[Federal Register Volume 59, Number 104 (Wednesday, June 1, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13304]


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[Federal Register: June 1, 1994]


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DEPARTMENT OF ENERGY

Office of Policy, Planning, and Program Evaluation

 

Guidelines for Voluntary Reporting of Greenhouse Gas Emissions 
and Reductions, and Carbon Sequestration

AGENCY: U.S. Department of Energy (DOE).

ACTION: Notice of availability of draft guidelines and request for 
comment and notice of public hearing.

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SUMMARY: Pursuant to section 1605(b) of the Energy Policy Act of 1992, 
the Department of Energy is developing guidelines for the voluntary 
reporting of greenhouse gas emissions, their reduction, and carbon 
fixation achieved through any measure. The data will be reported on 
forms to be developed by the Energy Information Administration (EIA) 
and entered into an EIA database.
    The guidelines provide for the voluntary and accurate reporting of 
greenhouse gas emissions and reductions, and of carbon sequestration. 
The guidelines and supporting materials assist parties in analyzing 
activities and determining emissions and reductions and carbon 
sequestration in order to voluntarily report this data. EIA will 
develop reporting forms consistent with the guidelines. Draft 
guidelines and supporting materials are available for public review and 
comment.

DATES: Written comments on the draft guidelines and supporting 
materials (10 copies) are due on or before August 1, 1994. DOE does not 
anticipate extending this date. A public hearing will be held on June 
29, 1994, beginning at 8:30 a.m. at the address listed below. If 
necessary to accommodate requests to speak, the hearing will continue 
on June 30, 1994. Requests to speak must be received by the Department 
on or before June 22, 1994.

ADDRESSES: Written comments (10 copies) should be submitted to: U.S. 
Department of Energy, Office of Policy, PO-63/VRP NOA, Docket No. PO-
VR-94-101, room 4G-036, 1000 Independence Ave., SW., Washington, DC 
20585.
    A copy of the draft guidelines and supporting materials may be 
obtained by telephone request to (301) 601-8284. Requests to speak at 
the hearing should be made by telephone at (301) 601-8284.
    The public hearing will be held at The Holiday Inn Capitol, 550 C 
Street, SW., Washington, DC 20024. Copies of the transcript of the 
public hearing and public comments received will be available for 
inspection at the DOE Freedom of Information Reading Room, room 1E-090, 
at the address listed above, between the hours of 9 a.m. and 4 p.m. 
Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Mr. Elmer Holt at (202) 586-0714.

SUPPLEMENTARY INFORMATION: Under section 1605(b) of the Energy Policy 
Act of 1992 (EPAct; Pub. L. 102-486), the Secretary of Energy with the 
Energy Information Administration (EIA) is to establish a voluntary 
reporting system and database on emissions of greenhouse gases (GHGs), 
reductions in emissions of these gases, and carbon fixation. DOE has 
consulted with the Environmental Protection Agency in developing the 
draft guidelines, as provided under section 1605(c).
    The draft guidelines and supporting methodologies provide guidance 
on institutional and technical aspects of the voluntary program. They 
are presented in discrete parts, as discussed below. DOE requests 
comment on all provisions of the draft guidelines and supporting 
material.

I. Background

    Under section 1605 of the EPAct, two databases related to 
greenhouse gases are to be established. These separately address (1) 
the inventory of aggregate national totals of greenhouse gas emissions, 
and (2) data voluntarily reported on emissions, reductions, and carbon 
sequestration.
    First, under subsection (a), the Secretary of Energy through EIA 
and without any expanded data collection authority is required to 
develop an inventory of national aggregate emissions of each greenhouse 
gas for each calendar year of the baseline period of 1987 through 1990. 
This inventory was published in September, 1993 (``Emissions of 
Greenhouse Gases in the United States, 1985-1990;'' DOE/EIA-0573). This 
inventory will be updated annually, as required by the legislation.
    The voluntary reporting program database is required under 
subsection (b) of section 1605, and will consist of voluntarily 
reported information on annual greenhouse gas emissions and their 
reduction, and carbon sequestration. It is separate from the national 
aggregate inventory established and updated under subsection (a). 
Because submission of data to the program established under subsection 
(b) is voluntary, this database cannot be designed for use as a 
comprehensive national greenhouse gas accounting system, and thus may 
not serve to provide a statistically accurate representation of 
aggregate U.S. greenhouse gas emissions or their reductions.
    The Secretary of Energy is required to issue guidelines with 
procedures for the accurate voluntary reporting of information on (1) 
greenhouse gas emissions on an annual basis for the baseline period 
1987 through 1990, and for subsequent calendar years; (2) annual 
reductions of greenhouse gases and carbon fixation achieved through any 
measures; and (3) reductions in greenhouse gas emissions achieved 
voluntarily, or as a result of plant or facility closings, or as a 
result of State or Federal requirements.
    The guidelines and supporting materials assist those who wish to 
report in determining or developing information necessary to report. 
EIA will develop and make available forms for voluntary reporting 
consistent with the final guidelines, and will develop a database for 
the information voluntarily submitted.

II. Public Input Process

    The process for public input in developing the draft guidelines 
began with a Notice of Inquiry (NOI) in July 1993 (58 FR 40116; July 
27, 1993), requesting comment on institutional and technical issues 
related to a 1605(b) reporting system. These comments assisted in 
developing the focus for discussion at six public workshops held in 
November and December of 1993. A summary of workshop sessions and a 
copy of all written comments submitted are available for public 
inspection in the DOE Freedom of Information Reading Room, listed in 
the ADDRESSES section above.
    Additional public input to the guidelines is being sought through 
the comments requested and the public hearing announced in this notice.

