CHAPTER SIX
Informing Greenhouse Gas Management

Some of the most important decisions on climate change concern the emissions of greenhouse gases (e.g., CO2, CH4, N2O) and other greenhouse warming agents (e.g., tropospheric ozone, black carbon). High quality information on greenhouse gas emissions from multiple sources and at multiple scales is needed to detect trends, verify claims about reducing emissions, develop policies to manage carbon, and inform citizens. The importance of measurement, reporting, and verification of emissions (MRV) emerged as a key negotiating issue for the United States in the 2009 United Nations Climate Change Conference. Both public and private organizations report information on greenhouse gas emissions, often using standards and methods geared toward a specific application (e.g., regulation, carbon trading, or national obligations to the United Nations Framework Convention on Climate Change [UNFCCC]). The resulting plethora of carbon information systems has created confusion for consumers, businesses, and policy makers and threatens to undermine the legitimacy of responses (Winkler, 2008). This chapter examines procedures used to measure and report emissions for greenhouse gas registries and energy efficiency and recommends ways to improve these procedures to better inform decisions to limit emissions in the United States. Limiting the magnitude of climate change, as noted in the Limiting and Advancing reports (NRC, 2010d;b), involves more than managing greenhouse gas emissions and can also include ecological strategies, such as changing albedo through land use, and may eventually involve geoengineering solutions to alter radiation or sequester carbon.

GREENHOUSE GAS ACCOUNTING SYSTEMS

Figure 6.1 provides a conceptual diagram of the processes and mechanisms needed to inform decisions on greenhouse gas management. Key elements of this information system are:

  • The scientific underpinning

Processes:

  • Monitoring

  • Reporting protocols



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CHAPTER SIX Informing Greenhouse Gas Management S ome of the most important decisions on climate change concern the emissions of greenhouse gases (e.g., CO2, CH4, N2O) and other greenhouse warming agents (e.g., tropospheric ozone, black carbon). High quality information on green- house gas emissions from multiple sources and at multiple scales is needed to detect trends, verify claims about reducing emissions, develop policies to manage carbon, and inform citizens. The importance of measurement, reporting, and verification of emissions (MRV) emerged as a key negotiating issue for the United States in the 2009 United Nations Climate Change Conference. Both public and private organizations report information on greenhouse gas emissions, often using standards and meth- ods geared toward a specific application (e.g., regulation, carbon trading, or national obligations to the United Nations Framework Convention on Climate Change [UN- FCCC]). The resulting plethora of carbon information systems has created confusion for consumers, businesses, and policy makers and threatens to undermine the legitimacy of responses (Winkler, 2008). This chapter examines procedures used to measure and report emissions for greenhouse gas registries and energy efficiency and recommends ways to improve these procedures to better inform decisions to limit emissions in the United States. Limiting the magnitude of climate change, as noted in the Limiting and Advancing reports (NRC, 2010d;b), involves more than managing greenhouse gas emissions and can also include ecological strategies, such as changing albedo through land use, and may eventually involve geoengineering solutions to alter radiation or sequester carbon. GREENHOUSE GAS ACCOUNTING SYSTEMS Figure 6.1 provides a conceptual diagram of the processes and mechanisms needed to inform decisions on greenhouse gas management. Key elements of this information system are: • The scientific underpinning Processes: • Monitoring • Reporting protocols 0

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E • Verification Mechanisms: • Inventories and registries • Carbon offsets FIGURE 6.1 A conceptual diagram to illustrate the principles underlying greenhouse gas (GHG) report- ing and accounting, mechanisms for reporting emissions information, and governance structures for GHG information systems. Black dashed arrows represent the transfer of emissions information collected by 6-1.eps various entities (e.g., companies, local governments, and non-governmental organizations) for different bitmap purposes (energy efficiency, registries, and carbon markets) to overarching administrative bodies. The overarching bodies (created at state or federal levels) provide feedback and assistance on data collection (black dotted arrows). The blue dashed arrow illustrates the adaptive governance approach needed to respond to changing conditions and circumstances. The red triangle illustrates the increasing usefulness of GHG emissions information. This heuristic diagram is not meant to represent all the linkages between components of the GHG management chain. 0

