![](media/image1.png){width="3.2395833333333335in" height="0.59375in"}
*133PeachtreeStreet NE (30303)*

*P.O. Box 105605*

> *Atlanta, Georgia 30348-5605*

*Telephone (404) 652-4654*

June 2, 2002

Office of Policy and International Affairs

Office of Electricity and Natural Gas Analysis, PI-23

U.S. Department of Energy

Forrestal Building, Room 7H-034

1000 Independence Ave., SW

Washington, DC 20585

### **RE: Voluntary Reporting Comments**

<ghgregistry.comments@hq.doe.gov>

Georgia-Pacific Corporation (G-P) is a forest products company that
manufactures a wide variety of forest products mostly in the commercial
and consumer sectors, and in the building sector. We appreciate the
opportunity to comment on the Department of Energy's (DOE) May 6, 2002
Notice of Inquiry (FR, Vol. 67, No. 87, p. 30370) regarding the
voluntary reporting of GHG emissions and removals. G-P is an active
agent in the practices for controlling GHG emissions. Besides
third-party certified sustainable procurement of wood fiber for both
pulp and wood products mills, the company utilizes biomass fuel in large
quantities making up for almost 60% of the energy requirements of the
corporation. Cogeneration is practiced wherever there is need of
electricity and steam generation thus obtaining these in a most
efficient manner. G-P is one of the major recyclers of paper fiber. This
practice, besides other environmental and economic benefits, adds to the
storage time in the product carbon pool. Our forests products supply
renewable energy or biomass fuels.

In addition, Georgia-Pacific, as a multinational with manufacturing
operations in Europe and Canada, principally, is vitally interested in
the linkage of trading systems between the emerging regimes, USA's and
the ones under the canopy of the Kyoto protocol. This could lead to a
win-win situation for the entities involved as well as for the
environment.

For the above reasons, we are vitally interested in the modifications
that the Agency may make to the guidelines governing the voluntary
reporting of greenhouse gases and carbon sequestration under section
1605 (b) of the Energy Policy Act of 1992. Principally, the final DOE's
treatment of carbon dioxide emissions from biomass combustion is of
primary concern to G-P.

Georgia-Pacific as a member of the American Forest and Paper Association
(AF&PA) endorses and supports the comments presented by the Association
in this regard. According to the suggestions for commenting, we will
present our comments as follows.

#### A-Issues Related to Comment Scope and GHG Registry/Reporting

The Administration's new approach desires to substantially improve the
emission reduction Registry in order to enhance accuracy, reliability
and verifiability, according to both domestic and international
approaches. Consequently, we submit that there may be need to look
deeply and objectively on how the future 1065(b) program will fulfill
the Administration objectives. We welcome the format advance in the NOI
since it allows for broader and conceptual recommendations rather than
just specific answers to limited questions.

1-One way to visualize our concept of a future improved 1065 (b) program
is to outline a simplified framework of such system. Regardless its
voluntary character the system could be defined by three major
subsystems: an inventory database, a registry of reduction/removals with
a clear hierarchy and the accurate and reliable system of information
that will connect both sub-systems and will make possible and effective
communication between them for future climate policies. We are depicting
the major features of the concept framework for ease of understanding.

![](media/image1.wmf)

In the one hand, the inventory subsystem would be of a more
informational and analytical character. It will allow, with proper
protocol and calculating tools, the harmonized and uniform registering
of information on emissions and removals by entities at different levels
of reporting, in an organized manner. This is needed because climate
policies are emerging and we need to protect any potential right so
entities would not be penalized by future policies. Such organized and
harmonized database will eventually be used for validation of reduction
projects, for purposes the protection of reduction or performance trends
of the entity, etc. It also means an inventory that registers a baseline
as well as different levels of reporting including both absolute and per
unit of production, both emissions and removals, carbon pool
contributions, etc. This subsystem will not register emission
reductions/removals but will contain the inventory of emissions and
removal and baseline data from which real reductions would be justified
and verified for retention in the registry.

In the other hand, a registry of reduction/removal, linked to the
baseline, must contain a hierarchy of reductions/removals. This is
desirable because we would be dealing with different climate policies
and trading regimes. The real reduction on direct emissions/removals is
the top level in the hierarchy and it means they will enjoy the highest
credit both for international as well as domestic crediting. Reduction
of indirect emissions is a second level in the hierarchy. They may not
be acceptable in all international trading regimes but future domestic
climate policies could reward real efforts in reducing consumption. And
so on.

