TOOLS FOR ACTION:

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TOOLS FOR ACTION The GHG Protocol Kjell
Oren World Business Council for Sustainable
Development Taipei, April 11th 2003 Manila,
April 7th 2003
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Structure of todays presentation

• 1. Brief overview of GHG Protocol Process and
  Background
• 2. Overviews, short descriptions and status of
• Corporate Accounting Module
• Project Accounting Module
• 3. Link between the two Modules

Setting the scene
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The GHG Protocol Initiative

• Convened in 1998 by WBCSD and WRI
• Mission to develop international GHG accounting
  and reporting standards for business through an
  inclusive and transparent multi-stakeholder
  process
• 2 modules (i) for CORPORATE INVENTORIES
• (ii) for REDUCTION PROJECTS

Setting the scene
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The GHG Protocol A Unique Partnership
GHG Protocol Initiative a unique partnership
Businesses,industry associations, NGOs,
governments, accountants, inter-governments
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Motivation for the Initiative
The absence of clear international accounting
rules for GHG mitigation. WBCSD/WRI approached
by companies to develop GHG accounting standards.
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Why use the GHG Protocol?
Participate in Emissions trading
Public/financial reporting
Business goals
Comply with Government/ Voluntary schemes
Internal GHG risk assessment
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(i) Corporate Inventory Module
Standards and guidance for companies to develop
corporate inventories to account and report GHG
emissions.
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Corporate Module - what it contains
CALCULATION TOOLS Web-based, user-friendly,
free Sector-specific IPCC methodologies and
industry best-practices
GUIDANCE Business Goals Inventory
design Identifying sources Setting GHG targets
STANDARDS Accounting principles Organizational
boundaries Operational Boundaries Historic
performance datum
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Corporate Module - Characteristics

• Improves consistency credibility
• Simplifies measurement reporting
• Minimizes cost of developing an inventory
• Harmonizes across borders and initiatives
• Accepted by business, NGOs, and Governments

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Contributors

• 350 stakeholders contributed and reviewed
  corporate standard
• Businesses
• NGOs (WWF, NRDC, Pew, TERI)
• Governments (US EPA, Canada, UK, Australia,
  Japan)
• Inter-government organizations (UNFCCC, IPCC,
  IEA, EU, )
• Corporate standard tested by 30 companies in 9
  countries
• Peer reviewed for verifiability and consistency
• Corporate inventory standard published in 2001
• Second edition scheduled for release in July 2003

Setting the scene
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Business using GHG Protocol Corporate Module (as
participants of schemes/initiatives or for own
purposes)

• Alcan Aluminum, USA
• Alcoa, USAAstraZeneca, UK
• AstraZeneca, UK
• BP, USA
• Bethlehem Steel, USA
• Birka Energi, Sweden
• The Body Shop, UK
• Cinergy, USA
• Eastman Kodak, USA
• CODELCO, Chile
• Edison Mission Energy, USA
• Ford, USA
• ENDESA, Spain
• Green Mountain Energy, USA

• Holcim, USA
• IBM, USA
• IKEA International, Sweden
• International Paper, USA
• Interface, USA
• Johnson Johnson, USA
• Kansai Electric Power, Japan
• Lockheed Martin, USA
• Miller Brewing Co., USA
• Mirant, USA
• National Renewable Energy Laboratory, USA
• Nike, USA
• Norm Thompson Outfitters, USA
• Norsk Hydro, Norway

• N.V. Nuon Energy, Netherlands
• Philips Yaming, China
• PWC, New Zealand
• PSEG, USA
• SC Johnson, USA
• Seattle City Light, USA
• Simplex Paper Pulp, India
• Sony Electronics, Japan
• STMicroelectronics, Switzerland
• Suncor, USA
• Tata Steel, India
• Tokyo Gas, Japan
• Volkswagen, Germany
• We Energies, USA
• 500 PPM GmbH, Germany

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Revision of the GHG Protocol Corporate Standards

• Current status Undergoing advanced review
• Two new chapters
• Target Setting
• Accounting for Carbon Stocks
• Timeline draft of 2nd edition for WBCSD approval
  in May.
• Due for publication in
  July/August 2003