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Informing Greenhouse Gas Management Scientific Underpinning An effective greenhouse gas (GHG) accounting system has a strong scientific basis for measuring, comparing, and verifying emissions. Most systems rely on methods developed by the Intergovernmental Panel on Climate Change (IPCC) and on report- ing requirements of the United Nations Framework Convention on Climate Change (UNFCCC), which include six greenhouse gases (CO2, CH4, N2O, SF6, perfluorocarbons [PFCs], ad hydrofluorocarbons [HFCs]), converted into carbon dioxide equivalents using their global warming potentials. However, methods are continually evolving as more is learned about greenhouse gases. There are ongoing debates about whether other warming agents (e.g., SO2 or black carbon) should be included, the accuracy of global warming potential estimates, accounting for sinks, and technologies and ana- lytical tools for monitoring and estimating emissions. For example, the atmospheric lifetime of black carbon is short relative to other greenhouse gases and its global warming potential (along with other non-Kyoto greenhouse gases) is substantial. As a result, the IPCC regularly adjusts how it estimates GHG emissions. Thus, an ongoing U.S. research program on GHG monitoring—ranging from satellite and ground-based monitoring to analytical and modeling tools for estimating emissions from energy use and production data—is essential for an informed response to climate change at both national and international scales. The panel recognizes that greenhouse gases are not the only important feedback to climate change, and research is critical for establishing emission reductions targets and exploring policy options. For example, forests that are planted in northern temperate latitudes to facilitate carbon sequestration also re- duce the albedo, thereby absorbing and transferring more energy to the atmosphere. Although the net effects of albedo and carbon sequestration are not yet certain, planting of forests at latitudes that support occasional snow cover is likely to cause climate warming, whereas a similar amount of forest growth at lower latitudes would have a clear cooling effect on climate. Changes in land use can therefore be a useful component of monitoring, reporting and verification in a system that assesses overall changes in the earth system that cause or limit climate change. In the following three sections, monitoring, reporting protocols, and verification, col- lectively termed MRV, are discussed and the commonly accepted processes to manage greenhouse gas emissions are presented. In the next two sections, inventories and registries and carbon offsets are discussed, respectively, and example mechanisms are provided that serve the functions of MRV. 0

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E Monitoring Most greenhouse gas emission estimates are based on calculations rather than direct measurements, although some large facilities have installed direct or continuous emission measurement systems (CEMS), especially for carbon dioxide and industrial gases with high global warming potential. Estimates are usually based on activity data (e.g., fossil fuel use) or other quantitative measures (e.g., waste volume) that can be converted into emissions using standard emission factors (DEFRA and DECC, 2009; IPCC, 2006). An example of such an estimate for global carbon emissions is shown in Figure 6.2. Activity data are taken at a wide range of scales, from individual facilities (or even households for utilities) to entire states (e.g., gasoline use). The IPCC provides default emission factors for various source categories in four sectors (IPCC, 2006), but use of FIGURE 6.2 Deutsche Bank, in collaboration with scientists at the Massachusetts Institute of Technology, created the Carbon Counter, a 20-meter billboard displayed in New York City’s Madison Square Garden, to demonstrate to the public a running estimate6-2.eps of increasing global greenhouse gas emissions to the atmosphere. SOURCE: Deutsche Bank. bitmap 0

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Informing Greenhouse Gas Management country-specific activity data and emission factors yields more accurate GHG esti- mates at the national level (Garg et al., 2006; Lowe et al., 2000). The growing importance of carbon trading and regulation demands regional- and facility-level estimates of greenhouse gas emissions, which in turn requires the devel- opment of local and regional emission factors. Protocols for estimating greenhouse gases at smaller spatial scales are being developed. For example, the Environmental Protection Agency’s (EPA’s) proposed rules for mandatory reporting of greenhouse gases (EPA, 2009b) cover major emitters and facilities that are critical to monitor, such as power plants. The International Local Government Greenhouse Gas Protocol helps local governments quantify greenhouse gases emitted both from their internal operations and from communities within their geopolitical boundaries. Sector specific emissions standards are also being implemented by a number of industries and by several state and local governments in the United States (see Table 6.1). Sector specific methodologies are especially useful when emissions result from complex processes or for industries that emit (e.g., aluminum, cement industries) or take up (sequester) high levels of greenhouse gases. Although direct measurement is expensive, the costs of facility-level reporting are likely to come down as emissions monitoring becomes more automated and emis- sions management is incorporated into daily corporate practice (DEFRA and DECC, 2009). The reporting priority for any national system should be high intensity emission sectors such as the electric power sector (which represents about 41 percent of total U.S. emissions; EIA, 2009). In these sectors, the federal government can choose to man- date metering or continuous emissions monitoring systems for those facilities above a minimum threshold. Estimating greenhouse gas emissions carries a considerable degree of uncertainty because of measurement error and model assumptions, and IPCC and other guid- ance recommend the analysis and reporting of this uncertainty. Sensitivity and error analysis can be used to estimate variance resulting from uncertain evidence (such as estimates on activity or emissions data) and poorly understood mechanisms (such as particularly complex processes/relationships with emissions to the atmosphere; Saltelli et al., 2000) and used as a quality assurance tool. EPA and other federal guide- lines for documenting uncertainty are less comprehensive than needed for an effec- tive national monitoring system. This is especially the case for complex sectors, such as forestry, where clearly defined and consistently applied methodologies are still in development, and different standards allow for different functional carbon reductions. (For a review of U.S. state and voluntary initiatives, see Pearson et al. [2008]) Although direct measurement of emissions is costly, it is likely to decrease as carbon trading and 0

