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March 16, 2009

Is Criticism of EPA GHG Reporting Rule Justified?

Andy Hultgren
Environmental Performance Group

In a recent article, a representative of consulting firm CRA International criticized the proposed Environmental Protection Agency Greenhouse Gas Reporting Rule for including both upstream and downstream reporting of emissions, saying it was “costly” and “duplicitous” to take such an approach.

It is correct that it is more costly to report downstream greenhouse gas emissions (such as furnace emissions, automobile emissions, or smokestack emissions) than it is to report upstream emissions (such as the carbon content of natural gas extracted from a natural gas well).

For example, consider that there are far fewer points of natural gas extraction (e.g. natural gas wells) than there are points of natural gas combustion (e.g. furnaces and boilers throughout all of America’s homes and businesses).  So, reporting emissions “upstream” means much fewer entities need calculate their GHG emissions, which means a much lower reporting cost burden on America’s private sector.

However, the EPA estimates that under its proposed rule, out of the millions of homes and businesses throughout America, only 13,000 entities would be required to report their GHG emissions.  Through its judicious use of the downstream reporting requirement for only the largest of emitters and upstream reporting for all other emissions, the EPA estimates it will capture 90 percent of total US greenhouse gas emissions.

Now, about the EPA being “duplicitous” in its requirements for both upstream and downstream emissions reporting: the EPA gives good justification for their approach within the text of the proposed rule. For example, see the following quotation from page 94 of the proposed rule.

“There is inherent double-reporting of emissions in a program that includes both upstream and downstream sources.  For example, coal mines would report CO2 emissions that would be produced from combustion of the coal supplied into the economy, and the receiving power plants are already reporting CO2 emissions to EPA from burning the coal to generate electricity.  This double-reporting is nevertheless consistent with the appropriations language, and provides valuable information to EPA and stakeholders in the development of climate change policy and programs.

“Policies such as low-carbon fuel standards can only be applied upstream, whereas end-use emission standards can only be applied downstream.  Data from upstream and downstream sources would be necessary to formulate and assess the impacts of such potential policies.”

The EPA is not only defining a reporting rule, but they are also defining a data set upon which national policy decisions will be based.

This means data has to be available to support a range of policy options, including both upstream and downstream regulatory measures; thus the proposed rule to include mandatory reporting of upstream emissions as well as a limited selection of downstream emissions.

Andy Hultgren is a project manager and the greenhouse gas reporting technical lead for Environmental Performance Group.

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