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EPA MANDATORY GREENHOUSE GAS GREENHOUSE GAS
REPORTING RULE (MRR)
A Workshop & SymposiumDecember 16, 2009
Workshop & Symposiump y p
1. Welcome & Opening Remarks
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1. Welcome & Opening Remarks
2. Preparing for a Carbon Constrained World
3. EPA Mandatory Reporting Rule (MRR)
4 Legal Aspects of MRR4. Legal Aspects of MRR
5. What does MRR mean to your company?
6. Wrap-up and Close
1. Welcome & Opening Remarksp g
W l t i it d t
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Welcome to invited guestsObjectivesjScheduleIntroduction of PresentersHousekeeping itemsHousekeeping items
2. A Carbon Constrained World
Wh h l ti t
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Why are we here, relative to Carbon?Carbon Emissions & GHG FootprintsR l F kRegulatory FrameworkMassachusetts v EPAMassachusetts v EPAKyoto to Cap & Trade
$64MM, $64B, $64T$64MM, $64B, $64T
n)7
6
Tons
Car
bon
6
Atmospheric ConcentrationsAnthropogenic Emissions
lion
Met
ric T5
4
mis
sion
s (B
il
3
2
CO
2Em
1
0
Source: ORNL, Carbon Dioxide Information Analysis Center
Validity: The Christianity Argument…….8
If you are, so what?
If ’ l k !If you aren’t, look out!
Therefore we can’t!Therefore, we can t!
So we must all!So we must all!
Carbon Emissions & Footprintsp9
Carbon Footprint
IRP or IMP Cap & Trade
• IRS W-2• MRR• 1605b =
• IRS 1040• QA/QC
PlanBAMM
• Tax or Refund• Cap & Trade• REC
135 + 384 = PAIN• SAP vs. Quicken
• BAMM• Annual• Quarterly• SAP vs.
• CCX• OTC• FERC• EPA
Quicken
3. EPA MRR
O i
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OverviewApplicabilitypp yReporting RequirementsTimelineImpact to IndustryImpact to Industry
MRR – General Overview
US Carbon Marketplace is a 2-piece puzzle:
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US Carbon Marketplace is a 2 piece puzzle:1. Carbon Emission data – MRR
Carbon dioxide (CO2)Carbon dioxide (CO2)Methane (CH4)Nitrous oxide (N2O)Hydrofluorocarbons (HFC)Perfluorocarbons (PFC)S lf H fl id (SF )Sulfur Hexafluoride (SF6)
2. Management of data - Cap & Trade
MRR – Applicabilitypp y
Who’s in? Who’s not?12
Who s in? Who s not?The 4 “doors” of applicability1 “All i ” S1. “All in” Sources2. Threshold Sources3. Stationary Sources4. Supplier Sourcespp
MRR – Marble Game13
1. “All in” Sources2. Threshold Sources3. Stationary Sourcesy4. Supplier Sources
“All in” Sources §98.2(a) (1) § ( ) ( )
Electricity generation (40 CFR Part 75)
Adipic acid production
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Adipic acid productionAluminum production
Ammonia manufacturing
Cement productionHCFC 22 productionHCFC-22 production
HFC-23 destruction processes
Lime manufacturingNitric acid production
P t h i l d tiPetrochemical production
Petroleum refineriesPhosphoric acid production
Silicon carbide production
S d h d tiSoda ash productionTitanium dioxide production
Municipal solid waste landfills (>25k/ton CO2e/year)
Manure management systems (>25k/ton CO2e/year)
Threshold Sources §98.2(a) (2) § ( ) ( )
Not “All-In” + ≥25k ton/CO2e/year =
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Not All In + ≥25k ton/CO2e/year Ferroalloy productionGlass productionGlass productionHydrogen productionIron & Steel productionIron & Steel productionLead productionP l & P f t iPulp & Paper manufacturingZinc production
Stationary Sources §98.2(a) (3)y § ( ) ( )
Not “All-In” - Not ≥25k ton/CO2e/year + make
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Not All In Not ≥25k ton/CO2e/year + make power, heat or steam at ≥30MM Btu + ≥25k ton/CO2e/year =
Stationary internal combustion enginesProcess heatersProcess heatersIncineratorsB ilBoilers
Suppliers Sources §98.2(a) (4)pp § ( ) ( )
Coal-based liquid fuels17
Coal-based liquid fuelsPetroleum productsN l Natural gas Industrial GHGCO2 Suppliers
MRR – Time Line
October 30, 2009: EPA issued final rule in the Federal Register18
December 7, 2009: Endangerment Finding signed by EPADecember 29, 2009: Final rule is “effective” January 1, 2010: Affected facilities must begin collecting datay , g gJanuary 29, 2010: BAMM Deferment applications dueApril 1, 2010: End of deferment period for BAMMApril 1 2010: QA/QC Monitoring Plan due April 1, 2010: QA/QC Monitoring Plan due May 2010: Expected revisions to MRR to include
additional industries - food, coal, WWTPSeptember 2010: Expected Endangerment Findings impactSeptember 2010: Expected Endangerment Findings impactMarch 31, 2011: GHG report due for 2010March 31, 2012: GHG report due for 2011
MRR – Reporting Requirementsp g q
D t & R dk i i t
