February 13, 2004

U.S. Department of Energy

Via Internet: <1605bgeneralguidelines.comments@hq.doe.gov>

Attention:

Mark Friedrichs, PI-40

Office of Policy and International Affairs

U.S. Department of Energy

Room 1e190

1000 Independence Ave. SW.

Washington, DC 20585

Re: Minnesota Power Comments, Department of Energy 10 CFR Part 300
General Guidelines for Voluntary Greenhouse Gas Reporting; Proposed
Rule. FR vol. 68 No. 234 12/5/2003

Dear Mr. Friedrichs,

Minnesota Power (ALLETE) offers the following comments in response to
the above-referenced U.S. Department of Energy General Guidelines for
Reporting of Greenhouse Gas Emissions via internet in accordance with
the February 17, 2004 extended comment submittal date. These Minnesota
Power comments supplement oral comments made at the January 12, 2004
public workshop at the Washington Plaza Hotel and joint utility industry
comments being offered by the Edison Electric Institute.

Minnesota Power is an investor owned utility providing energy services
to customers in Minnesota and Wisconsin. Minnesota Power has been an
active participant in the Climate Challenge program and has provided
voluntary reports of Minnesota Power project level greenhouse gas
emissions, reductions and sequestration under the EIA 1605(b) reporting
program since its 1994 inception. Minnesota Power anticipates
participation in voluntary reporting under the proposed 1605(b) program
revisions and is concerned that the revised program will not provide for
reasonable continuity with current reporting, will not facilitate
Minnesota Power's preference for project level reporting and will not
adequately recognize voluntary measures reported and implemented before
2003.

**Key concerns:**

**Emphasis on net entity-wide changes in emissions, avoided emissions
and sequestration and emission offsets.**

Minnesota Power has been facilitating voluntary reporting by
characterizing project level activities. Project level reporting allows
an activity's boundaries to be defined such that specific changes in net
greenhouse gas emissions associated with the activity can be
characterized without requiring characterization of unrelated
activities. For example, Minnesota Power has reported on a hybrid
poplar, tree planting program where about 2800 acres of western
Minnesota marginal farmland has been established with fast growing
hybrid poplar trees for the purposes of carbon sequestration and
prospective future use of the fiber and energy resource as an
alternative to harvest of established forest or use of fossil fuels.
Under the proposed 1605(b) reporting revisions, this successful program
would not post a net greenhouse gas emission benefit unless entity-wide
emissions growth was first offset by such project level activities.
Entity-wide emissions can reflect a complex combination of changing
business affiliations, changes in customer demand for energy, changes in
an entity's energy resource mix etc. that are completely unrelated to an
project such as establishing a hybrid poplar plantation that benefits
the global greenhouse gas balance. Also, in Minnesota, the integrated
resource planning process already requires that new electric energy
resource selection give consideration to environmental externalities
including carbon dioxide and requires utilities to provide for customer
conservation improvements. The mix of electric energy in a Minnesota
utility entity-wide emissions balance reflects such activities in a
manner that would not receive recognition absent project level
characterization. Project level actions are the foundation for
establishing net greenhouse gas emissions and should not be discounted
based on an entity's business structure, growth pattern or resource mix.
Other reporting mechanisms (utility carbon dioxide CEMS, FERC Form 1,
EIA 767) can allow DOE to determine aggregate greenhouse gas emissions
for purposes of carbon intensity calculations. The project level
reporting mechanism should be preserved under the revised 1605(b)
measures in a manner that enables project level net greenhouse gas
emissions to be registered, independent of the entity-wide emissions
balance. Assuring credit is established for project level reporting is
an essential means for encouraging voluntary participation under the EIA
1606(b) program going forward.

**Emphasis on activities posting benefits from 2003 on.**

There are many pre-2003 voluntary measures reported under the 1605(b)
program that continue to deliver benefits in 2003 and in ensuing years.
For example, Minnesota Power has reported on conservation improvements,
office waste paper recycling, heat rate improvements, tree planting, use
of renewable biomass, expanded use of natural gas etc. that all deliver
net greenhouse gas emission benefits beyond 2002. From a policy
perspective, an action that was initiated before 2003 but delivers
ongoing benefits should not be characterized as having less standing in
voluntary greenhouse gas registration than a contemporary project. For
example, current 1605(b) reporting of carbon dioxide sequestration from
Minnesota Power's establishment of 2800 acres of hybrid poplar trees
posted average annual growth and will continue to deliver annual carbon
dioxide sequestration post 2002. The purpose of voluntary reporting
should be to encourage action by giving recognition to meaningful
voluntary greenhouse gas emission reduction, offset or sequestration
methods rather than to incentivize delay of projects to which time the
sponsors might be assured that action will receive recognition and net
greenhouse gas emissions be acknowledged through registration. Changing
the reference point in an established program to 2003 through proposed
revisions also creates uncertainty that measures reported post 2003 will
be negated with a future revision and baseline shift. Such uncertainty
is a disincentive for bringing forward new voluntary measures. The
revised 1605(b) program should facilitate follow through reporting and
registration of actions already initiated that deliver ongoing net
greenhouse gas benefits.

**Credit for early action.**

Under the Climate Challenge, U.S. electric utilities provided for
voluntary greenhouse gas emission reduction, offset and sequestration
action and facilitated reporting under the 1605(b) mechanism. Such
measures included action that involved outlay of financial and in-kind
contributions to shift from "business as usual". For example, I again
reference how Minnesota Power provided financial resources, contract
commitments and organizational support to help establish about 2800
acres of hybrid poplar trees on marginal farmland in western Minnesota.
The greenhouse gas benefits from such actions should receive
registration recognition as the 1605(b) revisions are facilitated, so
there is no loss in standing for action taken before the revisions go
into effect. Future voluntary action is incentivized when parties
considering measures to reduce, offset or sequester greenhouse gases are
assured that such action will be recognized. Otherwise, initiating a
voluntary action places the entity at risk that the measure will not
receive recognition and that proactive behavior was at the detriment to
long term interests because the financial outlays to support future
voluntary or perhaps mandatory targets will be greater than if the
entity had chosen to defer action. Project level activities that are
supported by documentation that supports the emission reduction, offset
and sequestration values reported under the current 1605(b) program
should be assured of registration standing under the revised program.

Thank you for the opportunity to provide comments to the proposed EIA
1605(b) revisions. Please contact Mike Cashin of Minnesota Power if you
have any questions regarding these comments.

Regards,

Michael G. Cashin, P.E.

Senior Engineer, Environmental Services Department

Minnesota Power (ALLETE)

30 West Superior Street

Duluth, Minnesota 55802

218-722-5642 ext. 3339

FAX 218-723-3916

mcashin@mnpower.com