical and thermal generation is based on the
assumption that thermal generation is 80 percent efficient and does not
consider efficiencies associated with electricity production. This
approach allocates most of the emissions to steam as if the steam was
generated in a non-CHP stand-alone boiler. Therefore, the energy
efficiency benefits of the CHP system are attributed solely to
electricity generation in the proposed method, whereas none of the
efficiency benefits are reflected in the emissions allocated to steam
generation.

This is of concern to the forest products industry because our
facilities are often "steam hosts" for CHP systems. The allocation
method used in the industry's calculation tools, in the EPA Climate
Leaders program, and elsewhere, allocates the emissions more evenly
between the electricity and steam outputs of CHP systems, and this
should be the default method in 1605(b).

The "efficiency" method allocates emissions between the thermal and
electrical outputs of CHP systems by relating these energy outputs to
the amounts of fuel used to generate them and, by extension, to the GHGs
produced in generating them. The efficiency method is one of the methods
recommended by the World Resources Institute (WRI) and World Business
Council for Sustainable Development's (WBCSD) *Greenhouse Gas
Protocol*[^8], and is the recommended method for allocating CHP
emissions within the *Protocol's* sector specific *Calculation Tool for
Pulp and Paper Mills.*[^9] The efficiency method requires use of actual
or assumed efficiency factors for *[both]{.underline}* the production of
power and steam and uses this information to estimate the portion of the
total CHP system fuel demand corresponding to production of each energy
output (i.e., the efficiency method considers efficiency of producing
each type of energy output, not solely the efficiency of steam
production). The simplest approach to applying the efficiency method is
to assign a single efficiency factor to all power output and a single
efficiency factor to all heat (steam and hot water) output.

The WRI/WBCSD guidance includes recommended default efficiency values
for the US: 35% for electricity production and 80% for heat
productionError: Reference source not found. Note that use of default
efficiency values may, in some cases, violate the energy balance
constraints of some CHP systems. This can be checked by comparing the
calculated assumed energy input with the actual energy input of the CHP
plant. Assumed energy input is calculated based on the heat and power
output and the assumed efficiencies as shown in the following equation.

![](media/image2.wmf){width="2.6527777777777777in" height="0.375in"}

> where:
>
> H = steam output (energy)
>
> e~H~ = efficiency of steam production
>
> P = electricity generation (energy)
>
> e~P~ = efficiency of electricity generation

It is not a significant issue if energy balance is violated, since total
emissions would still be allocated between the energy outputs. However,
the user should be aware of the energy balance and if the constraints
are not satisfied e~H~ and e~P~ can be modified until constrains are
met.

Emissions from the CHP system are allocated between the heat and power
outputs based on the formulas presented below.

![](media/image3.wmf){width="1.8465277777777778in" height="0.625in"} and
*E~P~ = E~T~ -- E~H~*

> where:
>
> E~H~ = emissions allocated to steam production
>
> H = steam output (energy)
>
> e~H~ = efficiency of steam production
>
> P = electricity generation (energy)
>
> e~P~ = efficiency of electricity generation
>
> E~T~ = total direct emissions of the CHP system
>
> E~P~ = emissions allocated to electricity production

**[Approaches for Wood Products]{.underline}** \[1.I.2.5.4 and Appendix
1 -- Section 4\]

Consistent with our position on the rights of forest land owners and
forest product manufacturers to register reductions associated with wood
products, the word "harvest" needs to be replaced with the word
"production" in section 1.I.2.5.4 and in Appendix 1 -- Section 4. The
decay-rate equations should be applied to the production volume and not
to the harvested volume.

