Greenhouse Gas Emissions Reporting: Trends

1
Greenhouse Gas Emissions Reporting Trends
Challenges

• Auditing Roundtable
• Vienna, 4 May 2006
• Dr. Jochen Harnisch
• Ecofys GmbH, Nuremberg, Germany

2
Overview

• Introduction Ecofys GHG monitoring
• Motivations for companies
• Legal and standardisation framework
• Methodological challenges
• Examples
• Verification
• Conclusions

3
Ecofys
4
Ecofys

• Over 21 years of experience regarding climate
  change, energy efficiency renewables
• Solutions for industry, public sector NGOs
• International 300 employees in nine countries
  work on projects all over the world

5
London
Berlin
Poznan
Cologne
Utrecht
Nuremberg
Brussels
Turin
Barcelona
6
Ecofys
Projects
Consultancy
Built Environment
Project Development
Energy in Buildings
Climate Change
Energy Supply
Policy Studies
Biomass
PV
Green Markets
Wind
Solar Thermal
Energy Management
Demand Side Management
Industry
7
Our Core Comptences

• Energy climate policy
• Corporate greenhouse gas management
• International emission reduction projects
• Innovative energy concepts for buildings
• Renewable energies

8
Ecofys GHG Monitoring Verification

• Development and implementation of corporate
  monitoring systems
• Verification of corporate GHG inventories
• Verification of EU-ETS emission reports
• Development of sectoral, national and
  international GHG monitoring protocols
• Review of national GHG inventories
• Focus established in 2001 7 people across EU

9
Motivations for Companies
10
GHG Emissions Can Mean Money...
11
Greenhouse Gas Emissions

• UN Framework Convention on Climate Change (1992)
  and Kyoto (1997/2005)
• Assessment Reports 1-3 of the Intergovern-mental
  Panel on Climate Change (IPCC)
• Tony Blair Climate change - the biggest
  long-term challenge facing the world
• Stakeholder expectations, voluntary schemes and
  evolving regulatory framework
• Companies, governments and NGOs have long
  focussed on energy rather than greenhouse gas
  emissions

12
Mandatory Schemes

• EU Emissions Trading Scheme
• Other Trading Schemes UK, N, DK, AU-NSW, CAN
• National Statistics Laws to provide data for
  national ghg inventories

13
Interlinkage Mandatory Schemes
Source Point Carbon 2006
14
Voluntary Schemes

• Project credit based schemes CDM/JI under the
  Kyoto Protocol
• Carbon Disclosure Program (CDP)
• Global GHG Register (WEF)
• Global Reporting Initiative (GRI)
• Chicago Climate Exchange (CCX)
• NGO Programmes e.g. WWF Climate Savers or ED
  Partnership for Climate Action
• National Voluntary Programmes US Climate
  Leaders, BLICC

15
Overview Voluntary GHG Schemes
Source Ecofys, 2005
16
Voluntary Action

• Corporate Sustainability Reporting
• Corporate Targets
• CO2 neutral Products and Services
• Why?
• Motivate employees to accept changes and cost
  savings
• Compensate for other sustainability issues
• Investor and client perception

17
Certificate Markets Structure 2004 and forecast
for 2010
Structure 2004
Structure 2010
Kyoto- market
EU Project Market
Japan
Japan
Denmark
Australia
Canada
New Zealand
NSW
UK Trading system
ETS
Russia CIS
EU Project Market
ETS
VERs
Canada
CCE
USA
VERs
USA
Australia
Mas
NH
Regional Market
X
18
Legal Standardisation Framework
19
Reference Documents

• WBCSD/WRI GHG Protocol and Tools
• EU Monitoring Reporting Guidelines
• National monitoring protocols e.g. UK
• ISO 14064 1-3 GHG Monitoring Verification
• IETAs verification protocol
• EA 6/03, recognition of verification bodies
• ISAE 3000, non-financial auditing
• IPCC Inventory Guidelines for nat. inventories

20
Challenges

• Parallel (only partly compatible) protocols for
  different purposes/regions
• Auditing/verification requirements are still
  evolving
• WBCSD/WRI GHG Protocol provides the
  methodological core for ghg reporting
• Designed for voluntary reporting not for
  mandatory trading schemes

21
Methodologies
22
How to get started?

• Definition of scope of inventory
• Definition of boundary of company
• Drawing organisational operational boundaries
• Design of company specific calculation
  methodologies
• Documentation of monitoring procedure
• Collection of activity data
• Emission calculation
• Compilation of emission report
• External verification

23
Definition of the Scope of the Inventory
Source WBCSD/WRI GHG Protocol, 2005
24
Definition of the Company
Source WBCSD/WRI GHG Protocol, 2005
25
Organisational Operational Boundaries
Source WBCSD/WRI GHG Protocol, 2005
26
Definition of the site
27
GHG Management Reporting