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Data & Recordkeeping requirements
January 29, 2010 Deferment due for Best y ,Available Monitoring Methods (BAMM)
April 1, 2010 QA/QC or Monitoring Plan
March 31, 2011 GHG report due for 2010
MRR – Reporting Requirementsp g q
Data & Recording keeping:
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Data & Recording keeping:
A list of all units, operations, processes, and activities
The data used to calculate the GHG emissionsThe data used to calculate the GHG emissions
The GHG emissions calculations and methods used (Tier 1-4)
Analytical results of site-specific emissions factors
Analyses for high heat value (HHV), carbon content, and other parameters
Any facility operating data or process information used
The annual GHG reportsThe annual GHG reports
Retained record for any missing data
Certification & QA/QC data of instrumentation
Maintenance & Calibration records of instrumentation
MRR – Reporting Requirementsp g q
January 29 2010: BAMM Deferment Request:
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January 29, 2010: BAMM Deferment Request:
Written request
Specific monitoring instrumentation
Locations where installed or planned
ID of rule requirements where instrumentation is needed
Description as to why instrumentation is not obtained and installed p ybefore April 1, 2010
MRR – Reporting Requirementsp g q
April 1 2010: GHG Monitoring or “QA/QC” Plan:
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April 1, 2010: GHG Monitoring or QA/QC Plan:
Identification of responsibilities (i.e., job titles) for data collection
Explanation of processes and methods used for data collection
Describes QA/QC procedures, maintenance, and repair of all CEMS
Existing corporate documents (e.g., standard operating procedures)
Revise the Plan to reflect changes in processes, etc
U k l bl f dUpon request make available for audit
MRR – Impact to Industryp y
80% Industry is EPA’s “guess”
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80% Industry is EPAs guessTax refund? 100% Cost & Time: in house vs consultantCost & Time: in-house vs. consultantEvery year from now on…
“Disclaimer: solely as assistance, information provided is unintentional may not be relied provided is unintentional, may not be relied upon, does not constitute a submission.”
4. Legal Aspects of MRRg p
C li N C li
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Compliance v. Non-ComplianceLegal NuancesgProposed GHG LegislationGHG Litigation
Regulatory Framework
The MRR was promulgated under EPA’s Clean Air Act authorityyThe MRR does not regulate GHG
b l k l emissions, but is likely a precursor to such regulationsg
EPA endangerment finding
Compliance vs. Noncompliancep p
EPA ifi ti (i diti ) th dEPA verification (i.e., auditing) methodsCAA penalties are up to $37,500 per d i l tiday per violationCriminal penaltiesOther ramifications
ImageAccountabilityDisclosure
Nuances of MRR
MRR d i i i MRR does not preempt existing reporting requirements
B d f ili d i iBurden on facility to document emissionsmay need to continuously monitor even though not required to report required to report
Facilities that fail to monitor or report . . . are subject to EPA enforcementubje t t e e e t
Electronic reporting
CBICBI
Nuances, continued
D i d R i ill b EPA’ i l Designated Representative will be EPA’s single POC. DR may be a non-employee.
D i i i d hif Designating a representative does not shift accountability for compliance away from owners/operatorsowners/operators
Data reported will be made available to the publicpublic
Where Are We Headed?
Ch i d b i d li i l iCharacterized by uncertainty and political in-fightingR l i l li bili / i kResult = potential liability / riskParallel tracts:
International TreatyStatutory Provision Regulatory
KYOTO PROTOCOL KYOTO PROTOCOL A protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aimed at combating global warming.
The UNFCCC is an international environmental treaty with the goal of achieving "stabilization of greenhouse gas concentrations in the atmosphere t t d th i i t f ith th li t t ”to prevent danger us anthropogenic interference with the climate system.”
Under the Protocol, countries commit to a reduction of four greenhouse gases (GHG) by 5.2% from the 1990 level. Emission limits do not include emissions by international aviation and shipping but are in addition to the industrial by international aviation and shipping, but are in addition to the industrial gases, chlorofluorocarbons, or CFCs, which are dealt with under the 1987 Montreal Protocol on Substance that Deplete the Ozone Layer.