III. Organization of the Draft Guidelines

    The draft guidelines and supporting materials, ``Voluntary 
Reporting of Greenhouse Gases Under Section 1605(b) of the Energy 
Policy Act of 1992: General Guidelines and Sector-Specific Issues and 
Reporting Methodologies,'' are presented in eight discrete parts. The 
first part, ``General Guidelines,'' provides basic guidance for 
reporting under the program. Six parts, ``Sector Specific Issues and 
Reporting Methodologies Supporting the General Guidelines'' (or 
``supporting materials'') discuss issues particular to specific sector 
or activity areas, as indicated: Electricity Supply, Residential and 
Commercial Buildings, Industrial, Transportation, Forestry, 
Agriculture.
    The seventh supporting document, ``Global Warming Potential and 
Other Indices for Representing Greenhouse Gas Effects on Climate'' 
completes the guidelines set.
    The public review draft does not include the sector-specific part 
on the Agriculture Sector; this document is expected to be available by 
the end of June. Notice of its availability for review and comment will 
be announced in the Federal Register.

IV. Goals of the Voluntary Reporting Program

    The draft guidelines and supporting materials have been developed 
to reflect the dual goals of maximizing participation without 
compromising the usefulness of the data. These goals reflect public 
input received in response to the July 1993 Notice of Inquiry and the 
subsequent workshops discussed above.
    Achievement of the participation goal will be measured by the 
numbers of voluntary reporters and the variety of economic sectors and 
activities they represent, and in the quantity of emissions and 
reductions and carbon sequestration reported. The draft guidelines and 
supporting materials assist participation by minimizing administrative 
burden and repetitive submissions among data acquisition programs, and 
by providing flexibility for the use of self-generated data with 
optional default and prescribed data alternatives.
    Usefulness of the data is defined not only by the quality, 
quantity, and variety of the data included, but also by its ability to 
serve the varied purposes of the program. These purposes include 
providing a database of information for entities seeking to reduce 
their own greenhouse gas emissions; formal recordation of emissions, 
reductions and carbon sequestration achievements for various 
objectives; and informing the public debate in future discussions on 
national greenhouse gas policy.

V. Summary Description and Discussion

A. What Are The Guidelines?

    The guidelines define who may report, what information may be 
reported, and considerations in identifying or developing reportable 
data. Consistent with the guidelines, EIA will develop reporting forms 
for the program, receive submissions and evaluate them for compliance 
with the guidelines and reporting instructions, and develop and 
maintain the database of information reported.
    The guidelines suggest to reporters data identification, collection 
and retention needs, and address the use by reporters of information 
which may be part of existing recordkeeping systems or standard 
business practices. They also provide a framework for analyzing 
activities with the goal of developing reportable data. Finally, the 
guidelines provide information for comparing emissions of gases on the 
basis of their differential greenhouse (radiative forcing) effects 
within the climate system. This discussion on differential effects is 
provided for information purposes only. The guidelines provide that 
data reported be in units of gas emitted or reduced, and not 
transformed by any radiative forcing index reported.

