#### RIN: 1901-AB11

June 22, 2005

Mr. Mark Friedrichs, PI-40

Office of Policy and International Affairs

U.S. Department of Energy

Room 1E190

1000 Independence Ave., S.W. (PI-40)

Washington, D.C. 20585

**RE: Cameron-Cole's Comments on the Interim Final General Guidelines
and Draft\
Technical Guidelines for DOE's Voluntary Reporting of Greenhouse Gases
(1605(b)) Program**

Dear Mr. Friedrichs,

Cameron-Cole appreciates the opportunity to submit these comments on the
Interim Final General Guidelines and Draft Technical Guidelines for
DOE's Voluntary Reporting of Greenhouse Gases (1605(b)) Program (please
see Attachment). Cameron-Cole is an independent environmental and social
issues management firm, with experience in designing, developing,
implementing and verifying greenhouse gas and air emissions inventories,
as well as corporate non-financial reports that contain both types of
inventories.

We understand that one of the primary goals for the revisions is to
enhance the accuracy, reliability and verifiability of reported
emissions and emissions reductions from participating organizations. To
this end, we focused our comments on how the revisions addressed this
goal.

We hope you find our comments useful in your efforts to improve the
1605(b) program.

Sincerely,

Connie S. Sasala

**Connie S. Sasala**

**Senior Vice President -- Strategic Services**

**Cameron-Cole, LLC**

Cleveland Office

3733 Cascade Oaks Trail

Richfield, OH 44286

Tel: 330.659.0733

Fax: 330.659.0744

[www.cameron-cole.com](http://www.cameron-cole.com/)

cc: Jerome Edwards

Dr. Riva Krut

Dr. Todd Cort

# ATTACHMENT

> **Cameron-Cole's Comments on the Interim Final General Guidelines and
> Draft Technical Guidelines for DOE's Voluntary Reporting of Greenhouse
> Gases (1605(b)) Program**

### Topic: Inconsistent Program Requirements

**Reference**:

Interim Final General Guidelines

II\. Discussion of Revised General Guidelines

A. Overview and Purpose

pg. 12

"...the 1605(b) program will serve as the primary public emission an
emission reduction reporting mechanism for participants in EPA's Climate
Leaders program and in DOE's Climate VISION program. ...To support
distinct program elements, each of these programs is likely, however, to
have other additional reporting requirements."

**Comment:**

We recognize the significant effort DOE has undertaken to harmonize its
efforts with other programs in existence. However, we are concerned that
accuracy, reliability and verifiability of information may be negatively
impacted by having multiple programs within the Executive Branch, all
with different requirements. Slicing and dicing existing information
(and/or collecting additional information) to meet different program
elements may lead to material errors, increased costs, confusion, and
dwindling support by organizations for participation in voluntary
programs. Given the existence of many other domestic and international
GHG programs, this problem is magnified for many organizations. To
lessen the confusion, the Executive Branch should take the lead in
making its programs consistent, or merge them.

### Topic: Registering vs. Reporting Emission Reductions

**Reference**:

Interim Final General Guidelines

II\. Discussion of Revised General Guidelines

B. Crosscutting issues and revisions

2\. Whether to provide for registered emissions reductions

pg. 17:

"DOE continues to believe this is the most effective method for
improving the program, including improving the accuracy of the reports,
as directed by the President, while continuing to cover all of the
program elements required by the statute."

**Comment:**

It appears as if the revisions attempt to reconcile competing objectives
through the creation of a two-tiered system of reporting and
registering. The competing objectives include the need to improve
accuracy (and completeness) while maintaining less burdensome reporting
requirements, and the need to provide future recognition or promised
"transferable credits" while staying within the bounds of DOE's
statutory authority.