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E TABLE 6.1 Examples of Top-Down, Sector Specific Methodologies for GHG Emission Calculations Sector Protocol/Supplier Main Principles/Rationale for Sector Specific Power Power Generation/Electric Based on the California Climate Action Registry Utility Reporting Protocol (CCAR) General Reporting Protocol (GRP). (CCAR) Complete (all gases, all facilities). Must be transparent, verified, and accurate on reporting. Power sector has large, specific GHG implications. Cement Cement Reporting Protocol Provides additional guidance on determining based on GHG Protocol emissions from calcination in cement (CCAR, WRI GHG Protocol, manufacturing process. Cement Sustainability Initiative [CSI]) Forests Forest Sector Protocol (FSP) Includes non-biological (e.g., fossil fuels from forest (CCAR) machinery) and biological emissions. The GRP provides for non-biological emissions, while the FSP provides for forest biomass (i.e., biological) emissions. Local government Local Government Covers all operational aspects of local Operations (LGO) protocol governments including transit and vehicle fleets, (CCAR, CARB, ICLEI) power generation, port and airport facilities, water and waste, buildings and fugitive emissions. Comprehensive approach to multifaceted institutional emissions. Manufacturing Direct HFC and PFC Covers refrigeration, all gases not covered by the refrigeration and air emissions resulting from Clean Air Act (i.e., CFCs and HCFCs) including conditioning units commercial refrigeration and operating commercial equipment, service, disposal, air conditioning (EPA Climate and retrofit emissions for high global warming Leaders, based on WRI GHG potential (GWP) gases. Protocol) Iron and steel Direct emissions from steel Identify and estimate GHG emissions (CO2) from production and iron production (EPA oxidation of reducing agent and flux in steel Climate Leaders, based on production and from removal of carbon from iron WRI GHG Protocol) ore (separate from combustion). 0

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Informing Greenhouse Gas Management BOX 6.1 Prices and Their Informational Content The need to “put a price on carbon” arises from the fact that a market economy—if it is to work—has no way of dealing with essential commodities in the absence of a price signal to consumers. That is what a market economy is for—prices inform choices. The information content of prices refers to the completeness and hence the correctness of market prices. Prices cannot provide appropriate signals to consumers if those prices do not con- vey information about the economic processes to which those prices pertain. As an illustration, there is now widespread agreement that the price of a gallon of gasoline does not reflect the full costs of highway congestion, exhaust pollution (smog), or the carbon emissions that contribute to global climate change. Similarly, the cost for a ton of coal does not account for either the environmental costs to mountains, waterways, and the atmosphere or the public health costs associated with inhaled pollutants. In other words, if the full social costs of congestion delays, air pollution, and greenhouse gas emissions were correctly accounted for in the price of gasoline, consumers would almost certainly make different choices about automobile use. A price premium on energy reflecting the carbon content of petroleum products would help reflect these costs and would, as a result, convey more correct market signals to consumers. regulation place higher prices on CO2 and its equivalents and demand more rigorous reporting (Box 6.1). Scientific observations and models provide a means to independently verify green- house gas emission estimates and thus to assess compliance with carbon manage- ment policy (Michalak, 2008; WRI, 2009). An analysis of the capabilities of these meth- ods appears in NRC (2010e). For example, NASA’s Orbiting Carbon Observatory, which failed on launch in February 2009, would have been able to monitor a sample of large local CO2 sources, such as cities and power plants, over its 2-year mission lifetime (NRC, 2009c, 2010e). As noted earlier, greenhouse gas emissions are only one component of earth system processes that maintain the planet at a livable climate. Policy making can benefit from integrated assessments that include, for example, all components of the carbon cycle or radiative processes, including land use, albedo, clouds, and aerosols, so that green- house gas emissions can be understood in the context of other important factors that affect the climate. 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E Reporting Protocols There are a variety of protocols for reporting GHGs. Most protocols for reporting greenhouse gases are designed to achieve accuracy, transparency, completeness, and consistency (Penman et al., 2000). Accuracy is usually a function of the rigor of monitoring, estimation, and uncertainty. Transparency is an indication of the docu- mentation, audit, and publication of information. Consistency is both internal to allow tracking over time and external to allow comparison with other reporting entities. Wide variations in where systems set their baseline, boundaries, scope, and thresh- olds for the reported emissions affect both consistency and completeness. There are advantages and disadvantages to a single scheme versus sector specific schemes. For example, the former allows for a better picture of the whole system, while the latter may be more useful for the specific needs of individual decision makers. Baseline estimates of GHG emissions are usually established through a political nego- tiation in which countries and firms may attempt to secure baselines that provide fa- vorable positions in a regulatory or trading system. A high baseline may provide more generous emissions allowances in a trading system with permit allocation based on historic emissions (as for some firms in the European trading scheme) or immediate emissions savings where current emissions have already fallen below the baseline (as was the case for Eastern Europe, the United Kingdom, and Germany entering Kyoto). In the United States, varying baselines partly reflect the patchwork of different report- ing systems which have emerged in the absence of a mandatory national system (see Chapter 2). The boundaries for reporting include the gases, sectors, reporting entity, and the geographic scale. Most GHG systems require the six UNFCCC gases, although some (e.g., WWF Climate Savers) include only CO2 ( WBCSD and WRI, 2005). Sectors that are difficult to measure are sometimes excluded from reporting systems, especially those associated with land use or landfills. Such exclusions can create significant gaps in the information needed for regional carbon management. Geographic boundaries are im- portant to avoid double counting of emissions reporting and to ensure full coverage of emissions (Rypdal and Winiwarter, 2001), although emissions resulting from interna- tional activities (imports and exports, shipping, and aviation) can be difficult to assign. The boundaries are often chosen for the application—national for reporting under the UNFCCC or voluntary corporate accounting, facility, or state level for regional trading schemes. For corporate level reporting, decisions must be made about whether to define responsibility by facility, national corporate entity, subsidiary, or even multinational 

