2025 M Street, NW, Suite 350, Washington, DC, 20036 Phone: (202)
463-8808 E-mail gkelly@kellypublic.com

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, D.C. 20585

By email: <1605bgeneralguidelines.comments@hq.doe.gov>

Dear Mr. Friedrichs:

The Alliance for Climate Strategies is grateful for the opportunity to
provide the following comments on the Department of Energy's (DOE)
*Voluntary Reporting of Greenhouse Gases (1605b) Program; Proposed
Revision of General Guidelines* published at 68 *Federal Register* 68204
on December 5, 2003.

The Alliance for Climate Strategies (ACS) is a broad-based advocacy
coalition of industry sectors created to exemplify the principle that
voluntary actions are an effective means of reducing greenhouse gas
emissions, and to demonstrate that the ingenuity and technological
expertise of American industry can achieve meaningful reductions in
greenhouse gas emissions. The members of ACS include the following
national trade associations: American Chemistry Council, American Iron
and Steel Institute, American Forest and Paper Association, American
Petroleum Institute, Edison Electric Institute, Nuclear Energy
Institute, National Lime Association, National Mining Association,
National Rural Electric Cooperative Association, and Portland Cement
Association. ACS maintains, as a condition of participation in the
group, a requirement that all participants be engaged in GHG management
partnership agreements with the federal government, or be working to
establish a GHG management partnership. All ACS members are participants
in the DOE Climate VISION program.

The Alliance for Climate Strategies appreciates the opportunity to
provide as comments the benefit of our substantial collective experience
in monitoring, reporting and addressing greenhouse gas emissions issues.

##  [General Comments]{.underline}

The proposed revisions to the 1605(b) program are represented in DOE's
public notice to be a "proposed rule." The notice also includes language
that indicates DOE's intention to seek amendments to the Code of Federal
Regulations (CFR) for the purpose, we assume, of codifying the proposed
new "guidelines." We note that both the underlying statute authorizing
the existing 1605(b) program and the President's February 14, 2002
declaration refer to the reporting program as "voluntary." The proposed
intent to publish any final General Guidelines in the CFR, therefore, is
troubling at best and problematic at worst. Publication of such revised
guidelines in the CFR will likely lead to confusion among potential
program participants. For instance, they may question whether their
participation is, as we believe is intended, voluntary, or if their
participation might at some future date be considered to be subject to
enforcement given that the "guidelines" would be published in the CFR,
which is widely considered to be legally enforceable.

In addition, codification of the proposed new Guidelines in the CFR
would make potential future revisions, if necessary, far more difficult
and time-consuming. It would also have a chilling effect on potential
new program participants and others who might be led to believe that the
program is a regulation rather than a voluntary initiative.

ACS therefore recommends that the final Guidelines be published in the
Federal Register and on the DOE website where their dissemination will
be far reaching, in the public interest, and affirming of the underlying
voluntary nature of the program.

We also applaud the decision by DOE to allow for further comment on
these draft General Guidelines in conjunction with the future
anticipated release of the draft Technical Guidelines. As will be noted
later, it is difficult if not impossible to provide adequate comment on
many areas of the draft General Guidelines without a full appreciation
of the contents of the draft Technical Guidelines.

**[Reporting Entities]{.underline}**

DOE's draft revised General Guidelines solicit comment regarding the
nature and composition of reporting entities. ACS contends that trade
associations should be allowed under the 1605(b) program the option to
report aggregated data for their respective members. The General
Guidelines should, at a minimum, provide for this flexibility,
particularly in light of the significant efforts currently undertaken by
a broad range of trade associations that presently compose the DOE
Climate VISION program. While most entities will likely seek to
participate in their own right, some pools of potential reporters are
not likely to possess the capacity to meet the program requirements
without the assistance of an aggregator. Still others may seek an
opportunity to participate in a collective way to demonstrate a
concerted commitment to address sector-wide emissions. Regardless of the
rationale among possible reporters, DOE should recognize all forms of
reporting -- individual, entity-wide, project-based or aggregated.

Along such lines, ACS urges DOE to acknowledge and allow reporting and
registration of all actions taken to reduce, avoid or sequester GHG
emissions. We affirm the principle that "a ton is a ton," regardless of
whether it is reduced, avoided or sequestered by actions taken by any
entity. Furthermore, "a ton is a ton" whether it is reduced, avoided or
sequestered on an entity-wide basis or through a project-based
initiative. For that reason, ACS urges DOE to allow reporting and
registration of mitigation efforts at BOTH the entity-wide level as well
as the project level. All achieve the same objective, all serve the
public interest and all comport with the President's stated policies.

### Direct/Indirect Emissions

The draft guidelines would mandate that entity-wide reports include, in
addition to other data, GHG emissions from indirect sources. The draft
General Guidelines identify such sources as purchased electricity,
steam, and heated or chilled water. The lack of additional clarity
regarding "indirect sources" due to the lack of access to the
yet-to-be-released draft Technical Guidelines for methodologies for
calculating indirect emissions makes it difficult to fully assess and
comment on this section at this time. We look forward to providing
additional comments when the draft Technical Guidelines become publicly
available.