DOE has stated that its current two-tiered system is the most effective
method for improving accuracy (and completeness), but we believe that
this is not necessarily the case. In a voluntary program, improving
accuracy and completeness through the imposition of additional
requirements is only helpful if participants see tangible value in the
additional effort. Currently, the value for the additional effort (i.e.,
registered reductions) is set at the prospect of gaining "special
recognition" and "unique designation," with no baseline protection or
opportunity for tangible, transferable credits. As such, few
organizations may choose to participate in the more onerous registration
tier. If the majority of organizations choose the less onerous reporting
tier (less accurate and complete by inference), then DOE will not meet
its objective for improving accuracy and completeness.

Eliminating one or the other tier also may not solve the problem. If the
more onerous registration tier is eliminated, participation may increase
but (by DOE's statements) reports will be less accurate and complete. If
the less onerous reporting tier is eliminated, reports may be more
accurate and complete, but there may be too few to make a difference.

If DOE wants to retain the two-tiered approach, we suggest that
incentives should be provided for organizations that choose the more
onerous registration tier. Although tax credits and transferable carbon
financial instruments are desirable, it is understood that DOE may have
limited (or no) authority to provide these. Other organizations,
however, may be able to provide incentives if they partner with DOE. We
suggest that DOE consider working closely with other departments in the
Executive Branch, and external organizations such as CCX to do so, with
the idea of providing reports under 1605(b) that are accurate, complete,
reliable and verifiable for such incentives.

### 

### Topic: Pre-2002 Reductions

**Reference**:

Interim Final General Guidelines

II\. Discussion of Revised General Guidelines

B. Crosscutting issues and revisions

3b. Limiting registration to post-2002 reductions

**Comment:**

Although we understand that DOE is focused on the President's goal, and
is skeptical of an organization's ability to meet all of the
requirements of the revised guidelines for earlier years, pre-2002
reductions should still be recognized via registration. Categorizing
reductions for reporting or registration should only occur after
non-compliance with the revised guidelines is proven (through review).
Making this change would reward early movers who have put considerable
effort into pre-2002 reductions, and would send a signal that even
though changes in program focus may occur occasionally, investment in
the program at any time will be recognized and rewarded.

### 

### Topic: Record Retention

**Reference**:

Interim Final General Guidelines

II\. Discussion of Revised General Guidelines

C. Section-by-section discussion of the General Guidelines

9\. Reporting and recordkeeping requirements (§300.9)

pg. 39

"Because the purpose of the 3-year record maintenance requirement is to
permit verification of entity reports, DOE applies this requirement only
to entities intent on registering their emission reductions."

**Comment:**

We suggest that records be kept for 5 years, as it is not uncommon for
revisions to be made within that timeframe that would require the
original documentation. Also, if turnover is a factor in a reporting
organization, records will be the only substitute for institutional
knowledge of the inventory and reduction efforts. Lastly, organizations
that choose to verify their emissions and emission reductions a number
of years after commencing the initial effort, will save a great deal of
time and money if thorough documentation is available to internal or
external verifiers.

### Topic: Independent Verification

**Reference**:

Interim Final General Guidelines

II\. Discussion of Revised General Guidelines

C. Section-by-section discussion of the General Guidelines

11\. Independent Verification (§300.11)

**Comment**:

There appear to be no tangible means to 'encourage' organizations to
independently verify their reports, even though this is DOE's stated
intent in §300.11. As verification of reports by independent and
qualified auditors is optional, it is unlikely that many (if any)
organizations will do so. This is understandable, as the value of such
an exercise is usually tied to a mandatory requirement for participation
in a program, a transaction (trading credits), other incentives, or the
desire of an organization to increase the credibility of its report in
the eyes of its stakeholders. None of these drivers are present in
1605(b) -- with the possible exception of credibility with stakeholders.

If DOE believes that reports will be accurate, complete, reliable and
verifiable without mandatory independent verification, then the purpose
of 'optional' verification is unclear unless it is solely for the
benefit of a particular organization's stakeholders. If some reports are
verified and others are not (for those that are intent on registering
reductions), what is the difference in their status under the program?