B. What is Covered by the Guidelines?

    The reporter. The guidelines define ``reporting entity'' flexibly 
in order to accommodate total organization and project reporting, as 
well as reporting focused on specific activities or on specific sites. 
A reporting entity, or ``reporter,'' may be any U.S. organization or 
individual that has taken actions which result in emissions, emissions 
reductions, or carbon sequestration, and that can define a project and 
report physical data in enough detail to quantify results of the 
activity. The following may report under the program: any U.S. citizen 
or resident alien; any company, organization, or group incorporated 
under or recognized by law; and any U.S. Federal, state, or local 
governmental entity.
    Sector coverage. The guidelines may be used for all economic 
sectors. The supporting methodologies provide additional direction for 
reporting data on activities in the following sectors: electricity 
supply, residential and commercial buildings, transportation, 
industrial, forestry, and agriculture.
    Size threshold. In order to encourage participation and to capture 
small-scale demonstration projects, DOE is not proposing minimum levels 
for participating in the reporting program. At the outset of the 
program design process, DOE assumed that the program would have a 
threshold level of participation to prevent overburdening EIA in 
managing a costly, inefficient database.
    However, commenters recommended strongly that no threshold levels 
be set, in order to avoid unnecessary limitations that might discourage 
participation, particularly by those engaging in pilot projects and 
innovative approaches. In addition, setting threshold standards for the 
broad range of activities--for each gas, each sector, and for all 
activities within a sector--would be difficult.
    DOE seeks comment on the possible need for a threshold level for 
participation. If thresholds are recommended, DOE requests suggestions 
for appropriate levels.
    Direct and indirect emissions activities. The draft guidelines 
address activities that result in either direct or indirect emissions 
and reductions of greenhouse gas emissions. Direct greenhouse gas 
emissions may result from activities such as fossil fuel combustion and 
the venting of methane. DOE acknowledges that a program with 
submissions limited to direct emissions, and to activities directly 
producing or reducing those emissions, would be more manageable and 
transparent than the broad, flexible approach reflected in the draft 
guidelines.
    The statute, however, provides some examples of activities which 
are to be covered which indirectly affect, or may indirectly affect, 
emissions or reductions. Among the activities mentioned are the 
manufacture of vehicles with reduced greenhouse gas emissions, 
appliance efficiency, and energy efficiency measures.
    DOE believes that Congress intended that the program cover the 
broadest set of activities which impact greenhouse gases, both directly 
and indirectly. Thus, the guidelines address both indirect and direct 
emissions activities, which will be appropriately distinguished in 
submissions. Comment is specifically requested on the proposed approach 
which allows reporting emissions and reductions from indirect and 
direct emitting activities, with appropriate identification of each.
    Multiple party activities. The guidelines permit the reporting of 
activities undertaken in association with others. The guidelines 
provide suggestions to the parties for assigning the ability to report 
among the parties, and ask that the reporter identify others who may 
also report the data. Examples of multiple party activities include 
utility demand-side management actions, and the manufacture, sale, and 
use of more efficient vehicles.
    Some commenters urged that the guidelines prohibit ``double 
reporting'' of the results of joint activities, in order to prevent the 
accounting for the same emissions, reductions or sequestration more 
than once. DOE agrees. Thus, while the draft guidelines permit any 
party to the activity to report, they require reporters to identify the 
other parties to the activity. In addition, the guidelines suggest ways 
for reporters to help protect against ``double counting.'' These 
methods are based on the nature of the relationship of the parties, and 
the comparative ability of the parties to perform adequate project 
analysis and to have, or have access to, necessary data. Methods 
suggested in the guidelines include contractual agreements.
    Comment is specifically requested on the proposed approach on 
reporting multiple party activities. In particular, comment is 
requested on whether the guidelines and the reporting forms to be 
developed by EIA should contain additional protections against double 
counting.
    Reporting through third parties. In order to increase 
participation, particularly of small reporters and small projects, the 
draft guidelines permit third party and aggregated reporting, at the 
reporter's discretion. For example, a trade association or other 
organization may, at the reporter's request, aggregate data from 
multiple entities. Such organizations may provide technical or 
administrative assistance in reporting, and aggregation of data may 
provide some degree of confidentiality of the data. However, third-
party reporters may not be able to record individual achievements in 
the detail that individual reporters desire. The draft supporting 
documents provide a discussion of third-party reporting as it may apply 
in each sector, as well as a discussion of the appropriateness of 
third-party reporting for different reporting purposes.
    The gases. The draft guidelines cover emissions of the following 
greenhouse gases: carbon dioxide, nitrous oxide, methane, and the 
halogenated carbon substances. A more comprehensive list of greenhouse 
gases would include additional gases, most notably some of the 
conventional, or ``criteria,'' pollutants for which emissions data is 
collected by EPA and State agencies under various air quality programs.
    Because the Act does not provide a definition of ``greenhouse 
gases,'' DOE has initially limited the coverage of the guidelines to 
those long-lived greenhouse gases specifically mentioned in the 
statutory provisions, or inferred to in the statutory language which 
provides examples of emissions reductions measures. Consistent with 
specific statutory language, the guidelines cover halogenated carbon 
substances such as CFCs.
    Calculating radiative effects among different gases. The draft 
supporting materials for the guidelines provide methods for reporters 
to estimate, for their own use, the global warming potential of 
greenhouse gases, with a discussion of the radiative forcing system and 
the derivation and uncertainties of the estimates. In simplified terms, 
radiative forcing is the change in the balance (incoming versus 
outgoing) of solar and infra-red radiative energy in the troposphere 
(the layer of the atmosphere closest to Earth). Emitted gases have 
different direct radiative effects and atmospheric lifetimes. The Act 
requires the guidelines to establish procedures for taking into account 
these effects.
    Because this area of science is complex and evolving, reporting 
activity results by any relative index would create an unnecessary 
additional burden in an area where few reporters are likely to have 
expertise. More importantly, the state of the science in this area is 
uncertain and rapidly changing; thus, any calculations performed will 
likely need revision. Therefore, while the draft guidelines provide 
information necessary for a reporter to perform these calculations, all 
data reported to this program will be in units of the gas emitted or 
reduced, and will not be transformed in voluntary submissions by any 
common radiative forcing index, such as the Global Warming Potential 
(GWP) index.
    The draft supporting document on GWPs is based on the anticipated 
outcome later this year of ongoing international scientific inquiry and 
discussions. The Intergovernmental Panel on Climate Change Working 
Group I report, entitled ``Second Supplemental Report to the IPCC 
Scientific Assessment (1994); Radiative Forcing of the Climate System'' 
is scheduled to be released in November 1994. This document will 
provide the latest current scientific consensus on the issues of 
differential radiative activity of greenhouse gases.
    The global warming potential supporting document will be finalized 
after release of the IPCC report, and will reflect that report. Since 
reporting will be by unit of gas emitted, neither the reporting program 
nor EIA forms development is dependent on this information. DOE seeks 
comment on this approach for assuring consistency with international 
scientific consensus and minimizing the immediate need for revision of 
guideline material.
    Temporal and spatial coverage. The guidelines address reporting 
annual emissions for the historic baseline period of 1987 through 1990 
(`` historic baseline''), and subsequent years. The guidelines also 
cover the reporter's aggregate annual emissions and emissions 
reductions from all of its activities. Annual reductions of greenhouse 
gases and annual carbon sequestration, by activity and project, are 
also covered. Results of activities occurring outside the U.S. are 
covered in the same manner as those occurring within the U.S., as 
discussed below.
    Reporters are encouraged to report and update historic baseline 
emissions and to report on an entity-wide (total organization) basis. 
The clarity and credibility of data provided by an organization will be 
enhanced by the optional submission of comprehensive greenhouse gas 
emissions data on the historic baseline and total annual emissions of 
the organization. While the guidelines do not require this 
comprehensive information to accompany reports of other, more focused 
data on projects and activities, reports will be identified within the 
database on the basis of the coverage of the submittal.
    Causation. The guidelines require that reporters identify the cause 
for the activity resulting in greenhouse gas emission reductions. 
Section 1605(b) provides that the guidelines cover greenhouse gas 
emission reductions achieved as a result of: (1) plant or facility 
closings, (2) Federal or state requirements, and (3) voluntary 
reductions. Accordingly, the guidelines require reporters to identify, 
if appropriate, which of these factors caused the reported emissions 
reduction. Reports will identify the causative factor if it falls 
within these areas, but will not include any further information. 
Comment is specifically requested on the appropriateness of this 
limited identification of cause.
    International activities. The draft guidelines provide that U.S. 
entities may report international activities to which they are a party 
if the submission meets the general reporting criteria. The Act is 
silent on the reportability of offshore activities to this program.
    There is considerable interest in the potential for cooperation 
among firms in industrialized countries and governments, firms, or 
individuals in less developed countries in sequestering carbon and 
reducing global carbon emissions. Reporters are advised that there may 
be special difficulties in defining project boundaries, determining an 
appropriate reference case, and using appropriate estimation methods 
for offshore activities.
    The United Nations Framework Convention on Climate Change (FCCC), 
Article 4, paragraph 2(A), requires some nations to take measures to 
mitigate climate change, and it allows the parties to implement these 
measures jointly with other parties. Criteria for ``joint 
implementation,'' as this concept is known, will be formally addressed 
by FCCC's Conference of the Parties in 1995. Thus, it is impossible at 
this time to ensure that guidelines for the voluntary reporting of 
actions taken by U.S. entities in other countries will be consistent 
with the eventual requirements for joint implementation under the FCCC. 
Accordingly, the guidelines may be updated to reflect future decisions 
made by the Conference of the Parties.

