Certified Carbon Auditing Professional (CAP) Exam - Association of Energy Engineers

Association of Energy Engineers® Certified Carbon Auditing Professional CAP_v2023.06 1  Safety and Housekeeping Follow instructions of the facility and know:...

Association of Energy Engineers® Certified Carbon Auditing Professional CAP_v2023.06 1  Safety and Housekeeping Follow instructions of the facility and know: Emergency exit locations Bathrooms Breaks will be scheduled between presentations and for lunch. During breaks attendees are encouraged to: Network with other course participants Schedule time to discuss special situations with instructors Please silence phones. We want you engaged and participating! Safety and Housekeeping For a Virtual Course Please leave your webcam on. We want you engaged and participating! Wave at us to get our attention. If a presenter loses power/internet or ability to present, take a 20-minute break, and the backup instructor will resume the course. CAP_v2023.06 2  One-Minute Introductions Your Name Your Location Your Employer What You Want to Learn And finally—what do you do for fun? Lead Instructor: Kevin Vidmar [email protected] / +1 401-965-7608 Certifications: CAP, CEA, CEM, CPEnMS (ANSI/ISO 50001) AEE Fellow Has taught many AEE classes online: Energy Reduction Using Six Sigma, 5S, Treasure Hunts, and Behavioral Change Energy Reduction Using ISO 50001 Using Portable Data Loggers Understanding, Making, and Using Energy Metrics Trainer for many utilities on energy programs and reduction methods Has visited over 1,000 locations worldwide for energy, water, and environmental assistance Also plays the fiddle CAP_v2023.06 3  Other Contributors Dr. WL den Heijer Dr. Leonard Chow Mr. Rabih El Medawar CEM, CAP AEE Fellow CEM, CWEP, CLEP, CAP, CMVP, PCF, PMVA [email protected] AEE Hall of Fame 2022 [email protected] AEE Hong Kong Chapter Course Manager [email protected] CAP – Simple View, Contents WHY Global Trends, CSR, and Strategy WHY Are You Required (Or Do You Wish) to Report/Reduce Emissions? Process: Program Design, Auditing, Reporting, Verification, WHAT Reductions/Offsets, Trading, Financing, Selling WHAT/HOW Emissions Terms and Guidance Documents HOW Carbon Auditing, Measurement, Reporting, Verification HOW Reduction, Offset, and “Project” Strategies HOW Marketing/Financing/Selling CAP_v2023.06 4  CAP Training – Day 1 Description Section Length Start End Registration 0:30 8:30 9:00 Welcome, Course Outline, Exam Info 0:30 9:00 9:30 A Global Greenhouse Gas (GHG) Trends 1:15 9:30 10:45 Break 0:15 10:45 11:00 Kyoto Protocol, GHG Legislative Requirements, Guidance B 1:15 11:00 12:15 Lunch 0:45 12:15 1:00 Carbon Footprint Measurement C 2:15 1:00 3:15 Break 0:15 3:15 3:30 Fleet Management D 0:45 3:30 4:15 Best Practices for GHG Auditors E 0:30 4:15 4:45 Break 0:15 4:45 5:00 Carbon Audit Exercise F 0:45 5:00 5:45 Wrap-Up/Questions 0:15 5:45 6:00 CAP Training – Day 2 Description Section Length Start End Room Open 0:30 7:30 8:00 How to Reduce Energy/Carbon Footprint, Efficient Solutions G 1:15 8:00 9:15 Renewable Energy, Green Power, and Recycling H 1:00 9:15 10:15 Break 0:15 10:15 10:30 Carbon Trading I 1:00 10:30 11:30 Lunch 0:45 11:30 12:15 Review Airport Exercise F 1:30 12:15 1:45 Break 0:15 1:45 2:00 Time Value of Money J 1:00 2:00 3:00 Alternative Financing and Marketing K 0:45 3:00 3:45 Break 0:15 3:45 4:00 Body of Knowledge, Worked Example, Closing L, M 1:00 4:00 5:00 CAP_v2023.06 5  Examination Layout Description Number of Questions Understanding the Problem History, Terminology, Policy, and Legislation 15 Carbon Audit 20 Emissions Reporting/Verification 15 Emissions Conversions 10 Solutions Energy Efficiency Solutions 7 Renewable Energy Sources and Green Power 5 Fleet Management 5 Emissions Trading, Terminology, and Offsets 10 Recycling, Financing, and Marketing 13 Total 100 Eligibility and Certification Applicants must meet at least one of the following eligibility criteria: Education Experience Four-year engineering or architectural degree Four-year degree in business (or related field) AND Three-plus years’ related experience* Two-year associate degree AND Five-plus years’ related experience* NONE Eight-plus years’ related experience* Current status of Certified Energy Manager (CEM®) * Related experience in energy/carbon management. CAP_v2023.06 6  Exam Instructions Examinees must have the following available on their desks for the examination: Identity Non-Wireless Scientific HB Pencil, Pencil Open-Book Materials* Document/Passport Hand Calculator Sharpener, Eraser, Ruler AEE examinations are open-book. Students cannot successfully