The President's program makes clear the need for substantial improvement
of the 1065(b) program. The suggested framework is predicated on
flexibility, maximum protection against unfair penalties but also
reflects the need for accuracy and transparency to make real the promise
of transferable credits in foreseeable climate regimes. That is the
reason for different levels of reporting, a strict protocol and a
hierarchy of reduction/removal registration. One of the criticisms to
the present 1065(b) is that it treats different levels of reporting and
crediting equally when in fact they are very different. The credibility
in the future system will be enhanced with well-defined levels of
reporting as well as a clear hierarchy in crediting.

Entries in the inventory sub-system can be done at any time and
independent of any entry in the reduction registry compartment. The very
first entry of an entity in the inventory sub-system should be the
emission/removal data to establish its baseline, according to the
pre-established protocol. Entries in the registry would require the
proper registering in the inventory compartment since a project alone,
without been anchored to a baseline would be difficult to justify.

Baselines are baselines, and once entered they will remain (with the
approved adjustments described and approved in the protocol) as the
reference level for the future, regardless its initial year. Validation
of the claims according to proper, accepted rules, for each hierarchy
level, will be the final step before final entry in the registry.

2-In aligning the reporting and registry requirements of the improved
domestic system in 1065(b) to make it more compatible with the emerging
regimes (Kyoto, U.K, Denmark, etc.) it is important not to incorporate
meaningless requirements that would make a practical application of this
information tantamount to impossible. We are referring to such terms as;
business as usual; supplementarity, additionality, etc. that are typical
of the discussions around the Kyoto Protocol. This language is so highly
subjective and speculative that real, effective commercial transactions
will be delayed, their costs vastly increased and the credibility of
results will be exposed to continuous challenge. Innovation and
technological progress can be considered rightly the "business as usual"
in America. Would such plausible interpretation serve any purpose? Real
demonstrable reduction should be the first and main criterion.

3- In advancing its program, the President's report stresses the use of
an emission intensity ratio that depends on the GDP. We believe this
type of indicator is suitable to reflect the national progress in
slowing the rate of growth in GHG emissions. Nevertheless, different
industry sectors should be allowed to use other proven emission
intensity ratios. For this industry tons C equiv. ton product is a
typical emission intensity ratio proven for years.

4-The inventory compartment of the system must allow for proper
accounting of the apportioned components of the product pool. The carbon
product pool is a segment of the carbon sequestered that is growing at a
faster rate than the forest carbon sink. The allocations for carbon pool
adjustments are not complex since the annual production of different
categories of biomass product is a verifiable and traceable record and
the estimation method to move from production to fraction not yet
emitted is readily available. Since the harvested wood was "booked" as
emissions at the time of harvest in the forest, the product carbon sink
simply adjust the booked value to the realities of a certain fraction of
the production of biomass products with a longer retirement life than
one year. How this adjustment will be used in the future would depend on
future climate policy. But for the furtherance of the President's
program on carbon sequestration, the modified and improved 1065 (b)
system must give room to the reporting of the entity' contribution to
the product carbon pool.

5- One dilemma not addressed in the NOI if the fate of the existing
reductions in the registry. If the President's mandate for a substantial
improvement on the system is fulfilled there will be legitimate
questions about the fate of the existing reductions in the registry.
Georgia-Pacific has not used the 1065(b) program and this may preclude
an experienced recommendation on this unsolicited question. There are
different tonalities and quality in the data now in the system, branded
as reductions. While the rights of those submitting data must be
guaranteed it is also a matter of perception and credibility that could
taint the improved new system. A grand fathering approach could be the
solution of this situation that must be addressed for the sake of the
new program.

**[B- Institutional Issues]{.underline}**

1.  **[Time frame of data reported]{.underline}. The current DOE
    registry accepts information on emissions and reductions back to
    1991 and on emissions back to 1987. Submitted reports may be revised
    and supplemented. DOE is seeking suggested improvements to this time
    frame.**

Under a voluntary program, maximum flexibility should be provided to
encourage reporting of greenhouse gas emissions. This includes selection
of a base year. Consistent with the framework outlined in the above, it
is important that past actions be recognized. If past action is not
taken into account, important information that could be used to explain
sector or company performance would be lost. The years in the current
registry are acceptable for the inventory compartment. Regarding the
existing registry of reductions, there must be a mechanism created to
review the enter data in the registry and accept, grandfather or remove
data not meeting the "real reduction" criterion.

