EPA Proposes Nationwide Greenhouse Gas Reporting

The Environmental Protection Agency (EPA) proposed on March 10 a comprehensive national registry of greenhouse gas (GHG) emissions.  Under authority of the Clean Air Act, the registry will require a wide range of industrial GHG sources, including upstream producers of fossil fuels and industrial gases, manufacturers, electricity generators, and producers of chemicals, cement and metals, to monitor and report their GHG emissions.  Public comments on the proposed registry must be submitted to EPA for consideration 60 days following publication of the rule in the Federal Register, which has not yet occurred.

The GHG registry would require covered sources to report annually their GHG emission into a public database.  A number of voluntary and mandatory reporting initiatives already exist, but none is as sweeping as the current proposal.

The proposed rule is intended to lay a factual foundation for resolving the national debate on federal strategies for controlling anthropogenic sources of GHGs.  Additional purposes may be to stimulate the political discussion, to show progress in regulating GHGs two years after the Supreme Court's Massachusetts v. EPA decision, and to call attention to companies that have a substantial carbon footprint.

The proposed rule defines the sources that must report their GHG emissions annually, and it defines the methods of measurement or calculation that are to be used in reporting the emissions.  The rule may prove difficult to apply in its initial rounds, however, because of its complexity, due to numerous compromises, hybrid approaches, and alternative technical methods for calculating or measuring emissions.  EPA appears to have gone to great lengths to honor the existing patchwork of reporting regimes and balance the need for a comprehensive accounting of emissions against the desire to avoid imposing high costs on the thousands of sources covered by the new registry.

Companies with facilities in designated sectors (e.g., aluminum production or electronics manufacturing) must report their GHG emissions annually, regardless of the amount of emissions.  Companies with non-designated facilities must report their GHG emissions if they exceed 25,000 metric tons of carbon dioxide (CO2)-equivalent per year.  The proposed rule covers CO2, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC) and sulfur hexafluoride (SF6), as well as certain other fluorinated gases such as nitrogen trifluoride and hydrofluorinated ethers.  The emissions are typically reported on a per-facility basis (the 25,000-ton threshold applies on a per-facility basis, not a corporate basis), but in some instances the reporting reaches down to the level of individual units or process lines.

In addition to the designated sources and the threshold sources, the proposed rule covers upstream producers of fossil fuels and industrial gases, as well as manufacturers of certain mobile sources and engines.  This may lead to double-counting of certain GHGs, since fossil fuels could be "counted" both before and after combustion.

As a general matter, 25,000 tons is low enough to capture most substantial industrial facilities and power plants, but high enough not to capture individual homes or small office buildings.  Monitoring emissions from the area in between - large commercial buildings, warehouses, hospitals, universities and so forth - is not directly addressed.  EPA has tried to simplify the applicability determination for these sorts of sources by assuming that most of these sources will contribute GHGs mainly through heat/steam generation.  On that assumption, EPA established a threshold of 30 mmBtu/hour aggregate maximum rated heat input capacity per facility.  If the facility's capacity is lower, no reporting is required (unless the facility is in a designated sector); if the facility's capacity is greater, reporting may be necessary.