Greenhouse Gas Monitoring and Reporting Regulation - How You Can Prepare Now

October 19, 2009

On September 22, 2009, the United States Environmental Protection Agency (EPA) finalized the Mandatory Greenhouse Gas Reporting Rule which requires reporting of greenhouse gas (GHG) emissions from large sources and suppliers in the United States. This rule is estimated to affect about 10,000 facilities, representing approximately 85% of the GHG emissions in the United States. It is intended to allow EPA to collect accurate and timely emissions data to better understand the sources of GHG emissions and thereby to support the future development of policies and programs to reduce GHG emissions.

Monitoring of GHG emissions is required to start on January 1, 2010 with the first reports due in 2011 for calendar year 2010. In very limited circumstances, and upon submission of an application by January 30, 2010 that meets detailed and explicit requirements, an exemption from monitoring until the end of 2011 may be available.

Facilities covered by the rule include suppliers of fossil fuels or industrial greenhouse gases, specific source categories (for example petrochemical production and electricity generation), and certain facilities and stationary combustion sources that emit at least 25,000 metric tons per year of GHG emissions. Although certain source categories currently are exempt from the final rule, including underground coal mines, wastewater treatment, and electronics manufacturers, these source categories are being considered for inclusion in the rule by 2010 with reporting due by 2012.

Determination of GHG emissions is either by direct measurement or facility-specific calculations, depending on the source category. Facilities subject to the rule are required to submit annual reports to EPA and reporting is to be completed on the facility-level, not on a system-wide or common-ownership level.

The gases covered by the rule are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE). The rule prescribes source specific calculation methodologies and emissions factors for these gases.

The final rule contains several major changes from the proposed rule. These changes add a provision for exiting the program based on reductions in GHG emissions; reduce the number of source categories that must report under the rule; include exemptions for research and development; and add more flexibility for measuring and monitoring.

To prepare for this new GHG reporting rule, companies must, before January 1, 2010:

  1. Determine if your facility is (a) within the definition of a supplier or (b) within one of the 17 specific source categories to which the rule applies regardless of the quantity of GHG emissions.
  2. Determine if your facility is within the definition of any of the remaining specific source categories for which the annual GHG emissions applicability threshold is 25,000 metric tons of carbon dioxide equivalents. If so, collect the data needed to determine the amount of GHG emissions and assure that the data is reasonably accurate and representative. Then, calculate the carbon dioxide equivalent emissions from the facility using the methodologies and emissions factors prescribed in the rule.
  3. If your facility is not a supplier and is not within any of the specific source categories, determine if your facility operates a stationary combustion source for which the applicability threshold is 25,000 metric tons of carbon dioxide equivalents emitted per year. If so, collect the data needed to determine the amount of GHG emissions and assure that the data is reasonably accurate and representative. Then, calculate the carbon dioxide equivalent emissions from the combustion source using the methodologies and emissions factors prescribed in the rule.

If the rule applies to your facility:

  1. Determine if your facility has the required monitoring equipment in place and prepare the monitoring plan. Monitoring equipment requirements vary by a number of factors including source category, fuel type, and fuel delivery system and may include utility meters, equipment specific meters, level indicators or other monitoring equipment. If the required monitoring equipment is not in place, a detailed and specific request for delayed compliance must be made by January 30, 2010.
  2. If you have determined that the applicable monitoring requirements are inefficient, determine whether monitoring requirements for other source categories are more suitable and request using those alternate monitoring methods. The rule does not provide a deadline for making this request; however, it should be made as soon as possible.
  3. If your facility voluntarily has participated in another reporting program or cap and trade regime and has a data collection and GHG calculation and reporting system in place, determine whether that system meets the requirements of this rule. If not, determine whether your existing system can be modified to comply with this rule.
  4. If not implemented already, develop a comprehensive system to monitor, calculate, record, verify, and report the GHG emissions. This process is particularly important if your facility's GHG emissions are close to the applicability threshold.
  5. Determine your source specific reporting requirements. Since reports are required to be made electronically (EPA's electronic reporting system is under development), ensure that your reporting mechanism is flexible and can easily adapt to EPA's system.

Cheryl-Lynne Davis, Kevin N. McMurray or any other attorney in Frost Brown Todd's Environmental Law Practice Group can assist you in preparing for and complying with EPA's new GHG monitoring and reporting regulation.

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