2.  **[Reporting entity definition]{.underline}. The current guidelines
    define a reporting entity as a "legal U.S. entity," meaning "any
    U.S. citizen or resident alien; any company, organization, or group
    incorporated under or recognized by U.S. law; or any U.S. Federal,
    state, or local government entity."**

> The term "entity" should also include trade associations. Some
> industries may wish to file collective emissions reports, which would
> give an overall perspective of that particular industry or sector. It
> is understood that transferable credits are not typically bestowed
> upon trade associations. It means that individual entities claiming
> credits would need to follow the procedures in the framework.

3.  **[Level of reporting]{.underline}. DOE asks whether it is
    appropriate for reports to cover (1) all emitting activities of the
    entire reporting entity, (2) emissions by facility/site, affiliate,
    or subsidiary; or (3) an emissions reduction, emissions avoidance or
    carbon sequestration project. Also, DOE is seeking comments on how
    different levels of reporting may be appropriate for various
    reporting purposes, including transferable credits and protection
    against penalty under future climate policy.**

G-P, in the above, has provided suggestions about this item but we wish
to expand on the suggested neutral biomass emissions reporting level
that appears in the framework.

### **A reporting level for biomass fuels and emissions**

> DOE's guidelines for calculating greenhouse gas emissions must clearly
> state that carbon dioxide emissions from the combustion of biofuels
> and from the oxidation of biomass in general, do not contribute to
> global warming and thus are not considered greenhouse gas emissions.
> That is the reason we proposed a new reporting level be created in the
> inventory/database sub-system for these emissions.
>
> Most international protocols including that of the Intergovernmental
> Panel on Climate Change (IPCC) consider biomass emissions to be
> neutral. The IPCC views biomass emissions as part of the natural
> carbon balance and state that such emissions do not add to atmospheric
> concentrations of carbon dioxide. In fact, the EIA 1605(b) reporting
> instructions contain a footnote[^1] citing the IPCC guidance and
> stating, "reporters may wish to use an emission factor of zero for
> wood, wood waste, and other biomass fuels."[^2] The information
> contained in this footnote needs to be brought into the body of DOE's
> guidance and made the cornerstone of DOE's biomass policy.
>
> G-P has offered and helped develop for years, a consistent and
> justifiable rationale to explain the neutrality of the biomass fuel
> emissions and with the proper details. This rationale has been
> reflected in different publications and publications of standards
> organizations such as ISO. One of the arguments advanced is based on
> the accounting practices in effect since the UN Framework Convention
> on Climate Change. The "stock" method encourages the "booking" of all
> harvested biomass as "emissions" in the first year, and that
> accounting is done at the forest. So the biomass fuel later utilized
> in the combustion process has already be accounted as "emission". If
> the emissions from the combustion of such biomass were again accounted
> as "emissions" we would incur in a flagrant double-counting situation.
>
> The other argument advanced[^3] is based on the atmospheric carbon
> dioxide cycle[^4], which explains the well-recognized carbon
> sequestration. The sunlight energy is converted into adenosine
> triphosphate (ATP) and others and the transformed sunlight energy
> fixes the atmospheric carbon dioxide into organic substances such as
> glucose that enters the transformation cycle in the biomass. Upon
> combustion, the carbon in the biomass is released as carbon dioxide
> back into the atmosphere. As far as there is biomass growth,
> sustainable or not, sequestration occurs. This cycle is a closed-loop:
> new tree growth keeps absorbing atmospheric carbon dioxide; hence,
> there is no net contribution to the atmospheric CO~2~ level.

To fully accommodate the President's climate policy and to be consistent
with existing domestic and international protocols on accounting for
greenhouse gases, DOE must modify its guidelines and clearly state the
neutrality of emissions from biomass fuels. As currently written, DOE's
guidance for the industry and forestry sectors is so complicated and
difficult that it presents a substantial obstacle to the
administration's goal of increasing the use of renewable biomass fuels.