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Informing Greenhouse Gas Management scale and whether to define it by equity share, financial, or operational control (WRI, 2008, 2009). For example, the California Climate Action Registry requires reporting of CO2 for the first 3 years (and thereafter the six UNFCCC gases) at the corporate level and allows participants to choose whether to report California or U.S. operations. The EU ETS reports CO2 at the facility level within all member states. A flexible GHG report- ing scheme for the United States is likely to require the collection of information on a wide range of greenhouse gases (including tropospheric ozone and black carbon) at multiple scales to enable crediting at the firm, state, and national scales. Many sectoral sources are covered under the EPA Mandatory Reporting of Greenhouse Gases pro- posed rule (EPA, 2009b). In principle, such methodologies can assist in cost-effective harmonization policies, create a more level playing field by providing standardized tools for all companies within a sector, build expertise on GHG calculation and report- ing within a sector, and provide specific guidance on GHG-related issues in sectors with more complex industrial (e.g., cement), biological (e.g., forests), or institutional (e.g., local governments) emissions profiles. The scope of emissions in a reporting system accounts not only for direct emissions (those from sources owned or controlled by the reporting entity) but also for indirect emissions (those that result from the activities of an entity but occur at sources owned or controlled by others; see Box 6.2). The California Climate Action registry requires reporting of direct emissions and indirect emissions associated with the generation of electricity, heat, and steam, whereas the EU ETS requires reporting of only direct emis- sions. Accounting for both direct and indirect emissions enables the most comprehen- sive carbon management. The threshold for emissions reporting is chosen to balance cost considerations with the need to effectively manage the maximum amount of GHG emissions (Stolaroff et al., 2009). A threshold may allow reporting entities to exclude small sources that are expensive to monitor or difficult to estimate. For example, the California Climate Ac- tion Registry and the EU ETS allow entities to exclude 5 percent of emissions (WBCSD and WRI, 2005) and the proposed EPA mandatory system sets an economy-wide threshold for corporate reporting above 25,000 tons of CO2. However, if there are a large number of small sources, a high threshold may create a significant material dis- crepancy in an overall emissions reporting system. Verification Assurance of the accuracy of emissions reporting is important within a carbon reduc- tion system that will necessarily create winners and losers, the possibility for rule- 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E BOX 6.2 The World Resources Institute/World Business Council for Sustainable Development’s Greenhouse Gas Protocol The World Resources Institute/World Business Council for Sustainable Development’s ( WRI/WBCSD) GHG Protocol for Corporate Accounting and Reporting is the most commonly ac- cepted global standard for the corporate accounting of greenhouse gases (Caponi et al., 2008). Developed internationally through a consultative process with over 500 stakeholders, and on its second revision, the GHG Protocol sets standards; lays out best practices for GHG accounting, reporting, and use at the organization or corporate level; and provides guidelines on boundary setting. The protocol also differentiates emissions into three categories: scope 1 (direct), scope 2 (indirect electricity and heat), and scope 3 (other indirect). The GHG Protocol is used in a number of voluntary GHG reduction programs (e.g., U.S. EPA Climate Leaders, WWF Climate Savers, Business Leaders Initiative on Climate Change), GHG reg- istries (e.g., California Climate Action Registry [CCAR], The Climate Registry, Regional Greenhouse Gas Initiative [RGGI],World Economic Forum Global GHG Registry), trading platforms (e.g., Chicago Climate Exchange, EU ETS), and sector specific protocols (e.g., International Aluminum Institute, International Council for Forest and Paper Associations, International Iron and Steel Institute, the WBCSD Cement Sustainability Initiative, and the International Petroleum Industry Environmental Conservation Association) (WRI, 2009). It is also the preferred protocol for the international Climate Disclosure Standards Board. The main strengths of the GHG protocol are its focus on scopes 1 and 2 for high emitting sectors (e.g., power generation, cement manufacturing, and transportation) and its wide appli- cability. It is guided by principles central to the IPCC, flexible enough to encourage participation and incorporation into registries and standards, but standardized enough to allow comparative analysis over time and between organizations. Criticisms include its limited focus to date on scope 3 emissions (e.g., product use, waste disposal, storage, and logistics), which may comprise more than 90 percent of an entity’s emissions profile (Matthews et al., 2008a), and on upstream and downstream emissions, which are needed for life cycle analysis and economic input-output models (e.g., Matthews et al., 2008b).a Greater flexibility in choosing financial or operational boundaries would allow wider corporate participation, although it would also add complexity in comparing entities that use different approaches. aThe WRI is currently undertaking concerted research on supply chain activities and product life cycle analysis to incorporate into the GHG Protocol (WRI, 2009a). breaking (i.e., in underreporting of emissions sources) and high levels of political and public scrutiny. Third party verification can be costly and may not obviate internal con- flicts of interest (Wara and Victor, 2008). Self-declaration, with obligations to provide supporting evidence, can be a useful and cost-effective way to ensure data quality, but 