• Generally no silver bullet high performance
  emission control technologyy
• Monitoring of small changes high accuracy
  requirements
• Relation to targets and allocations close link
  to economic consequences

28
Emission Determination Methods
Production Energy efficiency emission factor
Fuel consumption Mass/volume, heating value,
Emission- Oxidation factor
Annual emissions ton CO2 p.a.
Process emissions Mass/volume, Emission-
Conversion faktor
Measurement Concentra-tion and flow rate
29
EU-ETS Reporting

• Annual report to the competent authority
• To be verified by an independent Verifier
• Information contained
• Production data relevant for level of emissions
  consumption of fuel-/ input matieral, production
  output, etc.
• Emission factors, Oxidation/conversion factoren
• Emissions for each of the activites carried out
• Information are confidential ? Art 17 of
  Directive Access to information

30
Examples
31
Overview Examples

• Food company
• Pharmaceutical company
• 3) Power plant under the EU-ETS
• 4) Corporate transport emissions

32
Example 1 Food Company

• Background Disclosure of CO2 emissions because
  of stakeholder pressure
• Several hundred production sites across all
  continents
• Incomplete reporting for some regions
• Reduction of incompleteness in time
• Choice of appropriate level of aggregation for
  extrapolation country, region or world?
• Uncertainty about recent trend of greenhouse gas
  emissions increase or decrease?

33
Annual Trend of GHG Emissions for Different
Regional Levels for Extrapoltion
Source Ecofys, 2005
34
Example 2 Pharmaceutical Company

• Background GHG Target setting as part of wider
  sustainability strategy and stakeholder relations
• Dominance of Scope 2 emissions from Electricity
  Purchase
• Most production sites located in one country with
  strongly fluctuating mix of power generation
  (hydroelectricity)
• Main reduction lever purchase of green
  electricity
• Inconsistent use of CHP emission factors along
  time series
• Time series did not provide any useful
  information on performance
• Appropriate quality indicators for green energy

35
Original Revised Time Series
Source Ecofys, 2005
36
Example 3 Installation under the EU-ETS

• Background Large power plant under the EU-ETS
  with broad mix of primary and secondary fuels
• Separate permits for different boilers
• Accuracy requirements
• Site specific emission factors lab
  accreditation
• Stock-estimation stock losses
• Biomass tracking for mixed waste fuels
• Evaluation and change of supply contracts

37
Delivery Fuels
38
Attribution of Fuels
39
Stock Taking Losses
40
Example 4 Corporate Transport Emissions

• Background
• Take a wholistic approach and put emissions from
  stationary sources into perspective
• Issues
• Decent data availability for business travel
  commuting
• Limited data availability for supply chain
  distribution
• Inconsistent coverage and time series
• Comprehensive need for extrapolation
  estimation

41
Scope Transport Emissions
Source Ecofys, 2006
42
Emissions from Transport Activities
Source Ecofys, 2006
43
Emissions from Transport Modes
Source Ecofys, 2006
44
Verification
45
The EU ETD Monitoring Reporting
Monitoring Guidelines Principles
Principle I Completeness
Principle II Consistency
Principle III Transparency
Principle IV Accuracy
46
The EU ETD Materiality
Frequent small errors or errors (Aggregate errors)
Using spreadsheets containing errors
Inaccurate emissions factors
Materiality issues
Incorrect use of protocols
Incorrect reporting of emissions
Legal and operational boundaries
management control or dominant influence
Fundamental uncertainty - data quality / integrity
Unsystematic recording
Source BSI
47
The EU ETD Verification Process

• Overview of all installations activities
• Understand significance of emissions

STRATEGIC ANALYSIS

• Verify information on-site
• Use spot-checks to determine data reliability

PROCESS ANALYSIS

• Evaluate reliability of data from each source
• Identify high-risk sources, checking emissions
  factors calculations (materiality)
• Verify risk control methods minimising
  uncertainty

RISK ANALYSIS
REPORT

• Specify issues relevant to verification work
• Opinion that reported emissions are not
  materially misstated

48
Key Verification Issues in EU-ETS

• Accrediation/Acceptance
• Level of Assurance
• Level of Materiality
• Possible Outcomes of Verification Audits
• Role of Conservative Estimates

49
Conclusions
50
Conclusions

• Companies may be subject to different mandatory
  and voluntary schemes with their respective
  requirements
• Protocols standards for reporting and
  verification are evolving but are partially
  contradictory not always fully adequate
• Evolutionary process, potentially leading to
  convergence
• GHG emission reporting goes beyond data
  management requires multi-disciplinary
  approaches
• Need to adapt corporate GHG reporting systems to
  specific purpose and company

51
Further support for auditors and auditees
Dr. Jochen Harnisch Ecofys GmbH
www.ecofys.com j.harnisch_at_ecofys.de Tel. 49
911 994 358 12 Fax [phone]