The Protocol was initially adopted on 11 December 1997 in Kyoto, Japan y p y , pand became effective on February 16, 2005. 187 countries have signed or ratified the protocol.
The United States is not a signatory of UNFCCC.
WAXMAN-MARKEY BILL
American Clean Energy and Security Act of 2009gy yH.R. 2454 ("ACES" or "Waxman-Markey"), passed by House on June 26, 2009
Would create Cap and Trade Program
The legislation would set a limit (the cap) on total emissions over the 2012–2050 period and would require regulated entities to hold rights, or allowances, to emit greenhouse gases. After allowances were initially distributed entities would be free to buy and sell them (the trade part of distributed, entities would be free to buy and sell them (the trade part of the program).
Reducing emissions to the level required by the cap would be accomplished mainly by stemming demand for carbon-based energy by accomplished mainly by stemming demand for carbon based energy by increasing its price.
Other aspects of the bill, include federal efforts to speed the development of new technologies and to increase energy efficiency by specifying standards or subsidizing energy-saving investments.
KERRY-BOXER BILL
S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER ACT, introduced by Senators Kerry (D-MA) and Boxer (D-CA)y y ( ) ( )
In contrast to the House, where Waxman-Markey was the sole climate change bill to receive full consideration; The Senate is debating several bills, which may be combined in some way if all reach the floor.The largest and most comprehensive bill is S. 1733 ("Kerry-Boxer" or "CEJAPA"), but each of the other bills contain important provisions.Additionally, because of partisan circumstances in the Committee on Environment and Public Works, the Committee reported Kerry-Boxer to the , p yfloor without consideration of amendments by the Senators on the Committee.The Bill purports to transition to clean energy by ensuring that all of America’s energy sources (coal, nuclear energy, petroleum, solar and wind)
l d ffi i t ibl ith t d i U S h t t are as clean and efficient as possible without damaging U.S. short-term competitiveness. The Bill will provide for investing in all of these sources of power as well transmission and distribution systems.
OTHER SENATE PROVISIONS
The bill sets ambitious goals to reduce carbon pollution. It targets a reduction of 20 percent by 2020 and 80 percent by 2050 from 2005 levels the minimum alleged percent by 2020 and 80 percent by 2050 from 2005 levels, the minimum alleged necessary to avert a climate disaster. The bill purports to accomplish these goals through a pollution reduction and investment system that covers less than 2% of American businesses and keeps American industry competitive during the transition to a new energy economytransition to a new energy economy.
Other Senate Bills:
S CARBON LIMITS AND ENERGY FOR AMERICA'S RENEWAL ACT S. ____, CARBON LIMITS AND ENERGY FOR AMERICA S RENEWAL ACT, introduced by Senators Cantwell (D-WA) and Collins (R-ME)
S. 2835, INTERNATIONAL CLIMATE CHANGE INVESTMENT ACT, introduced by Senator Kerry (D-MA), with 4 co-sponsors
S. 2729, CLEAN ENERGY PARTNERSHIPS ACT, introduced by Senator Stabenow (D-MI), with 7 co-sponsors
S. 1462, AMERICAN CLEAN ENERGY LEADERSHIP ACT OF 2009 ("ACELA") introduced by Senator Bingaman (D-NM( ACELA ), introduced by Senator Bingaman (D NM
PARALLEL REGULATORY EFFORT PARALLEL REGULATORY EFFORT CLIMATE REGULATION
California Waiver
Cars and Trucks
Endangerment Findingg g
Ethanol Blend Gasoline
Executive Order
GHG R i R lGHG Reporting Rule
PSD Interpretive Memo Reconsideration
Renewable Fuel Standard Program
Tailoring Rule - Revised PSD Threshold
Underground Injection Control for Geologic Sequestration
Legal – GHG Litigationg g
St t t Cl i
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Statutory ClaimsCompelling Government Actionp gStopping Government ActionR l ti P i t C d t/I d t Regulating Private Conduct/Industry Lawsuits
Common Law Claims
5. What does MRR mean to you?y
W b b d C li T l
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Web-based Compliance ToolPublic Disclosure Due DiligenceOptions beyond MRR
EPA Web based Applicability ToolEPA Web-based Applicability Tool
U i d dUse it and document your useCombine with engineering analysis g g yand results to prepare sufficient “administrative record” of administrative record of determination of applicabilityEPA di l iEPA disclaimers
MRR effect – Options beyond MRRp y
Ch th P di
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Change the ParadigmNew Thinking – NIMBY v NUMBYgCCSCarbon OffsetsOthers?Others?