4.  **[Reportable GHGs]{.underline}. DOE asks whether and how it may be
    appropriate to modify the current GHG approach, which allows reports
    on various greenhouse gases and other pollutants, and their
    reduction.**

Reporting should be limited to the primary greenhouse gases (CO2, CH4,
N2O, HFCs, PFCs and SF6), as the most accurate data is available on
these gases and methods are available for quantifying their emissions.
However, DOE also should recognize that some industries do not emit all
of these gases in quantifiable amounts. For example emissions of HFCs,
PFCs and SF6 in our company are not inventoried. Furthermore, there is
still uncertainty about the relative effects of the primary gases on
climate change, and far greater uncertainty remains about the effects of
other gases currently reported to DOE's registry (such as NOX, NMVOCs,
and CO). Until a semi-quantitative method is available for
characterizing the relative importance of these other gases, they should
not be targeted by the Administration's program.

5.  **[Indirect emissions]{.underline}. DOE asks commenters to identify
    and discuss how a reporter could treat indirect emissions, such as
    those resulting from electricity use, and indirect emissions
    reductions, such as those from decreased electricity use. How should
    life cycle and fuel cycle emissions and wholesale electric or
    natural gas transactions be treated?**

Any questions or issues associated with the terms direct and indirect
can be resolved clearing establishing the ownership of the GHG
emissions. Direct emissions are those from sources owned by the entity.
Indirect contributions to emissions do not include sources owned by the
facility. It is another level of reporting in the inventory compartment
of the proposed improved system. The greenhouse gas protocol developed
by the World Resource Institute (WRI) and the World Business Council on
Sustainable Development (WBCSD) uses the terms direct and indirect to
describe the organizational boundaries -- or the ownership and control
of the sources emitting the greenhouse gases. For domestic and
international consistency, DOE should adopt the terminology and
associated meanings used in the WRI/WBCSD protocol.

6.  **[Avoided emissions]{.underline}. The GHG Registry currently
    includes avoided emissions such as those from electricity generation
    from renewable energy sources or nuclear power, the use of natural
    gas-fueled motor vehicles, and energy efficiency improvements in
    industrial or other applications. DOE asks commenters to discuss how
    a reporter could treat actions that avoid, at least in part, the
    production of GHG emissions.**

As indicated in the above, DOE's improved 1065(b) should recognize
"avoided emissions." Entries in the inventory subsystem should keep and
encourage such reporting according with proper guidance in the protocol.
In the forest products industry, avoided emissions are generally the
result of three major industry practices: use of biomass materials and
fuels, co-generation, and recycling.

We believe that proper recognition and protection should be given to
generators of electricity from renewable fuels and that is generated for
on-site consumption via cogeneration. The forest products industry leads
all other manufacturing sectors in onsite electricity generation,
meeting more than half of its own energy needs through highly efficient
co-generation processes using biomass fuels derived from wood waste
products. The generation of steam and heat from biomass for use in the
manufacturing process should also be appropriately recognized as
emissions avoidance, and the increased co-generation of power from
fossil fuels should be recognized.

Another important method of avoiding or reducing emissions is through
the recycling of paper. G-P uses about 4 million tons of wastepaper
every year and is one of the world's leading recyclers. Besides reducing
landfill emissions of methane, recycling plays a role in extending the
amount of time that carbon is sequestrated in paper products. These
important actions need to be recognized in the inventory subsystem and
guidance provided in the protocol for purposes of consistency and
comparability. Whether or not these data will be transferable intro
credits is a separate issue and depending of future climate policy.

7.  **[Baselines (or reference case) definition]{.underline}. DOE asks
    for discussion of appropriate changes to the GHG Registry's
    approaches to determining an emissions baseline(s) or reference
    case. The current guidelines permit several options for identifying
    the baseline (referred to as the reference case) for emissions
    reductions or carbon sequestration. The options include use of
    historical emissions or sequestration (historical reference case),
    or an estimate of what emissions or sequestration would have been in
    the absence of a project or a group of projects (modified reference
    case). Specifically, DOE asks:**

-   **How different baseline determinations may be appropriate for
    reporting purposes, transferable credits, or protection against
    penalty under future climate policy.**

-   **How the reporting program could be used by reporters who may wish
    to report their GHG emissions measured as emissions per unit of
    output or emissions intensity**

-   **How "units of output" or emissions intensity could be calculated
    for varying industries.**

Flexibility needs to be maintained in determining the base year but more
uniform procedures should be established for the baseline inventory.
Both the use of historical emissions or a credible estimate of what
emissions or sequestration would have been in the absence of a project
should be allowed. The protocol of the improved 1065(b) system would
address the necessary details including the adjustments that may need to
be made in the baseline. One of the most important aspects regarding
baseline is that its base year be flexible according to the entity's
plans and data availability.

