1. SETTING THE STANDARD IN GREENHOUSE GAS MANAGEMENT CLIMATE LEADERS Greenhouse Gas Workshop: Developing a GHG Management Strategy Federal Environmental Symposium East June 2, 2008

2. Federal Leadership on climate and energy Energy Star 175 Federal buildings with Energy Star label Portfolio Manager (Veteran’s Administration has linked energy tracking system to provide current ratings) New feature in PM to calculate emissions from building data Green Power Partnership- U.S. Air Force, VA, and EPA among top purchasers Federal Energy Management Program Collecting energy data, promoting best practices, emissions calculations

3. Main Street Significant public interest, green shoppers, educated consumers Employee satisfaction Staff want to feel employer is good corporate citizen E.O. 13423 Annual energy efficiency and renewable energy goals Goal to “reduce greenhouse gas emissions” Legislation coming? Draft House bill H.R. 3221 (2007) included requirement for agencies to inventory GHG emissions as part of Carbon Neutral Government Act (did not pass) Next Frontier: Agency-wide greenhouse gas management

4. Benefits of Developing a Strategy Reduce impact on the global environment Better manage greenhouse gas emissions and associated risks across emissions sources (buildings, fleets, plants, etc) Realize cost savings through energy efficiency Integrate climate change strategies with State, Regional, and International GHG accounting schemes National Renewable Energy Laboratory and U.S. Forest Service are Partners in Climate Leaders

5. Climate Leaders works with organizations to develop a long-term comprehensive GHG management strategy Road-tested with nearly 200 partners from every major sector across the country, representing 8% U.S. emissions and 10% U.S. GDP 3 critical components to credible strategy Complete Agency-Wide GHG Inventory Develop Inventory Management Plan (IMP) Set Aggressive Agency-Wide GHG Reduction Goal Annual reporting to EPA creates lasting record of accomplishments and identifies agency as environmental leader EPA recognizes and publicizes progress in the program Credible Climate Strategy

6. Program Participation Steps Partner Joins Program EPA assists Partner in developing inventory and inventory management plan (generally within 1 year) Partner reports annual inventory data to EPA and documents progress toward goal Partner may participate in meetings, public outreach, press events, etc. Partner sets agency wide 5-10 year GHG reduction goal Partner Achieves Goal

7. Climate Leaders Partners receive high-level recognition via: Press events Recognition events with EPA Page on CL web site Use of program logo Articles in local, national, and trade magazines Partner conferences, newsletters, speaking opportunities Public Service Announcements (PSAs) in mainstream press. 2007-8 PSA seen by over 10 million people National Public Recognition

8. Reporting First and Second Components

9. EPA Inventory Guidance Based on International WRI/WBCSD GHG Protocol: The most widely used international accounting tool for government and business leaders to understand, quantify, and manage energy use and greenhouse gas emissions. Convened in 1998 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) Multi-stakeholder development process included several hundred individuals from corporations, NGOs, and governments throughout the world.

10. GHG Protocol- Global Adoption Voluntary Climate Initiatives  U.S. EPA Climate Leaders Program  China, India, Mexico, Brazil, and Philippines GHG Management Programs  Korea National GHG Registry  South Africa NBI/BUSA-DEAT Initiative  WWF Climate Savers Program GHG Registries  The Climate Registry  US DOE 1605b Registry  WEF Global Registry Multilateral Non-government Initiatives  International Standards Organization (ISO) Industry Initiatives  WBCSD CSI Protocol  International Forum of Forest and Paper Associations  International Aluminium Institute Market Initiatives  AP 6 Initiative Cement Sector Protocol  Carbon Disclosure Project  Chicago Climate Exchange  EU Emissions Trading Scheme (informed by GHG Protocol calculation tools)

11. Required Agency-wide 6 major Greenhouse Gases (CO 2, CH 4, N 2 O, PFC, HFC, SF 6 ) Direct emissions Indirect emissions from electricity, heat, and steam Optional Offset projects Employee travel and commuting Product transport Contractor operations/sites First Component: Develop a Customized Inventory

12. Step 1 Identify Organizational Boundaries Which facilities should you include? ORGANIZATIONAL BOUNDARY APPROACH EQUITY SHARE (by % ownership) CONTROL FINANCIAL CONTROL (by economic interest) OPERATIONAL CONTROL (by operating policies) Approach matters most for treatment of partially owned or operated facilities (e.g. government owned – contractor operated) and for lease agreements