VI. Relationship of the Voluntary Reporting Program to Other Greenhouse 
Gas Initiatives

    EPAct, which requires the establishment of the voluntary reporting 
program, was enacted on October 24, 1992. It predates several domestic 
initiatives designed to respond to the threat of global climate change. 
Some of these initiatives refer to the voluntary reporting program as 
an associated tool in implementation. This reporting program can be 
used to record emissions reductions achieved under a variety of 
programs that may result in reducing greenhouse gas emissions or 
increasing carbon sequestration, whether as a primary goal or as a 
secondary result.
    While activities that reduce or avoid greenhouse gas emissions or 
sequester carbon under existing programs would be reportable, the 
guidelines were not specifically designed to accommodate any particular 
program. Although the ability to report beneficial greenhouse gas 
impacts of activities may encourage activities under existing programs, 
the guidelines were designed to encourage reporting regardless of cause 
or motivation for an activity.
    The language of section 1605(b)(1)(C) provides that the guidelines 
are to address reporting reductions achieved as a result of plant 
closings, and Federal and state requirements, in addition to those 
which result from voluntary actions. Thus, the guidelines do not limit 
submissions based on either the motivation of the parties involved or 
on the reason for the activity.

A. The Climate Change Action Plan

    A year after passage of the Energy Policy Act of 1992, the 
President, with the goal of returning U.S. greenhouse gas emissions to 
their 1990 levels by the year 2000, released the Climate Change Action 
Plan (CCAP). This plan contains over forty new or expanded initiatives, 
most seeking voluntary participation. Three actions under the CCAP--
Climate Challenge, Climate Wise and the U.S. Initiative for Joint 
Implementation--specifically refer to participant reporting under 
section 1605(b). DOE anticipates that most accomplishments under CCAP 
initiatives will be reported under section 1605(b), but reporting is 
not limited to these specific activities.
    The 1605(b) program is flexibly designed to accommodate broad 
participation consistent with the purposes of 1605(b). It was not 
designed to meet the accounting goals of any particular program. Some 
programs such as Climate Challenge and Climate Wise may need to adopt 
supplemental accounting procedures for the purposes of those programs.
    The Climate Challenge and Climate Wise programs are designed to 
elicit commitments by members of the utility and industrial communities 
to take actions which will reduce or avoid greenhouse gas emissions. 
While the 1605(b) voluntary reporting program will provide a mechanism 
for recording information on those achievements, it does not provide a 
mechanism for registering commitments.
    DOE is exploring establishment of a separate reporting system for 
the pledge portion of the commitment programs. While as yet 
undeveloped, that system may look similar to the reporting program and 
database established under 1605(b). This similarity, however, should 
not be confused as allowing commitments to be reported into the section 
1605(b) database; only achievements will be part of this database and 
any information system developed for commitments will be distinct.

B. United States Actions Under the United Nations Framework Convention 
on Climate Change (FCCC)

    Under the FCCC, the United States will be submitting a national 
communication which contains a mitigation plan of policies and 
measures. While data submitted to the voluntary reporting program may 
provide some limited information concerning accomplishments under U.S. 
measures, it is not designed to be a primary data source for 
communications of the United States under the FCCC.

VII. Discussion of Report Development and Analysis

    The Act requires that DOE develop guidelines on procedures for four 
reporting categories: baseline emissions for the period 1987 through 
1990, annual emissions, emissions reductions, and carbon sequestration 
activities. It also requires the procedures to take into account the 
differential radiative effects of each gas covered. However, it does 
not require that each report include all of these activities or address 
radiative effects. The legislation does not require that historic 
baseline, annual, or total organization emissions be reported as a 
prerequisite to reporting emission reductions or carbon sequestration 
project information.
    DOE is requesting comment on the guidelines approach, which allows 
voluntary reporters to determine how comprehensive their submissions 
will be relative to historic baseline, annual and total organization 
emissions.

A. Annual and Total Organization Emissions

    The guidelines encourage, but do not require, reports of annual 
emissions for the historic baseline period 1987-1990, and for 
subsequent years. In reporting emissions for this historic baseline 
period, the reporter may choose to report annual emissions for each of 
these years, or the average of the four years' emissions. Where 
adequate data exists (for example, for regulated industries such as 
utilities), the inclusion of emissions reports for the period 1987 
through 1990, and for each subsequent year, will provide enhanced 
clarity to submissions on reductions and carbon sequestration projects.
    The guidelines encourage annual emissions reports on a total-
organization basis, covering all greenhouse gas producing activities of 
the reporter. However, recognizing that adequate information may not be 
available or may be overly burdensome to collect and analyze (in the 
case, for example, where an organization has multiple sites and 
decentralized management), the guidelines allow emissions reporting on 
a project basis. A project is variously defined, at the discretion of 
the reporter, as a site, an activity, or a group of activities.