In the meantime, we make the following general observations and comments
with regard to the treatment of indirect emissions in the draft General
Guidelines.

ACS asserts that reporting of indirect emissions should remain an option
for reporters or registrants, but not a requirement.

Furthermore, ACS believes there should be a clear delineation within
reports between direct and indirect emissions. Indirect and direct
emissions should not be added together, and the program should make such
a distinction clear. A further recommendation would be to divide the
reports of indirect emissions to specifically highlight those that are
associated with purchase energy and other indirect emissions.

### Actual Emission Reductions

As a further general observation, ACS fails to understand the rationale
for disallowing the reporting of emissions reductions that occur from
declines in output or facility closures. As we note above, a "ton is a
ton" regardless of how it is reduced, avoided or sequestered. In
addition, the business cycle will undoubtedly lead to cyclical
prosperity and contraction for many industries over time. For example,
plant closures or changes in products or services are business decisions
that are driven by the markets. If these market-based decisions result
in emissions reductions, the reductions should be fully recognized.
Moreover, the underlying statutory authorization for the 1605(b)
reporting program clearly stipulates that reporting of emissions
reductions resulting from facilities closures is to be allowed.

ACS therefore recommends that reporting and registration of all actions
that produce the desired objective should remain permissible. Such
flexibility would preserve the public interest, be consistent with the
President's policy objectives, and most importantly, demonstrate to all
interested parties that actions are being taken to address GHG emissions
concerns.

### Avoided Emissions

The definition of Avoided Emissions set forth in the draft General
Guidelines is, in the view of ACS, too narrowly defined. For instance,
the definition in the draft General Guidelines would not allow for
accounting of product recycling or other operational activities such as
the deployment of Combined Heat and Power (CHP) facilities that export
power to the grid. These are only two examples.

Additionally, the proposed method for calculating avoided emissions
relative to an "established base year" is incorrect \[see section
300.7(a)(1)\]. Avoided emissions should be calculated on an annual basis
relative to a reference case that describes what the emissions would
have been in the absence of the activity that avoids emissions.

ACS therefore recommends that DOE reevaluate and expand its definition
of Avoided Emissions to more accurately reflect this important element
of national emissions inventories to ensure that all aspects of Avoided
Emissions are accounted for in the reporting and registration process.

### Verification/Certification

DOE proposes that the reporting entity would certify its submission
through the chief executive officer, agency head, head of household or
person responsible for the reporting entity's compliance with
environmental regulations to ensure that submissions are complete,
accurate and consistent with DOE guidelines. While DOE encourages
independent verification of reports, it does not propose to require
independent verification.

ACS strongly supports the verification/certification approach outlined
by DOE. As is clear, the 1605(b) program is voluntary -- it does not
therefore rise to the level of fiduciary interest associated with other
federally regulated activities (nor should it). In addition,
requirements for third-party verification/certification would add
substantial cost to participants, creating a significant disincentive to
participation. Most significantly, any perceived need for independent
third-party verification will be driven exclusively by public markets --
financial markets or the market of public opinion.

For the reasons outlined above, ACS encourages DOE to maintain the
verification/certification requirements it has outlined in the draft
General Guidelines.

### Quantification of Emissions Intensity

ACS believes the draft General Guidelines do not sufficiently articulate
methodologies for reporting of emissions intensity reductions. While we
look forward to reviewing and possibly commenting further once the draft
Technical Guidelines are released, we note the following general
observations regarding what we do know about the proposed methodologies
from the General Guidelines. Intensity indicators vary significantly by
industry and by entity based upon fuel sources, operations, geographic
distribution of facilities, products, services provided, and many other
factors. Unit of output measures are exceedingly complicated to measure
and compare across industry boundaries. This is particularly true when
attempting to measure intensity factors for the commercial,
transportation and residential sectors, where emissions have been shown
to be growing fastest. ACS cautions, therefore, that DOE should
acknowledge such factors when drafting the proposed Technical
Guidelines.

### Conclusions

ACS commends the DOE effort to strengthen and improve the 1605(b)
voluntary reporting program. The 1605(b) program has proven since its
inception to be a capable system of accounting and reporting significant
efforts to address greenhouse gas emissions issues. ACS agrees that the
program can and should be improved based upon past experience, knowledge
learned and visions for the future.

ACS believes that improved reporting guidelines will build further
public confidence in the program itself and the substantial and
significant efforts by industry (which comprise the majority of existing
reporters) to voluntarily address GHG concerns. We are hopeful that it
will encourage other sectors to make further substantial contributions.

We further believe that 1605(b) is one of many useful indicators for
progress toward achievement of the President's overall climate policy
goals.

Sincerely,

Glenn Kelly

Executive Director