13. Step 2 Identify Operational Boundaries Which sources of emissions should you include? Stationary Combustion of fossil fuel Process emissions Mobile Sources Refrigeration/AC Purchased electricity or steam Other Sources: backup generators, fuel for heating, aircraft, anaerobic wastewater treatment Optional Sources (e.g., business travel)

14. Emissions “Scopes” Source: WRI/WBCSD GHG Protocol

15. Example Calculations EPA has calculation guidelines and tools available Example of calculation (Stationary Combustion): Emissions = Fuel i x HC i x C i x FO i x ∑ i = 1 n CO 2 (m.w.) C (m.w.) Where: Fuel i = Mass or volume of fuel type i combusted HC i = Heat content of fuel type i C i = Carbon content of fuel type i FO i = Fraction oxidized of fuel type i CO 2 (m.w.) = Molecular weight of carbon dioxide C (m.w.) = Molecular weight of carbon

16. Step 3 Choose a Base Year Typically the most recent year for which quality data are available For federal agencies may be defined by E.O. 13423 guidelines Rules for adjusting your base year data for: Acquisitions/divestitures: adjust your base year data when these occur Organic growth/decline: do not adjust your base year data Question to ask: Are these new emissions to the atmosphere, or did they exist previously?

17. Second Component Create an Inventory Management Plan Institutionalizes process Develop and implement an IMP or a similar collection of Standard Operating Procedures and document process EPA provides checklist of components for good IMP to use as guideline when preparing documentation EPA offers technical assistance to help organizations complete IMP documentation

18. IMP Components Partner Information Boundary Conditions Facilities and sources included Emissions quantifications Methods and factors Data management Activity data, data management process, QA/QC Base Year Adjustment thresholds Management tools Roles & responsibilities, training, document retention policies Auditing & verification Internal & external

19. IMP Requirement Example A list of emission factors and other constants and reference for factors and constants (i.e. Global Warming Potentials and conversion factors) for each emission category Descriptions of the process for how external references are kept current Where multiple factors are used, specify which facility / source uses the respective factor Agency should provide specific information on the emission factors and other constants used to develop GHG inventory

20. Inventory Management Plan Internal Benefits Institutionalizes inventory process Leads to comprehensive & credible data management Increases efficiency/lowers costs by centralizing processes Increases accuracy and transparency Facilitates long-term emissions/goal tracking May facilitate documentation of capital savings Allows for continual improvement IMP provides assurance that Partners develop a high- quality inventory that is consistently maintained and updated over time

21. Resources Available http://www.epa.gov/climateleaders/resources/index.html

22. GOALS Third Component

23. Third Component Set an aggressive, long-term GHG goal Absolute 3M pledges to reduce total U.S. GHG emissions by 30 percent from 2002 to 2007 Normalized Holcim (US) Inc. pledges to reduce U.S. GHG emissions by 12 percent per ton of cement from 2000 to 2008 Index Ball Corporation pledges to reduce total U.S. GHG emissions by 16 percent per production index from 2002 to 2012 Net Zero (“Carbon Neutral”) Melaver, Inc. pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2009

24. Ensuring leadership goals Criteria: Agency-Wide Based on the most recent base year for which data are available Achieved over 5 to 10 years Expressed as an absolute GHG reduction or as a decrease in GHG intensity Aggressive compared to the projected GHG performance for the sector EPA individually negotiates each Climate Leaders goal

25. Benefits of Setting a Goal Focus high-level attention on existing and potential reduction activities Institutionalize management and tracking of progress for energy and GHG reduction activities Encourage innovation Identify new reduction opportunities Employee morale, recruiting, and retention Positive media attention

26. How to set a goal Assemble a broad-based team Engineers, environmental, energy, communications, procurement, policy Analyze GHG data Relative contribution of scope 1 vs 2 vs 3 Compare similar facilities –absolute energy level –intensity (e.g. energy use per square foot of building space) Evaluate historic data and trends if possible Identify any existing company goals in energy and/or environment E.g. EO 13423

27. Analyze Future Scenarios Identify planned construction, moves, facility closures, etc and likely effects on emissions Analyze low and high ranges of growth projections Facility- office, data centers, labs FTEs Analyze energy price forecasts