B. Emissions Reduction or Increased Carbon Sequestration Projects

    Reports will be accepted on a project-by-project basis as defined 
by the reporter. The reporter may credibly define a project at the 
entity level, at a subentity level (such as a plant or production 
line), at a supra-entity level (including, for example, joint reporting 
of the manufacture and use of fuel-efficient vehicles), or at a 
specific activity level (such as replacement of equipment). When 
defining a project, the entity must consider the amount and accuracy of 
available data and possible secondary effects of the project as 
described below.
1. Defining the Project
    The draft guidelines allow reporters latitude in defining the 
project to be reported and in performing analyses to substantiate 
claimed emission reductions or carbon sequestration. This latitude 
extends to permitting narrow delineation of a reportable activity which 
does not reflect the greenhouse gas effects of all of the operations of 
the reporter. Some commenters stated that requiring reports to cover 
all greenhouse gas emitting activities of the reporter is the only way 
to ensure that the program records only ``real'' reductions, that is, 
reductions from the entity's total emissions. Other commenters pointed 
out that participation in the program would be unnecessarily limited by 
the universal imposition of significant data collection and analytic 
burdens. In order to achieve the goal of maximum participation, as 
discussed above, the draft guidelines allow for a broad choice in 
designing the scope of submissions.
    Project-level reporting provides maximum flexibility to reporters 
based on individual circumstances. Participation is facilitated since 
growing entities would be able to report, even though their total 
emissions are growing; and parties who do not have or cannot develop 
data at the total organization level will be able to report quality 
data on an individual project. The focus of the program on individual 
achievements is preserved.
    DOE acknowledges that the breadth of reporter discretion permitted 
could result in some submissions which selectively provide only data on 
environmentally beneficial activities, without addressing secondary and 
other effects. By providing an analytic framework on project boundary 
definition and secondary effects, and in encouraging the submission of 
reports showing total organization emissions and emission reductions, 
the guidelines seek to minimize inappropriate use of narrow reporting. 
DOE specifically seeks comment on whether the proposed degree of 
flexibility provided for the scope of reports is appropriate.
2. Reporter's Data Identification, Analysis, and Certification
    To encourage voluntary reporting, the guidelines minimize reporting 
demands, both in terms of ease and cost of data identification, 
collection and analysis. Three strategies have been developed to 
accomplish this objective:
    (a) Provide that a reporter may use, to the extent possible, 
information it already collects for other purposes.
    (b) Provide two paths for data analysis and report preparation: the 
first with detailed assistance for smaller or less analytically 
sophisticated reporters without adequate data or expertise, and the 
second with more general guidance for reporters with experience in 
analyzing and reporting the type of data sought by this program.
    (c) Accept self-certification as an adequate accuracy check for the 
current purposes of the program, recommending that reporters consider 
retaining records where they may be appropriate for future use.
    a. Using existing information. Many reporters, such as utilities 
and members of other regulated industries, currently collect data 
relevant to this program. This data may be on greenhouse gas emissions 
specifically, or activity parameters which can be translated to 
emissions. Some reporters collect data for internal purposes, for 
example, in order to monitor energy use or expenditures. To minimize 
data collection burdens, the guidelines encourage the use of existing 
data for submissions.
    Data are collected and reported in various industrial and economic 
sectors under existing programs at the Federal, state, and local 
levels. The following discussion illustrates the types of information 
which will be useful for submissions under this program.
    Many reports already required of utilities will readily provide 
relevant data. These include, for example, specific carbon dioxide 
emissions reports from electric utility units affected under the Clean 
Air Act acid rain program (40 CFR part 75). Information needed to 
estimate emissions of greenhouse gases is reported by all major fossil 
fuel electricity generating plants in several reports submitted to EIA, 
for example, on EIA Form 767 (fuel use by generating unit) and EIA Form 
861 (utilities' net generation and sales to ultimate customers). In 
addition, utilities gather relevant data in order to report to public 
utility commissions and other state an local bodies.
    For the industrial sector, examples of information useful for 
reporting include that provided to the Census Bureau via the Census of 
Manufactures (CM), the Annual Survey of Manufacturers (ASM), and the 
Manufacturing Energy Consumption Survey (MECS). Industrial reporters 
may be collecting relevant data pursuant to existing programs such as 
the Clean Air Act requirements for halogenated substances, annual 
reports to the EPA Toxic Release Inventory System, and state programs 
such as California's Directed Inspection/Maintenance Programs. Data 
collected for reporting to the Federal Mining Safety and Health 
Administration and the Department of Transportation's Office of 
Pipeline Safety on methane may also be useful to the reporter.
    In the transportation sector, reporters may have information 
gathered in planning and compliance activities undertaken for numerous 
programs, such as the corporate average fuel economy (CAFE) standards; 
EPAct and Clean Air Act mandates for alternative fuel use, employer 
carpooling and telecommuting; state-level subsidies for gasohol; and 
required fuel use reports by airlines an railroads.
    Participants in voluntary programs in both the public and private 
sectors are or will be collecting information useful to reporting under 
this program. For example, DOE expects that data generated by 
participation in many initiatives under the CCAP will be reported under 
the EPAct 1605(b) program. Participation in private voluntary programs, 
such as trade association energy efficiency programs, will also result 
in participants generating data useful to reporting.
    Ongoing Federal programs, generally concentrated at DOE and EPA but 
also at other agencies, afford participants the opportunity to use data 
generated for those programs in reporting under Section 1605(b). Among 
these are the Motor Challenge and the Golden Carrot programs. DOE's 
Energy Analysis and Diagnostic Center (EADC) energy audits, as well as 
independent energy audits, may provide data useful for the additional 
purpose of reporting here. EPA's voluntary programs, such as Green 
Lights, Natural Gas Star, Energy Star Transformers, and others, will 
also provide useful data.
    In the forestry sector, participation in tree planting and urban 
forestry programs managed by agencies within the U.S. Departments of 
Agriculture (USDA), Interior, Transportation, and Defense, as well as 
by State forestry agencies, may provide useful data. Extensive physical 
data on land use and agricultural practices kept for and by the USDA's 
Soil Conservation Service and State agricultural agencies, developed 
for other purposes, may be useful in providing data on activities 
affecting greenhouse gas emissions and carbon sequestration in the 
agriculture sector.
    b. Two paths for reporting. Public input into development of the 
draft guidelines indicated that at least two categories of reporters 
exist. The first includes large utilities and industrial organizations 
with extensive data collection programs and the capability to perform 
thorough organizational and project-specific analyses of activities and 
greenhouse gas and carbon sequestration achievements. The second 
category of reporters encompasses smaller entities with adequate 
physical information, but needing assistance in transforming this data 
into estimates of emissions and reductions or sequestration. To 
accommodate both categories of reporters, the guidelines ask reporters 
to provide adequate physical data about projects/activities, and 
provide two paths for estimating greenhouse gas emissions or carbon 
sequestration.
    In all cases, submissions will include adequate physical data about 
projects; for example, how many and what type of trees were planted at 
a location, what quantities of materials were processed, or how many 
kilowatt hours were used. This information must be sufficient to derive 
a gross estimate of greenhouse gas emissions or carbon sequestration 
results.
    However, two paths are open to reporters for deriving their 
estimates of the effects of reported projects. The first is to develop 
the data and methods needed to estimate credibly and accurately project 
effects. A variety of tools may be used--such as computer models, 
actual measurements, and engineering estimates--based on the 
circumstances of the project and the reporter's purpose for reporting.
    The second path for reporters is the use of default values to 
derive estimates. The guidelines and supporting materials provide, or 
give references for, emission factors, stipulated savings, equations, 
and other default systems to be used at the option of the reporter. 
While the default path is likely to produce conservative estimates 
(i.e., underreporting beneficial accomplishments) which are less 
precise than those derived from project-specific analyses, it will 
enhance the ability of less sophisticated reporters to report.
    Identification of the types of tools used in either path will be 
part of the report.
    c. Certification of submissions. EPAct 1605(b) requires self-
certification of reported data. Consistent with the Act, the guidelines 
provide only for self- certification by the reporter of the accuracy of 
the submission.
    DOE considered the private and public resources necessary for 
various types of verification of data submitted. The goal of broad 
participation would be adversely affected by imposing upon reporters 
additional requirements for certification or verification of submitted 
data.
    Although the draft guidelines do not go beyond the self-
certification specified in the statute, other verification and 
certification parameters may be set by and through other greenhouse gas 
programs in which a reporter participates. The reporter may identify 
data in its submission that has been verified by a third party. In 
addition, reporters may wish to retain auditable data supporting their 
reported data, based on the anticipated uses of the data.

