The Climate Registry: The Registry & The Protocol August 2008

1. The Climate Registry: The Registry & The Protocol August 2008 Judy Collora, PE Senior Consultant

2. Outline • The Climate Registry (TCR) Overview • Greenhouse Gas Basics • TCR Protocol • Example Calculation

3. The Climate Registry – Process • Registry • Houses emissions, transactions • Protocol • Guidance on how to perform inventory • 3rd party Verification • Publish (public data)

4. The Climate Registry – Background (1) • Created in 2007 • Purpose • Establish and endorse voluntary entity-wide GHG registry that collects data consistently across jurisdictions • Encourage entities to join • Incorporate quantification methodologies into future mandatory programs • Current membership covers 80% of populations in the US and Canada (includes most of southeast)

5. The Climate Registry – Background (2) www.theclimateregistry.org

6. The Climate Registry - Tools • General Reporting Protocol V1.1 released May 2008 • Developed through a public stakeholder process • Drawn from existing protocols • Developing industry-specific reporting protocols • Power • Oil & Gas • Municipal • General Verification Protocol V1.0 released May 2008 • Required to verify emissions • Should be separate from company performing the inventory (conflict of interest) • Climate Registry Information System (CRIS) launched in July 2008 • On-line GHG calculation, reporting, and verification tool • Will have ability to calculate emissions in CO2e and aggregate emissions data by facility, state, county and entity • Public access to The Climate Registry’s verified emission reports

7. Common Terms (1) • TCR: The Climate Registry • GHG: Greenhouse Gas • GWP: Global Warming Potential • CO2e: CO2 equivalents • Direct Emissions: Company’s stationary and mobile sources • Indirect Emissions: Imported steam and power • Other Indirect Emissions: 3rd party /tolling sources

8. Common Terms (2) • Operational/Financial Control Approach • Equity Share Approach • IPCC: Intergovernmental Panel on Climate Change • WBCSD: World Business Council for Sustainable Development • WRI: World Resources Institute

9. Overview of Scope and Type of GHGs Source: WRI/WBCSD GHG Protocol Corporate Accounting and Reporting Standard (Revised Edition), Chapter 4.

10. Sources of Greenhouse Gases

11. Comparison of Global Warming Potentials from IPCC’s Second and Third Assessment Reports Source: California Climate Action Registry General Reporting Protocol, April 2008

12. Calculating CO2e • CO2e is carbon dioxide equivalent • CO2e reflects the global warming potential (GWP) of each greenhouse gas relative to carbon dioxide, which has a GWP of 1 Emission rate = 400 tpy CH4 CH4 GWP = 21 400 tpy CH4x 21=8,400 tpy CO2e

13. Control vs. Equity Approach • Control = you make the EHS decisions • Equity = you have a financial stake only • Example for company with financial interest (equity), but no control: Operations =8,400 tpy CO2e No management control = 0 tpy CO2e 10% equity share = 840 tpy CO2e

14. TCR Protocol – Where to Find It http://www.theclimateregistry.org/downloads/GRP.pdf

15. TCR Protocol – What it Covers • Geographic Scope • Must report emissions sources in all of Canada, Mexico, and United States • Must indicate if any facility is located on lands designated to Tribal Nations (Registry members) • Can report worldwide emissions • Organizational Scope • Operational Control Approach • Equity Approach • Can report either or both • Special Considerations for Lease Treatment (Capital vs. Operational leases) • Emissions Scope • Must report Direct (Scope 1) and Indirect (Scope 2) • All 6 GHGs • Stationary and Mobile sources (combustion, process, and fugitives) • Imported Steam, Heat, and Power • Can report Other Indirect (Scope 3) – e.g., captive tolling, employee commuting

16. TCR Protocol – Option for First 2 Years • Scope is reduced • Transitional report • CO2 emissions only • Stationary combustion • All operations in at least one state • Typically based on operational control approach • Must be Verified by 3rd party

17. TCR Protocol – Other Items • Base Year Designation • First year of full reporting (not transitional years) • Update if emission changes exceed 5% of base year emissions • No adjustments for acquisition (or insourcing) or divestments (or outsourcing) that were not in the base year • De minimis Emissions • 5% of total emissions (Scope 1 and 2) • All emission sources accounted for in base year report cannot be deemed de minimis in future years (even if emissions drop below 5%) – ensures comparability to base year • Efficiency Metrics – optional (e.g., tonnes CO2e per widget produced) • Verification • Required annually by third-party • Five-year verification cycle • Reporting Timeline • Emissions submitted by June 30 and verified by December 15

18. Locating Emission Factors • IPCC Guidelines for national inventory calculations and emission factors • Database on Greenhouse Gas Emission Factors (EFDB) • Contains IPCC default emission factors • Search by source/sink categories, fuel type, and emission gases • Other sector/general protocols (California Climate Action Registry) • EPA’s Air Pollutant Emission Factors, AP-42

19. Example:Direct Emissions fromStationary Combustion • Step 1: Identify all types of fuels combusted • Step 2: Determine annual consumption of each fuel • Step 3: Select appropriate emission factor for each fuel • Step 4: Calculate each fuel’s CO2 emissions • Step 5: Calculate each fuel’s CH4 and N2O emissions • Step 6: Convert CH4 and N2O to CO2e and sum all GHG emissions Note: assumes operational control, i.e., 100% of CO2e emissions

20. Example – Acme Widget Co.Stationary Combustion Sources • Step 1: Identify fuel – natural gas • Step 2: Annual fuel consumption • Step 3: Select appropriate emission factors (Table 12.1 of TCR Protocol) • CO2 = 52.91 kg/MMBtu • CH4 = 0.0059 kg/MMBtu • N2O = 0.0001 kg/MMBtu

21. Example – Acme Widget Co.Stationary Combustion Sources • Step 4: Calculate CO2 emissions • Step 5: Calculate CH4 and N2O emissions

22. Example – Acme Widget Co.Stationary Combustion Sources • Step 6: Convert to CO2e and sum all GHG emissions

23. Conclusions • If you’re not developing a climate change strategy that includes a GHG emission inventory, consider acting now to ready yourself for future mandatory requirements. • Leave yourself time to correct inconsistencies or recordkeeping issues (data gaps) before mandatory requirements are knocking at your door • Consider basing your emission inventory after TCR’s protocol – likely future transition will be more seamless and you will be better prepared. • Over the long term, GHG emissions are a business asset. Therefore, accurate carbon quantification and well-conceived carbon strategy are a must.

24. Questions?