The international forest products industry recognizes and recommends the
use of Row and Phelps decay equations coupled with a 100-year model to
calculate the quantity of carbon in forest products. Use of these decay
curves appropriately recognizes the contributions of both wood and paper
products, and the method is documented in the paper entitled "The
100-year method for forecasting carbon sequestration in forest products
in use."[^10]

**[Avoided Emission Factors]{.underline}** \[2.4.3.2.3\]

The generation and sale of electricity to the electrical grid from an
industrial facility, particularly from a pulp and paper mill, is not
unusual in the forest products industry. When such a sale occurs,
usually a high cost electricity generation source -- often one using
natural gas -- is displaced or avoided. Emissions from a natural gas
fired electric generation facility should be a good source for
determining the appropriate CO~2~ emission factor for the displaced
electricity. In terms of costs, electric utilities often dispatch or
shut down turbines and engines first, followed by facilities with a
gas-fired boilers and condensing turbines, and finally gas-fired
combined cycle facilities. Thus a factor based on the CO~2~ emissions of
an electric utility gas fired boiler and condensing turbine appears to
be a sound method.

**[Use of NERC Regions for Electricity Factors]{.underline}**
\[1.F.2.2\]

DOE is correct in realizing that the CO~2~ emission factors for grid
electricity vary considerably by region in the country and assigning
CO~2~ factors for each NERC (North American Electric Reliability
Council) region is a good start toward trying to correct the recognized
variation. Unfortunately, in at least one NERC region, the Western
Electricity Coordinating Council, CO~2~ emission factors vary widely by
sub-region. Emissions in the Pacific Northwest are low because of large
hydroelectric power resources. In California, the primary generating
fuel is natural gas, tempered with some hydroelectric and nuclear
resources, which produces a somewhat higher factor than in the Pacific
Northwest. In the Intermountain West the predominant fuel for
electricity generation is coal, which produces a rather high emission
factor. Likely, other NERC regions have similar variations to some
degree.

Use of NERC sub-regions as the basis for CO~2~ emission factors for grid
electricity should improve the quality of estimates where there is
considerable variation within a region. DOE should examine the relevant
NERC data and provide an improved group of CO~2~ factors for estimating
CO~2~ emissions associated with grid electricity.

**[Use of Economics as a Measure of Output]{.underline}** \[2.4.1.1\]

DOE has expressed a preference for physical measures when calculating
measures of emissions intensity. This approach can be used when there
are commodity-like products that can be the basis for sub-entities. When
such a method is not feasible, an economic measure of output, such as
sales revenue, can be used. Such a method will be subject to price
variation from year to year in a variety of products and services. DOE
should clarify in the technical guidelines with text and examples the
preferred methods for deflating revenue streams when a number of
dissimilar products and services constitute an entity's output. If one
uses a general deflator, such as a national index, the variation from
product to product is not captured, and the quality of the intensity
estimate is diminished.

Appendix A:

Comparison of Sequestration in Preserved and Managed Forests

June 7, 2005

TO: Dee Gavora, AF&PA

FROM: Reid Miner

SUBJECT: Example comparison of sequestration impacts of forest
"preservation" and forests managed for wood products

We have used the information on building construction in the Southeast
US from the CORRIM report and carbon accumulation curves from Forest
Service data in C.O.L.E. to compare two scenarios. In the first, a land
base is managed with stable forest carbon stocks and wood product output
adequate to sustain the construction of one million houses per year. In
the second scenario, this same land base goes unharvested and
accumulates carbon.

The following key assumptions, from the CORRIM analysis, are involved in
both scenarios:

-   The forest in question is managed loblolly pine forest in the
    Carolina Piedmont.

-   The home construction techniques are representative of the Atlanta
    area.

-   The conversion from harvested wood to finished house takes place
    with the losses and co-products identified in the CORRIM study, with
    an additional assumption that losses at the construction site are
    8%.

Additional key assumptions are as follows:

-   The house half-life is 100 years.

-   There is zero leakage of the benefits of forest preservation (an
    assumption that greatly overstates the benefits of forest
    preservation since a number of studies have shown carbon leakage
    from forest preservation to be significant because most of the
    harvesting activity is merely shifted elsewhere. (See for instance,
    "Estimating Leakage from Forest Carbon Sequestration Programs," by
    B.C. Murray et. al. in [Land Economics]{.underline}, February 2004.)

-   We also ignore the potential impacts of accumulation of fuel load in
    the unmanaged forest -- a phenomenon that would greatly increase the
    threat of loss of carbon due to fire compared to a managed forest.