VIII. Discussion of the Project Analysis Approach

    This section discusses the basic approach of the draft guidelines 
for project analysis, and of the sector-specific supporting 
methodologies for applying this approach.

A. What the Reporter Must Be Able To Provide

    The minimum requirements for reporting the achievements of a 
project include the following:
     Identifying information about the reporter and the 
project.
     Sufficient physical data on the project for calculating 
emission reductions or carbon sequestration results achieved.
     Definition of a reference case against which to measure 
reductions.
     Identification of the measurement and estimation methods 
used.

B. Reporting Emissions

    Reporters are encouraged to provide total organization emissions 
data when reporting project emission reductions, as well as total 
project or activity emissions for the historic baseline period of 1987-
1990 and subsequent years. Comprehensive reporting of all relevant 
emissions data will increase the credibility of any emission reduction 
reports, by providing a complete picture of the reporter's activities.
    Reporters have the flexibility to determine and identify 
organization-wide reporting boundaries. The rationale for the 
boundaries they draw will depend, in part, upon the reasons the 
reporter is preparing and submitting information. If reporters are able 
to report emissions for their entire organization, they are encouraged 
to do so. Reporters do not need to report total organization emissions 
in order to report emission reduction and carbon sequestration 
projects. DOE recognizes, however, that reporting total emissions for a 
specific industrial plant, for example, may be more consistent with 
specific emissions reduction project elements of the report, and based 
on more readily available data than would a report on the 
organization's total emissions.