28. Identifying Reduction Opportunities Identify best practices in marketplace Energy management systems –automated tracking –corporate energy manager and team Innovative technologies Identify projects Already in pipeline –Energy efficiency –Renewable energy –Capital projects that might improve efficiency Future possibilities/ “wish list” Conduct financial analysis of projects

29. Working with a 3 rd Party Working with a 3 rd party to set a goal can add credibility to your effort EPA process: 1) Partner presents an initial goal proposal to EPA (based on inventory and internal analysis) 2) EPA completes performance benchmark analysis- evaluates sector “business-as-usual” energy/carbon intensity performance 3) Partner and EPA negotiate a mutually agreeable goal- “aggressive yet achievable” 4) EPA publicly announces a goal and provides recognition for company’s efforts

30. EPA Analysis Creating a Performance Benchmark DOE’s National Energy Modeling System (NEMS)  forecasts fuel-specific consumption for heavy industry  forecasts commercial building energy demand Bureau of Labor Statistics (BLS) Forecast input/output tables for the US economy  estimates fuel quantities purchased/$output ICF’s Integrated Planning Model (IPM)  For electric generators Three models to determine Business-As-Usual sector improvement rates & current average intensity rates based on company’s sector

31. Sample Goal Setting Analysis California Portland Cement Company Goal Proposal: 9% per production index from 2003- 2012 Sector’s forecasted benchmark improvement rate (NEMS model):  Reduce CO2 emissions by 4.12% per ton of cement output by 2012 Cal Portland exceeds forecasted BAU improvement rate by 118% Additional Factors: Energy Star Partner (Partner of the Year 2005), current intensity better than sector average

32. Tracking your Progress Always track your absolute emissions If you choose a normalized goal: Determine an appropriate production metric that makes sense for your agency –Should correlate closely to GHG emissions to measure accurately improvements in efficiency –Examples: square footage of building space (energy tracks more closely to this than to, e.g. # employees) If you divest a facility, make sure to adjust for production metric as well as emissions

33. Using RECs and Offsets Renewable Energy Certificates (RECs) and offsets are considered an “adjustment” to emissions and can be used towards meeting goals RECs - credible way to reduce emissions from electricity use, should follow green power market definitions for eligibility Offsets - project-based reductions, apply towards Scopes 1 and 3 Climate Leaders methodologies for landfill gas, anaerobic digesters, commercial & industrial boilers, transit bus projects, reforestation/afforestation Based on performance standard approach Questions on whether federal government authorized to make these purchases

34. Going “carbon neutral” 1.Develop a robust GHG inventory and inventory management plan Include at least one significant optional source 2.Achieve Internal GHG Reductions Commit to implementing internal GHG reduction measures. This commitment should be expressed as an internal GHG reduction goal that is aggressive as a stand-alone goal 3.Purchase Green Power, Renewable Energy Certificates (RECs), and/or Offsets Green Power/RECs to reduce emissions associated with electricity use Project-based reductions to offset the remaining emissions from direct, other indirect, and optional emissions sources

35. Results Leadership in the Defense Industry 2004: UTC pledges to reduce global GHG emissions by 16 percent per dollar revenue from 2001-2006. 2006: Lockheed Martin pledges to reduce U.S. GHG emissions by 30 percent per dollar revenue from 2001- 2010. Raytheon Company pledges to reduce U.S. GHG emissions by 33 percent per dollar revenue from 2002- 2009. 2007: UTC reduced global GHG emissions by 46 percent per dollar revenue from 2001-2006. UTC pledged to reduce total global GHG emissions by 12 percent from 2006- 2010. ??2008??

36. “Low Hanging Fruit” Lighting Projects (sensors, CFL and high efficiency lights) Upgrade Cooling (high efficiency units, system balance) Reduce Plug Load (high efficiency equipment) Variable Speed Systems for Air Handling and Product Distribution Mobile Sources (employee travel/commuting and product transport) “Higher Hanging Fruit” Combined Heat and Power (CHP) Landfill Gas Recovery Install Green Power (solar panels, micro turbines) Innovative Projects  New Heating/Cooling Systems (ice, under floor distribution, solar and wind building exposure)  Green Roofs General GHG Reduction Methods

37. Thank you Manuel J Oliva, PE (202) 343-9094 oliva.manuel@epa.gov Bella Tonkonogy (202) 343-9183 tonkonogy.bella@epa.gov www.epa.gov/climateleaders