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Informing Greenhouse Gas Management it must be supported by other assurance methods, such as spot checks and desk re- view. National regulation or trading of GHGs demands the highest level of verification, including reviews of data systems and site visits, although batch verification can be developed for clusters of smaller organizations where the bulk of emissions are from electrical consumption or vehicles (CCAR, 2009). Inventories and Registries A greenhouse gas inventory is a quantitative accounting of greenhouse gases emitted or removed over a period of time for a particular country, region, firm, or other entity, whereas a GHG registry is usually defined as a collection of inventories from different groups, which can be used to collect, verify, and track emissions data from specific entities, such as facilities or companies (WRI, 2008).1 A registry provides emissions information in standardized forms to enable comparison, trading, or regulatory over- sight. The reporting steps and protocols discussed above are required to ensure that inventories are complete and verifiable and that registries are high quality and per- ceived as legitimate. In Chapter 2 the panel described the various efforts to respond to climate change by local and state decision makers. Information on accurate emissions collected and accessible at the zip code level would allow decision makers to develop policies and programs specific for a region to reduce greenhouse gas emissions. Greenhouse gas inventories are useful tools for carbon management because they can provide data on emissions by geographical area, administrative level, sector, or industry. For example, New York compiles an annual GHG inventory for the entire city, which has been instrumental for identifying key trends and sectors with high emis- sions (such as buildings), allowing policy to address specific emissions sources (Dickin- son, 2009). Registries can support a wide range of GHG reduction strategies by provid- ing a common framework to ensure accurate accounting in carbon market systems for issuing, holding, transferring, and canceling emission allocations or offset credits (Convery and Redmond, 2007). The integrity of a registry is fundamental to the environmental effectiveness of a GHG reduction program and supplements other carbon markets by providing buyers and sellers with transparent, consistent information about legally verifiable allowances and offsets (Call and Hayes, 2007; Haites and Wang, 2006). However, they are not trad- ing platforms. They are data systems that quantify emissions attributable to specific entities and that protect the integrity of trading programs by ensuring that only the 1 This is in contrast to an inventory, which aggregates, rather than establishes responsibility for, emissions. 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E BOX 6.3 Homes and Building Efficiency Information Home energy ratings provide summary information on the energy efficiency of an entire home, normally focused on the building shell and sometimes also the heating and cooling sys- tems, in simple, understandable form. They are intended to be used to enable buyers, renters, appraisers, real estate agents, mortgage lenders, builders, and others to assess the energy cost of operation of homes and to make comparisons among them. They can create an incentive for owners to upgrade the energy efficiency of their properties in advance of transfer to make them more attractive to buyers. However, home energy audits have not been effective in improving the energy efficiency of homes (Hirst et al., 1981; McDougall et al.,1983), except when combined with techniques to overcome other barriers, such as free or reduced-cost installation of recommended improvements (NRC, 1985; see also Chapter 4). A National Research Council (NRC, 1985) report found that over 40 home energy rating sys- tems were in operation in the United States by 1982, but that the effects of these programs were largely unknown (see also Chapter 5). EnergyStar houses in Texas are an example where people are financially rewarded, in addition to energy savings, for efficient energy use (Entergy Texas, 2009). Work in Europe has found that information from experts is more likely to influence behavior than energy ratings on houses (Gram-Hanssen et al., 2007), and that dynamic instant information on household use that can be seen on PCs or websites can yield 8.5 percent savings (Benders et al., 2006). Utilizing on-demand and solar water heating systems instead of the more typical American systems that heat water 24 hours per day from electricity or natural gas is another example of how home energy consumption could be substantially reduced with existing technologies. In the United Kingdom, the introduction of Energy Performance Certificates, which must be included in house sale information, has started to drive modest investments in home energy efficiency. Future research in this area should take an interdisciplinary approach to understanding household energy strategies (for review, see Steg, 2008). The federal government may also choose to provide a more reliable source of information by setting guidelines or standards for inform- ing consumers about home energy or emissions audits. The challenge is to encourage emission reductions in existing housing to complement the standards set for new homes by industry and local government. Feedback Information on Energy Use Information on the actual consumption of electricity or other energy sources over time enables people to learn ways to reduce usage. Used effectively (i.e., daily), it can reduce energy use by 5 to 12 percent (Abrahamse et al., 2005; Fischer, 2008) and more if combined with comparisons to the energy use of other consumers. Information can be provided to households through their utility bills, which can be designed to facili- tate feedback on energy (and water) use, but greater reductions occur when people 