C. Reporting Emission Reductions or Carbon Sequestration: Project 
Analysis

    Accurate and credible reporting under the EPAct 1605(b) program 
depends upon performing good project analysis. Entities may report 
emission reductions and carbon sequestration for projects which they 
define and for which they develop a basis of emissions with and without 
the project. The guidelines do not provide rigid rules for such an 
analysis, but provide general methodologies and considerations for use 
by the reporter, as discussed below.
    After defining the project to report, a reporter will need to 
address three elements of project analysis: (1) Establishment of the 
reference case (the basis for comparison with the project); (2) 
definition of the project and reference case boundaries; and (3) 
estimation of emissions for the reference case and the project.
    These elements are interdependent. For example, the selection of a 
reference case will depend upon both how widely the project boundaries 
are drawn and what data are available to measure or estimate emissions. 
The extent of the reporter's analytic efforts will be based on the 
purposes for reporting.
    Defining the project to be reported. A project may consist of only 
one activity, undertaken for its projected cost savings (such as a 
relighting project) or as a pilot project (such as an experimental 
process change); several activities, perhaps as parts of an energy 
efficiency program (these may include activities, such as materials 
processing, outside the organization); or all emission-producing 
activities for the organization. The definition of a project depends on 
factors such as how clearly the reporter draws the boundaries, how 
credibly it defines a basis for comparison, and how well it can measure 
or estimate the effects of the activities.
    Step 1. Establishing the reference case. A pivotal consideration in 
establishing project boundaries is how well the reporter can establish 
a reference case--that is, an emission level against which to measure 
the effects of a project. A reference case is often referred to as the 
``but for'' scenario, as in, ``but for this project, emissions would 
have been * * *.'' Two possible ways to finish this sentence are: (1) 
``* * * the same as a previous year'' (the basic, or historic, 
reference case), or (2) ``* * * different than any previous year'' (the 
modified reference case, which is adjusted from historic data or 
projected). Each of these cases is discussed below.
    Basic (or ``historic''). Emissions from within the project boundary 
may be compared with the corresponding level for some previous year(s); 
for example, the 1987 to 1990 period, the year(s) just prior to 
commencement of the project, or some intervening year more indicative 
of normal operations. The reference case may be defined as the average 
annual emissions during some multiyear period or the highest or lowest 
annual emissions during that time. Alternatively, a single reporting 
year (e.g., 1990) could be chosen by the reporter as the reference case 
year.
    Modified (or ``projected''). Even in the absence of the project, 
emissions levels may differ from past levels, for example due to growth 
or decline in output and changed operations. In this case, the 
reference case might be extrapolated with the use of models from past 
trends and external data to determine what emissions ``would have 
been'' but for the project in the year in which the project's effects 
are being measured. Adjustments may involve estimating the emissions 
per unit of production using historic or current-year data and 
adjusting for growth by multiplying this rate by the rate of production 
in the year reported.
    Under the guidelines, reporters may choose between these approaches 
depending on the reporter's purpose for reporting. For many purposes, a 
basic reference case using an average of emissions for the years 1987 
to 1990 or the annual emissions in the year before the reported year 
may be more appropriate than a modified reference case.
    In analyzing activities of a new entity or added capacity of an 
existing organization, extra care in constructing a reference case is 
necessary. Use of industry standards or of the alternatives actually 
considered during planning for the new capacity will increase 
credibility of the reference case. Another approach is the use of a 
unit-production (or unit of service) reference case. For example, if an 
entity is adding capacity in order to increase production or service to 
customers, it may calculate emissions per unit or customer and show 
reductions based on this common standard.
    Step 2. Defining project and reference case effects. The second 
major step in project analysis is identifying the types of effects the 
project had. The project may be primarily designed to reduce greenhouse 
gas emissions or increase carbon sequestration. It will, however, have 
both expected and unanticipated secondary effects. The reporter will 
need to address both primary and secondary effects in analyzing the 
project for reporting.
    Primary effects. These are the obvious, immediate, direct and 
intended effects of the project, resulting in direct and indirect 
emissions and carbon sequestration. For example, the primary effect of 
an electricity conservation project is the reduction of electricity use 
and of the carbon dioxide emissions associated with the electricity 
generation avoided. The primary effect of a tree planting program is 
the sequestration of carbon.
    Secondary effects. These are the more subtle, indirect, 
consequential, and perhaps unintended effects of projects. They may be 
positive (augmenting the primary effects) or negative 
(counterproductive to primary effects). Secondary effects may be large, 
in some cases as large as the primary effects, and include activity 
shifting, outsourcing, shifting emissions to different points of the 
life cycle, and offsetting emission reductions by residual market 
demand.
    The guidelines ask the reporter to clearly state the primary effect 
of the project and identify any significant secondary effects. If the 
entity is quantifying the emission reductions or carbon sequestration 
associated with the project, the entity should try to quantify the 
secondary effects, particularly those that amount to ten percent or 
more of the primary effects. DOE recognizes that quantifying the 
effects of a project can be difficult. However, the credibility of 
emission reduction or carbon sequestration reports may be impaired if 
negative secondary effects rose, or appeared capable of rising, thereby 
offsetting a significant portion of the reported primary effects. 
Ultimately, the reporter must choose the balance between increased 
analysis cost and increased thoroughness of the analysis, depending 
upon the reasons for reporting.
    Step 3. Quantifying reference case and project effects. The 
guidelines provide reporters with a wide range of options for 
identifying input data and defining methods for quantifying the 
project's impact on emissions or carbon sequestration. The types of 
data and methods used will be reported.
    First, the guidelines recognize three types of data: physical, 
default, and measured/engineering.
    Physical data. This is information that describes the activities 
involved in a project. For example, how many exit lights were replaced? 
What was the power requirement of the old and the new lights? How many 
hectares of which species of tree were planted?
    Default Data. This is information provided in the guidelines and 
supporting methodologies to assist reporters in evaluating the effects 
of projects. While using default data will ease reporting for many 
reporters, it is generally conservative, and may not provide the 
reporter's desired precision. There are two types of default data:
    Emissions Factors. These are factors that allow reporters to 
convert information about a change in energy use to an estimated change 
in greenhouse gas emissions. Emissions factors for direct emissions are 
more precise than for indirect emissions. For example, the change in 
direct emissions of carbon dioxide from a reduction in methane 
combustion is essentially constant, regardless of when or where the 
change takes place. Other emission factors, particularly those for 
indirect emissions, are less precise. For example, the draft guidelines 
provide emissions factors for electricity on a state-by-state basis. 
However, the effect that a specific change in electricity consumption 
has on emissions will vary by location within the state, the time of 
day, and the season in which a change occurs. Generally, the draft 
guidelines and supporting documents contain relatively conservative 
figures for indirect emissions factors.
    Stipulated Factors. These are factors that allow reporters to 
convert physical data about projects into estimates of changes in 
energy use, greenhouse gas emissions or carbon sequestration. The 
guidelines provide this information for a few types of projects where 
the scope and nature of the project can be clearly defined and the 
effects on emissions predicted with relative certainty. For example, 
the guidelines provide stipulated factors for converting physical data 
about tree planting into estimates of carbon sequestration. They also 
provide stipulated factors for converting information about certain 
energy-efficiency projects into estimates of fuel savings. These 
estimates can be combined with default emissions factors to estimate 
reductions in greenhouse gas emissions.
    Reporter-Generated Data. This is information developed by the 
reporter and used in estimating the effects of the reporter's projects. 
There are two types of reporter-generated data.
    Measured Data. These are data on emissions operating parameters 
collected directly from the project or a control group, that a reporter 
can use in estimating project accomplishments.
    Engineering Data. These are data that reporters derive from sources 
such as engineering manuals, manufacturer's equipment specifications, 
surveys, academic literature, and professional judgment.
    Standard Project. These are projects for which the draft guidelines 
provide the procedures and information necessary to transform physical 
data into emissions reductions or carbon sequestration results, relying 
entirely on physical and default data. A few types of projects can be 
described through standard project reports; these are identified in the 
sector-specific methodologies supporting the guidelines. Reporters must 
recognize that, since the default values used are conservative, the 
precision of their report is lessened. However, for reporters who do 
not have direct project measurements or experience in estimation 
methods, standard project methodologies will allow them to quantify the 
effects of these activities.
    Reporter-Defined Project. These are projects that use physical and 
reporter-generated data, possibly in combination with default data, to 
estimate the accomplishments of the project. For this type of project, 
reporters will need to be able to clearly indicate the sources of all 
data, and in the case of reporter-generated data, how it was measured 
or derived. For reporter-defined projects, the principles and guidance 
are provided in the sector specific methodologies supporting the 
guidelines.
    Estimation of reportable effects of most reporter-defined projects 
will require gathering basic data, and using it to derive the levels of 
project and reference case emissions. This may involve relatively 
simple calculations or complex modeling.
    The guidelines suggest recording the nature of the calculations or 
the type/name of the model used.
    In some instances, identified in the sector-specific supporting 
methodologies, it may not be possible to estimate emissions for both 
the project and the reference case. In these cases, it may be necessary 
for the reporter to measure the emission reductions or operating 
parameters directly.