-   Demolition debris is landfilled. The carbon is 57% nondegradable and
    the remainder decays at a first order decay rate of 0.03 yr^-1^.

-   We have ignored the greenhouse gas and carbon impacts on
    substituting other products for the wood products that are no longer
    being produced. These substitution effects are potentially enormous,
    especially where wood is displaced by steel or concrete. See, for
    instance;

    -   Lippke, B., J. Wilson, J. Perez-Garcia, J. Bowyer, and J. Meil,
        2004, "CORRIM: Life-Cycle Environmental Performance of Renewable
        Building Materials," [Forest Products Journal]{.underline}, Vol.
        54, No. 6

    -   Peirquet, P., J. Bowyer and P. Huelman, 1998, "Thermal
        performance and embodied energy of cold climate wall systems,"
        [Forest Products Journal]{.underline}, Vol. 48, No. 6

    -   Borjesson, P. and L. Gustavsson, 2000, "Greenhouse gas balanced
        in building construction: wood versus concrete from life-cycle
        and forest land-use perspectives," [Energy Policy]{.underline},
        28 (2000)

In using these results, please also keep in mind that the impacts shown
here will be different for different types of product and different
forest types. For products that are shorter-lived and degrade quickly in
landfills, the accumulation of carbon in products will be slower. For
forests that can accumulate large amounts of carbon over long periods of
time (areas of the Pacific Northwest, for instance) it will take much
longer for the carbon in products to equal the carbon in the preserved
forest. On the other hand, for forests that are faster growing than
those in the analysis but ultimately accumulate about the same amount of
carbon, the benefits of harvesting and producing wood products will be
even greater than shown here.

With that as introduction, please see the following graph. It shows that
the carbon in Southeast US pine forests saturates in about 50 years. The
carbon in products in use surpasses the carbon in the preserved forest
in about 40 years and continues to accumulate so that in 100-years, the
products in use contain about twice the carbon that would have been
present had the forest not been harvested. If the carbon in landfilled
products was included, the benefits of forest management would be even
greater.

![](media/image4.wmf){width="6.498611111111111in"
height="3.921527777777778in"}

[^1]: 70 Fed. Reg. 15164 (March 24, 2005

[^2]: See Appendix A: Comparison of Sequestration in Preserved and
    Managed Forests

[^3]: <http://www.epa.gov/globalwarming/actions/waste/w-online.htm>

[^4]: *Global greenhouse Gas Register: Value Proposition and Frequently
    Asked Questions*.  The World Economic Forum.  January 23, 2004. Page
    5.

[^5]: *De Minimis Emissions and Materiality*. California Climate Action
    Registry: General Reporting Protocol.  October 2002. Page 11.2.

[^6]: World Business Council for Sustainable Development/World Resources
    Institute, "The Greenhouse Gas Protocol -- a corporate accounting
    and reporting standard", page 69 - 70.

[^7]: World Business Council for Sustainable Development/World Resources
    Institute, "The Greenhouse Gas Protocol -- a corporate accounting
    and reporting standard", page 39.

[^8]: World Resources Institute (WRI) and World Business Council for
    Sustainable Development (WBCSD). 2004. Calculating CO~2~ Emissions
    from the Combustion of Standard Fuels and from Electricity/Steam
    Purchase - Guide to Calculation Worksheets (October 2004) v2.1.
    Washington, DC: World Resources Institute.
    http://www.ghgprotocol.org/standard/tools.htm (2 June 2005).

[^9]: National Council for Air and Stream Improvement, Inc. (NCASI).
    2002. Calculation Tools for Estimating Greenhouse Gas Emissions from
    Pulp and Paper Mills, Version 1.0. Research Triangle Park, NC:
    National Council for Air and Stream Improvement, Inc.
    http://www.ghgprotocol.org/standard/tools.htm (2 June 2005).

[^10]: Miner, R., Accepted for publication, "The 100-year method for
    forecasting carbon sequestration in forest products in use,"
    [Mitigation and Adaptation Strategies for Global
    Change]{.underline}, Springer Science+Business Media B.V.