We believe that verification is an important element of an overall
approach to improving accuracy. Emissions estimates and reductions can
be off by an order of magnitude or more if systems and checks are not in
place to ensure transcription errors, formula errors, conversion errors,
etc. are not carried forward. We have found that many organizations
collect and transfer information numerous times in creating a final data
set, all of which increases the chance for error. Many organizations
also rely heavily on a people-based approach rather than process-based
SOPs for collecting, checking and transferring information. As just the
act of collecting, calculating and reporting information is
time-intensive, some organizations do not commit the additional
resources necessary to systematically comb through a report, identify
all material discrepancies, make recommendations to conform with
guidelines, and put in place SOPs to ensure that future estimates are
more accurate. For these reasons, independent verification to ensure
accuracy makes sense, but does not always happen without the appropriate
drivers.

**Reference**:

Regulations

§300.11 Independent verification

\(d\) Scope of verification.

pg. 88

(d)(3) "The procedures and methods used to collect emissions and output
data, and calculate emission reductions (for entities with widely
dispersed operations, this process should include on-site reviews of a
sample of the facilities);"

**Comment**:

The number of site visits is a cost driver in independent verification.
We suggest that a percentage of sites to be visited be included here to
better bound the scope and make it consistent across participating
organizations.

**Reference**:

Regulations

§300.11 Independent verification

\(e\) Verification statement.

pg. 89

(e)(4), (e)(5) and e(7)

**Comment**:

All of these requirements would be difficult to achieve (especially for
large organizations) without greatly expanding the verification scope
and adding to the cost. Modifiers should be added to these provisions,
or they should be required as part of the internal certification, rather
than external verification.

**Reference**:

Regulations

§300.11 Independent verification

\(e\) Verification statement.

pg. 90

(e)(9)

**Comment**:

The organization commissioning the verification should also keep the
verification report for three years or more.

**Reference**:

Regulations

§300.11 Independent verification

\(e\) Verification statement.

pg. 90

(e)(10) "The independent verifier is not owned in whole or part by the
reporting entity, nor provides any ongoing operational or support
services to the entity, except services consistent with independent
financial accounting or independent certification of compliance with
government or private standards."

**Comment**:

This requirement is unclear as to whether or not "ongoing operational or
support services" means at any time during the reporting period to be
verified, any time during the period in which the verification is taking
place, or at any time, full stop.

### Topic: Objectivity

**Reference**:

Draft Technical Guidelines

I.A.2 Purposes and Principles

pg. 3

"Objectivity. ...The reporter should strive to produce a report that is
akin to an auditor's opinion, describing the emissions situation of the
reporter, rather than a "lawyer's brief," putting the most favorable
construction on a given set of facts or selectively choosing those facts
that favor a particular interest."

**Comment**:

How will reporters provide assurance to DOE and external stakeholders
that they have produced a report that is akin to an auditor's opinion
and not a lawyer's brief? Although the self-certification provision
attests to accuracy and other requirements, it does not get to the heart
of objectivity.

### Topic: Reporting Boundaries

**Reference**:

Draft Technical Guidelines

I.B.2 Identifying Reporting Boundaries

pg. 12

**Comment**:

It may be very helpful to large organizations with significant movement
into and out of their identified boundaries for DOE to develop a
consistent format or template for initial drawing those boundaries, and
to keep track of subsequent changes. Such a template would also be
helpful in achieving internal or external verification of boundary
changes.

### Topic: Recalculating Base Values

**Reference**:

Draft Technical Guidelines

2.3.3.1 Recalculating Base Values

pg. 248

**Comment**:

When a reporting organization acquires or merges with a new business
that does not have an established emissions inventory (but had emissions
that existed in the base period and beyond), a grace period for
developing those estimates should be considered (suggestion: 18 months).
The organization could continue reporting its previous emissions and
reductions, then incorporate the new estimates on or before the end of
the grace period. This would allow for uninterrupted annual reporting
from the organization, and accurate inclusion of new emissions estimates
from the organization that was acquired/merged.