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Informing Greenhouse Gas Management receive more frequent information. “Smart meters” and in-line power consumption meters have the potential to provide detailed, tailored information to consumers about their energy use. However, these technologies have typically been designed for other purposes, such as load control by utilities. Human factors research will likely be required to optimize these technologies for end-use emissions reduction. Technology for providing fuel economy feedback in motor vehicles is already installed on some newer models and could be useful for illustrating the effects of changes in driving techniques (e.g., slower acceleration). The effectiveness of fuel economy feed- back has received little research attention, although lessons can be drawn from the growing literature on the effect of instantaneous feedback on energy consumption (see Darby, 2006; McCalley and Midden, 2002; van Houwelingen and van Raaij, 1989). The government could choose to require that utilities provide standardized feedback on billing or install smart metering systems and that automobile manufacturers pro- vide improved feedback systems in new models. Industry could also create standard- ized reporting systems that provide consistent and clear feedback to consumers. Information on Energy Efficiency Information about the energy efficiency of homes, vehicles, and appliances is com- monly available in the form of certifications, ratings (e.g., EPA vehicle fuel economy ratings), and labels (e.g., EnergyStar and EnergyGuide labels, as illustrated in Figure 6.3). Some ratings include multiple types of information, such as the European system that rates appliance models according a color-coded 7-point (A-G) scale (EST, 2009) and also provides information on consumption per unit of service for various appli- ances (Boardman, 2004). Another example is Australia’s appliance energy efficiency program,4 which rates all consumer and industrial products based on energy con- sumption and estimated operational costs over a specified time period. Such a system of informing consumers about the energy consumption and costs associated with a wide variety of goods, could be a means of driving behavioral changes in consump- tion patterns. Energy efficiency information is currently provided by government agencies, such as the EPA and DOE EnergyStar certification program, and by private sector networks, such as the widely adopted Leadership in Energy and Environmental Design (LEED) certification program for buildings. Figure 6.4 illustrates the various levels of LEED certification that a given building can attain depending on the level of sustainability 4 See http://www.energyrating.gov.au. 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E FIGURE 6.3 EPA and the DOE developed the EnergyGuide and EnergyStar labeling program for various home appliances to inform consumers about a product’s energy consumption, cost of operation, and 6-3.eps energy efficiency. SOURCE: EPA and DOE. bitmap and efficiency measures built into its design. The DOE produces a building energy data book providing statistics on residential and commercial building energy consumption. The Data Book is evolving and could be developed as a useful tool for decision mak- ers. EnergyStar leverages bottom-up approaches to managing energy efficiency by providing information and incentives to consumers to take action that is in their self interest and that meets wider energy efficiency goals. The greatest savings have been 

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Informing Greenhouse Gas Management FIGURE 6.4 The various levels of LEED certification attesting to the sustainability and efficiency measures 6-4.eps built into a building’s design. The program is administered by the U.S. Green Building Council. SOURCE: bitmap USGBC (2010). in the areas of office equipment and computers, with an estimated reduction in emis- sions of up to 107 TgC between 1993 and 2006 and up to 278 TgC from 2007 to 2015 (Sanchez et al., 2008). Several new systems are being developed to rate the GHG and energy performance of companies (Horne, 2009). The “GreenStar” system, to be launched in 2010, will assign a star rating to the top half of each sector based on brand level corporate emissions accounting, then leverage market forces and consumer choice to drive down emis- sions through yearly competitive rankings (GreenStar, 2009). This approach has some similarities to Japan’s successful “Top Runner” program, in which the government set standards for products based on the current highest efficiency with the demanding standard becoming mandatory for all by a target year. Many products reached the standards before the target year, companies found themselves more competitive as government publicized the program, and efficiency improved more than the standard for some products (Jänicke, 2008). Carbon Calculators Carbon calculators have recently begun appearing on the web pages of NGOs, private companies, research groups, and government agencies. These calculators are used to estimate emissions from everyday activities. For example, the Nature Conservancy calculator estimates emissions from home energy, driving and flying, food and diet, and recycling and waste.5 Although in principle such calculators can inform household 5 See http://www.nature.org/initiatives/climatechange/calculator/. 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E decision making, different calculators give different results from the same input, and most are not transparent enough to allow an analyst to understand the discrepan- cies (Padgett et al., 2007). One of the criticisms of offset companies in Europe is the wide range of emission estimates given and the resulting effect on the costs of carbon offsets when the same flight is entered into different calculators. This has contributed to a decline in public confidence in carbon calculations. The EPA has developed a household emissions calculator, which has a good scientific basis but does not include airline travel or food—two of the most important sources of individual GHG emissions where Americans could make informed choices.6 An informed response to climate change in the United States might benefit from a wider diffusion of an improved EPA/DOE calculator and attention to the risks to public confidence from the proliferation of other calculators and their inconsistencies. Devel- opment of a standard by non-federal actors could also be helpful. Carbon Labeling of Products Carbon labeling of products offers a more nuanced analysis of product (or company) carbon intensities or ratings than the binary labeling schemes discussed above. Based on life cycle assessment (LCA), carbon labeling aims to provide consumers with information on the embedded carbon footprint of certain products, presumably so that they are better able to make climate friendly choices. The U.K.-based supermarket chain, Tesco, has announced its intention to develop carbon labels for all products, and carbon labeling schemes are being developed for biofuels in Europe (Rutz et al., 2007). Carbon labeling is attractive because it uses a simple metric (CO2e emissions), but there are real problems in defining boundaries for the footprint, and the LCA ap- proaches used miss important environmental variables (Weidema et al., 2008). No single protocol exists, and variable carbon footprinting assumptions lead to a wide variety of outcomes (White, 2007). In addition, different countries may manufacture the same products using different energy mixes. As a result, carbon labels may need to convey complex information to make individual choices relevant and contextual (Horne, 2009; Schmidt, 2009). Creating easy-to-understand comparative labels for complex products is difficult. An alternative approach is to label the emissions of com- panies, rather than the individual products they produce. Such an approach would inform consumers of emissions attributable to certain brands and also prevent emit- ting companies from “hiding behind” some low-carbon products. 6 See http://www.epa.gov/climatechange/emissions/ind_calculator.html. 