IX. Significant Issues

    DOE requests comment on all issues raised by the draft guidelines 
and supporting materials and calls particular attention to several 
significant issues. Commenters are requested to consider the impact of 
any alternative approach they suggest on the goals of encouraging broad 
participation and generating useful data.
    (1) Is the scope of the guidelines with respect to emissions of the 
gases and substances specified appropriate?
    (2) Should threshold reporting levels of emissions or carbon 
sequestration be set? If so, at what levels and why?
    (3) Do the guidelines appropriately address and distinguish between 
direct and indirect emissions of the applicable gases? Are there 
additional ways which can address the statutory references to 
reportability of activities which result in direct emissions and those 
that result in indirect emissions?
    (4) In order to report an emissions reduction or carbon 
sequestration project, should reporters be required to report 
comprehensive data on their historic (1987-1990) emissions? On their 
organization's total greenhouse gas emissions? From all activities in 
the year covered by the project report?
    (5) What categories of data derivation should be identified (e.g., 
measurement, engineering estimate) as appropriate to achieve the dual 
goals of the program?
    (6) Is the approach to reporting activities taken in association 
with others appropriate for minimizing double counting while 
encouraging participation?
    (7) How should activities outside the U.S. be handled by the 
reporting program?
    (8) Is the information and approach provided on different radiative 
activity of gases appropriate? Should DOE delay finalizing this portion 
of the guidelines until completion of the current international 
deliberations?

X. Administrative Requirements

A. Regulatory Review

    DOE has concluded that this is not a significant regulatory action 
because it does not meet the criteria which define such actions under 
Executive Order 12866, 58 FR 51735, and is therefore not subject to 
regulatory review. Accordingly, the Office of Management and Budget 
(OMB) has informed DOE that no clearance of the draft guidelines and 
supporting materials is required.

B. Issues Under the Paperwork Reduction Act

    In addition to providing information to parties which wish to 
participate in voluntary reporting, the guidelines and supporting 
materials provide direction to EIA in developing the reporting forms 
and database for the program. Separate administrative requirements 
apply to the development of EIA reporting forms, which will proceed 
after DOE finalizes the guidelines.
    Any information collection requirements proposed in EIA forms for 
the voluntary reporting program are subject to the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq., and will be submitted to the Office of 
Management and Budget for review and approval of paperwork 
requirements. Because the reporting forms developed by EIA will be 
necessary for participation in the program and must be consistent with 
the guidelines, the draft guidelines and supporting materials may 
involve issues relevant to subsequent review of the forms for paperwork 
requirements. Comments on any paperwork issues identified by the draft 
guidelines and supporting materials are requested.

XI. Opportunities for Public Comment

A. Public Hearing Procedures

    A public hearing on the draft guidelines and supporting documents 
will be held at the time and place indicated in the DATES and ADDRESSES 
sections above. Any person who has an interest in the draft guidelines 
may request the opportunity to make an oral presentation. DOE reserves 
the right to cancel the second day of the hearing if scheduled requests 
to speak can be accommodated in the first day. All requests to speak 
should be made by telephone at the number listed in the ADDRESSES 
section.
    DOE reserves the right to schedule speaker presentations, and to 
establish procedures governing the conduct of the hearing. The length 
of each presentation may be limited to 5 minutes, or longer based on 
the number of persons requesting an opportunity to speak. Ten copies of 
the speaker's statement should be submitted at the hearing.
    A DOE official will preside at the hearing. The hearing will be a 
legislative-type hearing; speakers will not be sworn in nor cross-
examined. Further procedural rules needed for the proper conduct of the 
hearing will be announced by the presiding officer. A transcript of the 
hearing will be made and will be available for public inspection as 
indicated in the ADDRESSES section above.

B. Written Comments

    Interested persons are invited to submit comments on the draft 
guidelines and sector-specific issues and methodologies, and on the 
questions presented in this notice.
    Ten copies should be submitted to the address indicated in the 
ADDRESSES section above, and must be received by the date indicated in 
the DATES section of this notice. All written comments received will be 
available for public inspection in the DOE Freedom of Information 
Office Reading Room at the address provided at the beginning of this 
notice.
    Pursuant to provisions of 10 CFR 1004.11, any person submitting 
information which that person believes to be confidential information 
and which may be exempt by law from public disclosure should submit one 
complete copy of the document as well as two copies from which the 
information claimed to be confidential has been deleted. DOE reserves 
the right to determine the confidential status of the information and 
to treat it according to its determination.

    Issued in Washington, DC, on May 26, 1994.

Susan F. Tierney,
Assistant Secretary, Office of Policy, Planning, and Program 
Evaluation.
[FR Doc. 94-13304 Filed 5-31-94; 8:45 am]
BILLING CODE 6450-01-P