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Adoption of the GHG Protocol
ISO Joint WRI/WBCSD comments taken into account
and will adopt same basic structure. ISO to have
three modules (a) Entity-level, (b) Project and
(c ) Monitoring and Verification WEF Register
GHG Protocol is the core basis EU emissions
trading The GHG Protocol will contribute to
monitoring guidelines, and project-based
emissions
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(ii) Project Module - Motivation
The absence of clear international accounting
rules for GHG mitigation projects under different
trading schemes and initiatives.
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Objective of the Project Module
To help project developers report and account
for GHG reductions achieved by means of specific
reduction projects.
Setting the scene
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What is a reduction project?
IDENTIFICATION
Reductions
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Project Module - what it will contain
Structured along the project cycle
1. Introduction to GHG accounting, identification
of GHG reduction opportunity, ensuring
eligibility
Identification of projects and GHG impacts
2. Identification of GHG impacts
3. Quantification of GHG reductions
Monitoring and Verification
4. Monitoring and Verification
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Project Reduction Opportunity

• Energy and Power
• Industrial Projects
• Fugitive Emissions Capture
• Agricultural Projects
• Carbon Sequestration

TYPOLOGY Project specific guidance for project
developers regulators
Monitoring and Verification
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Ensure Eligibility

• Different schemes have different rules
• Regulatory additionality
• Sustainable development objectives
• Allowable project types, locations, timing of
  project etc
• Financial additionality financing is additional
  to ODA

Monitoring and Verification
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Identify GHG Impacts

• Identify significant GHG impacts that can be
  reasonably
• attributable to the project
• Address ownership estimated ownership share of
  positive
• indirect impacts resolve contested ownership
• Assess leakage potential e.g. activity shifting

Monitoring and Verification
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Quantify GHG Reduction

• 1. Estimate project emissions
• 2. Select the most likely emissions scenario in
  the absence of
• the project
• Project specific approach
• Standardised appoach
• 3. Estimate baseline emissions
• 4. Estimate reduction (baseline project
  emissions)
• 5. Adjust for leakage, if applicable

Monitoring and Verification
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Selecting a baseline project specific approach

• Identify possible baseline scenarios
• Apply baseline tests to possible baseline
  scenarios
• Regulatory screen
• Investment ranking
• Barriers test
• 3. Select the most likely baseline scenario

Monitoring and Verification
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Selecting a baseline standardised approach
Establish a performance standard applicable to a
specific category of projects 1. Choose the
temporal range of reference activities e.g
recently constructed sites, or sites under
construction 2. Define geographical region to
which standard applies 3. Determine breadth of
standard e.g. fuel specific, all fossil fuel
plants 4. Decide on level of stringency e.g
average, better than average
Monitoring and Verification
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Monitoring and Verification

• Reporting what must be reported, and how it
• must be reported
• Monitoring the project
• Verification plans

Monitoring and Verification
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Project Module - characteristics

• Integrated approach
• Simplifies measurement reporting
• Lowers project transaction costs
• Improves consistency, quality credibility
• Is scheme-neutral (i.e. consistent between
  trading schemes e.g. CDM, EU-ETS, UK-ETS, any
  programs with project components)

IDENTIFICATION
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Emerging Issues

• Environmental integrity and practicality
• Setting optimal project boundaries
• Establishing credible baselines
• Needs more input from project developers
• Are the guidelines clear?
  Simple/complicated? User-friendly?
• Do they serve the intended
  purposes?
• Absolute value of document is heavily dependent
  on road-testing

IDENTIFICATION
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GHG Protocol and CDM Visualizing the link
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Road-testing what this entails

• What this entails
• A commitment to test and provide feedback on our
  draft guidelines
• Road-testing options
• For a proposed project (real time) or
• For an operational project (retrospectively)
• Different commitment levels are welcome
• Target audience
• Companies or individual project developers
• Administrators of trading schemes

IDENTIFICATION
Is this of interest to your company?
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Thank you!
IDENTIFICATION
www.ghgprotocol.org www.wbcsd.org