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Informing Greenhouse Gas Management INSTITUTIONAL OPTIONS FOR INFORMED GREENHOUSE GAS MANAGEMENT Governments can support informed greenhouse gas management decisions by providing information directly to the public and/or by creating or supporting orga- nizations that help the public and private sector reach emission reduction targets. Examples of support organizations include the United Kingdom’s Carbon Trust and the Oregon Climate Trust. The Oregon Climate Trust is a non-profit organization that provides offsets and advisory services to government, utilities, and large business (The Oregon Climate Trust, 2009). California and Florida have announced their intention to create similar organizations in their states to assist in reducing emissions.7 The U.K. Carbon Trust is partly funded by a U.K. government levy on electricity, gas, and coal. Its functions include information, education, and advisory services (e.g., carbon audits), loans to business for low-carbon technology and energy efficiency, and development of techniques (e.g., for carbon labeling) and standards. The United States lacks a single point of contact for comprehensive information on GHG emissions reductions or best practices for moving toward a low-carbon economy. The DOE, EPA, and other agencies provide information on energy efficiency and emissions reductions. The DOE’s Energy Information Administration provides some information on greenhouse gases, but it is not tailored to methods for emissions reductions. In general, information on methods for emissions reductions is either not available or is difficult to find on U.S. federal agency websites. The clarity and accessibility of information available could be improved by upgrading agency websites or relying more heavily on state and local government or the private sector to provide greenhouse gas information and management services. A more ambitious option is to create a structure within the government to provide green- house gas management services, perhaps as part of a Climate Service. The arguments for such a service include the growing public and private need for credible infor- mation and guidelines on emissions reductions and the evidence that information can—when coupled with incentives, regulation, and technology—foster changes in behavior. The functions might include: • Assistance to entities (e.g., firms, government offices) in greenhouse gas moni- toring and reporting; • Work with state and private sector climate trusts and carbon management services to ensure consistent reporting and information, thereby providing a level playing field for business and reducing confusion among consumers; 7 See http://www.myflorida.com, Governor Crist Signs Agreement With United Kingdom’s Carbon Trust 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E • Conduct periodic independent reviews and report to the administration and Congress on national progress on emissions reductions; • Encourage GHG reductions in different sectors; • Ensure climate justice objectives by empowering local and community activities; • Fund technology demonstration and research in areas where private invest- ment is lacking; • Demonstrate the need and methods for GHG reductions and assess compet- ing low-carbon strategies; • Provide information and guidelines on complex GHG management strategies and policies, such as cap-and-trade and offsets; • Provide carbon audit services or guidelines. A greenhouse gas management service that understands the regulation of emissions (policy), the mechanisms for counting and reporting emissions (emissions protocols and registries), and the practical implications for companies would be both business- friendly and effective for emissions reductions. Given current agency responsibilities and expertise, such a service might be best placed in or supported by EPA and DOE working in close coordination. Another important institutional issue relates to the governance of carbon markets and finance. A carbon market advisory could be established to ensure standardization and transparency in carbon accounting (similar to those in financial systems) and to establish ground rules and rigor in carbon markets. With accurate carbon data and a carbon price in place, the carbon market and associated trading should be governed by the Securities and Exchange Commission to ensure quality in carbon commodities and actual carbon reductions. Consultation with international entities working on this area, such as the Climate Disclosure Standards Board (CDSB), would help ensure that a U.S. system is compatible with carbon reporting and trading mechanisms elsewhere in the world (see Chapter 3). COMPETITION AND EQUITY CONSIDERATIONS Overarching issues in the implementation of greenhouse gas information systems include those relating to competition and equity. Because greenhouse gas emissions relate to the design of products and other information that can influence private sec- tor competitive advantage, some firms and even governments may be reluctant to disclose detailed information. On the other hand, disclosure and labeling can promote more effective actions in a competitive market or social context with firms, local gov- 0