From a manufacturing perspective, reporting emissions per unit of output
or as emissions intensity is more reflective of true emissions levels,
and reporting in this manner compensates for expansion or shrinkage of
operations. If a company expands (through a merger or direct operational
enlargement), its emissions may increase, but emissions per unit of
output may actually decrease due to operational efficiencies.

8.  **[Thresholds for reporting emissions and for reporting emissions
    reductions]{.underline}. DOE asks if minimum thresholds for
    reporting of emissions should be set.**

> Some minimum threshold should be set to eliminate collection of data
> that is within the margin of error of current measurement and
> estimation techniques. However, to create a meaningful program, all
> entities should be encouraged to voluntarily report greenhouse gas
> emissions. With CO~2~ emissions resulting from wide ranging
> industrial, commercial and transportation activities, a database
> containing information on each major sector would be a useful public
> policy tool. Unless all entities are encouraged to report, there will
> be significant gaps in information.

9.  **[Reduction activity reports on domestic and international
    projects]{.underline}. The current GHG Registry accepts reports of
    project-level emissions data for both domestic and international
    projects, without regard to entity-level emissions data. DOE asks if
    entity-level emissions data should accompany information on projects
    either within or outside the U.S.**

## 

## 

## 

## Today, G-P as many other U.S. companies operate in multinational markets and with manufacturing facilities in different countries; thus, the registry should allow for reporting of both domestic and international projects for purposes of future trading and transfer of credits. This should not be a requirement but an option since it depends on specific conditions of the interested entities. Allowing for the registration of all projects could be convenient if the desirable linkage of the emerging domestic and international trading systems is realized. We support efforts that will lead to the linkage of compatible trading systems.

10. **[Verification and third-party audit standards]{.underline}. The
    current guidelines and EIA forms require that the reporter
    self-certify the accuracy of reported information. No independent
    certification or verification is required.**

## The current guidelines require certification of the accuracy of the information but do not require third-party verification. Independent verification of reported information is not necessary in all cases. Companies reporting the information must maintain in-house professionals to verify the data. These are professionals who adhere to the same standards as their third-party peers. Situations requiring independent verification can be specifically identified as they occur.

11. **[Confidentiality of reported data and public availability of
    information]{.underline}. Current guidelines provide that
    information determined to be confidential -- such as trade secret
    and commercial or financial information -- does not appear in EIA's
    public database and is not made available to the public. Should the
    revised guidelines include a provision requiring reporters to waive
    this protection if they wish to obtain a certificate of emission
    reductions for potential use in connection with transferable credits
    or for protection against penalty under future climate policy?**

## The statute that sets out the voluntary reporting program requires that "trade secret and commercial or financial information that is privileged or confidential shall be protected..." \[42USC3385(b)(3)\]. Information involving trade secrets and commercial and financial data should be maintained as confidential. Such information is vital to a company's competitive advantage in the market place. Any requirements that reporters waive confidentiality protections will hardly improve participation. To require that confidential, business data be made public would dissuade many companies from reporting.

**SUMMARY**- Our comments have tried to address the objectives of the
Administration in substantially improving the present program. We also
tried to reflect the realities of emerging climate policies in the
United States as well as to effectively protect the legitimate interests
of entities confronting the lack of well-defined policies. We have tried
to be pragmatic and inclusive on the issues of transferability of
validated credits. Not all credits need to be equal and that is the
reason for our recommended hierarchy in the registry. Although our
comments tried to address the specific issues raised by the NOI we
realize we have stepped "out of the box" in certain comments and thus we
are available for any further clarification and information on these
suggestions. We appreciate the opportunity given to us to express our
views in this important issue.

Sincerely,

![](media/image2.png){width="1.3944444444444444in"
height="0.4888888888888889in"}

Sergio F. Galeano, Ph.D.

GEORGIA-PACIFC CORPORATION

[^1]: EIA 1605(b) long form reporting instructions, Appendix B, footnote
    "d."

[^2]: See also "Emissions of Greenhouse Gases in the United States
    2000," EIA, November 2001, document number DOE/EIA-0573 (2000)

[^3]: ISO TR14047- Environmental Management-Life Cycle Assessment.
    -Illustrative examples on how to apply LCIA (example 3): 2001

[^4]: LCI User's Guide-The International Working Group. TAPPI Press:
    1996