Climate Change and Greenhouse Gas Reduction

The process of establishing regulations to address climate change is beginning to accelerate in the United States.  Despite the fact that no regulatory programs specifically mandating greenhouse gas (GHG) reductions exist, several air quality permits have recently been denied at the state level under the existing Clean Air Act on the basis of GHG emissions.  The process has reached a point where it will become important for companies to understand the scope of proposed climate change and GHG regulations, what practical procedures will need to be developed for reporting and recording of GHG emissions, and how the GHG program can represent an opportunity for businesses.

What are Greenhouse Gases?

GHGs are gases that have the potential to absorb the longwave energy being radiated from the earth.  A portion of the absorbed longwave radiation heats the atmosphere while some longwave energy is re-radiated back to the earth’s surface as well as into outer space.  The re-radiated energy reaching the earth’s surface and the absorbed energy will increase the temperature of the earth’s surface and atmosphere.  The “man-made” gases that are efficient at re-radiating the longwave radiation are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs).

What’s happening at the National Level?

Climate change action officially began with the introduction of the Kyoto Protocol.  The Kyoto Protocol represents an international agreement to reduce GHGs relative to 1990 levels through a “cap and trade” program.  The Kyoto Protocol was signed by the United States, but was never ratified.  However, the 110th Congress has introduced over 125 bills, resolutions, and amendments to address climate change and GHG emissions.  The legislation varies greatly, but includes programs such as cap and trade CO2 reduction programs, carbon taxes, participation in international programs, funding for research and technology for climate change solutions, and more.  The legislation also addresses energy policy, including efficiency, new technologies, resource management, transportation issues, and building standards.  One of the leading bills in the Senate is the Lieberman-Warner bill, which introduces an industry wide cap and trade program with both short term and long term emission targets of 2020 and 2050, respectively.

What’s happening at the Regional Level?

The Regional Greenhouse Gas Initiative (RGGI) is a regional cap and trade program to reduce CO2emissions from the power generation sector.  RGGI consists of 10 participating northeast states, including Maryland, Delaware, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine.  RGGI has developed a Model Rule that each of the 10 states will adopt to allow cap and trade within the region and the specification of carbon offsets. The RGGI program is scheduled to begin in 2009 and will achieve a 10% reduction of CO2 emissions by 2019.

What’s happening at the State Level?

Several initiatives and legislative proposals designed to reduce GHG emissions exist at the state level, with regulatory activity varying widely between states.  Several states have begun to address GHG emissions by taking the following steps:

• Actions directly related to GHG emissions: Preparing state-wide GHG emissions inventories supported by newly established GHG emissions registries, establishing state-wide GHG reduction goals, and participating in regional initiatives.
• Energy Sector Actions: Enacting renewable portfolio standards, which require utilities to generate a certain percentage of power using renewable sources by set target dates, and other consumer based programs that allow utility customers to pay a premium in support of renewable energy projects.
• Transportation Sector Actions: Adopting California’s vehicle emission standards, which require more stringent GHG emissions controls for mobile sources.
• Building Sector Actions: Enacting energy codes for commercial and residential buildings designed to increase energy efficiency and reduce the generation of GHG emissions.
• Reporting and Recordkeeping Actions: Enacting the The Climate Registry, which is a multi-state and province initiative to create a GHG registry that establishes protocols for recording and reporting GHG emissions for both voluntary and regulatory accounting purposes.  Thirty-nine states, the District of Columbia, three Tribal Nations, a number of Canadian provinces, and Mexican states are participating members.  The registry will be operational
  beginning in June 2008.

What should facilities do to prepare for the possibility of climate change and GHG regulations?

Develop GHG inventories:  Since GHG reductions will need to be measured from a baseline period, facilities that emit CO2 and other GHGs should begin to develop GHG inventories. This is important as the various legislations require reductions from a baseline period.

Take advantage of simple, cost-effective GHG reductions: The reduction of GHG emissions often results in energy savings that can be realized immediately by facilities.  In addition, voluntary and involuntary carbon offsets have value in the marketplace.  Companies that can demonstrate an active GHG program will be viewed differently by a public that believes GHGs and climate change are no longer issues to be ignored.

Participate in GHG programs: Early and voluntary participation in a GHG program can represent a positive business opportunity for a corporation.  The benefits range from meeting stakeholder and shareholder sustainability expectations, encouraging innovative business and production practices, and reacting early to an impending regulatory program.