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Informing Greenhouse Gas Management ernments, and households competing to claim the largest emission reductions or for higher positions on tables that rank commitment to climate response and emission cuts. As in the case of climate services (Chapter 5), there are also substantial concerns about access to information and greenhouse gas information systems, including labels and standards should be easily accessible and understandable to the full range of U.S. citizens. Many people may find it difficult to afford products or energy that pro- duces lower emissions, and the less well off may be unable to respond to information unless it is accompanied by programs that support specific decisions to install new energy systems or upgrade appliances. And, as with climate services, greenhouse gas information systems must engage with outreach to the public and private sectors to understand their needs and ensure that people understand the information and find it useful. CONCLUSIONS AND RECOMMENDATIONS Informed decisions on greenhouse gas reductions and trading require information systems for the reporting of emissions by a variety of actors (e.g., governments, com- panies, and organizations) and at multiple levels (e.g., city, state, regional, and national). These diverse data sets will have to be developed according to standard accounting principles for internal consistency in order to generate a comprehensive, transparent system that is capable of supporting a wide range of carbon management decisions. Developing such a system will require • Research on greenhouse gas science, monitoring, and the effectiveness of ac- counting systems; • Agreement on a national accounting system and standards to report the full range of greenhouse gas emissions using consistent methods, boundaries, baselines, and acceptable thresholds; • High-quality verification schemes, including those for offsets; • Methods to facilitate carbon management in supply chains and to control emissions at the most effective stage in the production-consumption chain; and • A national greenhouse gas registry to track emissions from specific entities. The development of a national GHG system should be informed by existing systems at international, regional, and state scales, operated by governments, consortia, or the private sector. In adopting existing systems at the federal level, care is required to en- sure that national systems are fair, cost-effective, and designed to a high standard with 

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I N F O R M I N G A N E F F E C T I V E R E S P O N S E T O C L I M AT E C H A N G E options to adapt to new science and monitoring technologies and to link to interna- tional systems that might benefit American firms and citizens. Four main conclusions can be drawn from this chapter. First, no uniform approach to managing greenhouse gas emissions exists. Harmonization of different approaches is important to ensure that GHG emissions reporting is fair and accountable and that it provides information needed for a broader carbon reduction regime. Non-federal actors, such as cities, states, companies, and NGOs, have already taken important steps in standardizing emissions reporting. Information for a comprehensive GHG account- ing system must be accurate, transparent, relevant, consistent, and complete. These principles are fundamental for informing the design and use of protocols to measure GHG emissions. However, at present they are applied inconsistently between different carbon standards and therefore do not support a comprehensive or commensurable understanding of emissions information. A GHG regime should develop mechanisms built on these principles. A national climate registry should stipulate standard methodologies and expecta- tions and include regulated entities with the capability to add voluntary reduction and disclosure (i.e., the system should be scalable). The registry should complement international GHG reporting systems and should be extendable to create emissions in- ventories for city, state, and sectoral jurisdictions. A nationwide cap-and-trade system will require a harmonized registry built on the principles listed above to be atmo- spherically legitimate and to allow the incorporation of scientifically based programs into GHG reporting. A national registry needs to be “policy neutral” and to provide a flexible architecture for the incorporation of other programs, such as a tiered system that can account for reporting at state and federal levels, with various GHG reduction programs. Finally, a federal carbon or GHG management service may assist the public and organi- zations in understanding their GHG emissions and potential reduction strategies and in providing accurate data to formal registries and national assessment activities. A “climate trust” type of organization(s) may be the best positioned to achieve this and create an effective long-term adaptive governance arrangement that can continually improve upon reporting protocols, increase efficiency, and assist in the evaluation of the provision of useful emissions information. We conclude that there is a strong need for consistent methodologies for both emis- sions accounting and the development of energy efficiency information. Information needs to be accessible and reportable through harmonized accounting and registry systems. Consumers can be encouraged to limit emissions through feedback on en- ergy use and credible labeling, especially when supported by federal or industry-wide 

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Informing Greenhouse Gas Management standards. We also judge that the United States could benefit from a federally sup- ported, high profile, single organizational contact and structure for greenhouse gas management and information, which would include informational, advisory, standard setting, assessment, and research functions. Recommendation 7: The nation should establish a federally supported system for greenhouse gas monitoring, reporting, verification, and management that builds on existing expertise in the EPA and the DOE but could have some independence. The sys- tem should include the establishment of a unified (or regionally and nationally harmonized) greenhouse gas emission accounting protocol and registry. Such an information system should be supported and verified through high quality scientific research and monitoring systems and designed to support evaluations of policies implemented to limit greenhouse gas emissions. Recommendation 8: The federal government should review and promote credible and easily under- stood standards and labels for energy efficiency and carbon/greenhouse gas information that build public trust, enable effective consumer choice, identify business best practices, and can adapt to new science and new emission reduc- tion goals as needed. The federal government should also consider the estab- lishment of a carbon or greenhouse gas advisory service targeted at the public and small and medium enterprises. Core functions could include information provision, assessment of user needs and national progress in limiting emissions, carbon auditing guidelines and reporting standards, carbon calculators, and sup- port for research. 

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