complete the examinations without bringing books, notebooks, charts, tables, and course files for reference. Examination Room Rules Open notes: bring any notes, materials in hard-copy form. No wireless devices allowed. Phones, laptops, electronic watches, and wireless devices must be switched off and placed in a designated area away from examinees. Use only traditional calculator (non-wireless). Absolute silence to maintained (no talking). Retaking the exam only allowed after six months. Bathroom breaks: one person at any time. Exam booklet and answer sheet must be left face down on desk. You’re not allowed to take anything with you. Failure to comply with any of the above—automatic disqualification. CAP_v2023.06 7  Examination Room Rules (continued) Scratch paper is provided. Do not write in the exam booklet. Record answers to all questions on the answer sheet provided. No credit will be given for answers written in the exam booklet. Scoring is based on the number of correct answers—no penalty for wrong answers. When you have finished the exam, turn in your exam booklet, answer sheet, and all scratch paper to the proctor. Remote Proctoring of Certification Exams aeecenter.org/remoteproctoring CAP_v2023.06 8  Remote Proctoring We now offer remote proctoring for many AEE certification exams. You can take an online exam from the comfort of your own home or office while an exam proctor monitors your progress using a webcam and screensharing technology. Reduce Exam Stress by Taking Your Exam Online Flexible Schedule—You Pick the Date and Time Attend from Anywhere—Simply Join Online Control Your Environment—Get Comfortable in Your Space Reduced Expenses—Zero Travel, Hotel, or Meal Cost Remote Proctoring Review remote proctoring videos and links to confirm this is a good option for you: Online Proctoring at ProctorU: What to Expect: Review the onboarding process and what to expect during your exam. (This video is available in French by clicking on the “cc” on the bottom of the video) Technical Requirements: Review technical requirements and non-supported platforms. Automated Equipment Check: The automated equipment check does not guarantee your equipment’s functionality on exam day. Blocked ports and security firewalls may inhibit your ability to connect to a proctor. To ensure the functionality of your computer, you will need to test your equipment once you have a ProctorU account to confirm there are no blocked ports or security walls that could prevent you from connecting to a proctor on exam day. You will need to confirm that the LogMeIn Rescue Applet works correctly. CAP_v2023.06 9  Remote Proctoring NOTE: ProctorU does not proctor test on Chromebooks, Virtual Machines/Remote Desktop/VPN Connections, phones, or tablets. You must test from a laptop or desktop computer. If you plan to use a work/corporate computer, it is highly recommended that you provide this resource document to your IT department well ahead of your scheduled exam. Guardian Browser: Learn about the remote proctoring browser and how it benefits the testing experience. Remote Proctoring Computer System Checklist Strong high-speed internet connection Working webcam (built-in or external) Functioning microphone Windows or Apple operating system ProctorU Guardian Browser (available for download here). NOTE: You must download and sign in through the Guardian Browser on exam day. Chrome and Firefox are not compatible. Guardian resource articles (available here) Review client/port whitelist information (available here) CAP_v2023.06 10  Association of Energy Engineers Copyright 2023, All Rights Reserved We at the Association of Energy Engineers (AEE) recognize and respect intellectual property rights and are committed to fulfilling our moral and legal obligations with respect to our use of copyright-protected works. As a matter of moral integrity and adherence to copyright law, AEE sets forth these policies as it relates to our copyrighted works. No one is permitted to reproduce any copyrighted work in print, video or digital form in violation of the law. Works are considered protected even if they are not registered with the U.S. Copyright Office or any registering agency outside the U.S. and even if they do not carry the copyright symbol (©). Reproducing and distributing this material without the written permission of AEE is prohibited. The term Certified Energy Manager and the mark CEM are the property of AEE. All training material and supplemental documents included in the material are copyright and must not be used or copied without express written permission. All training materials may be used by and for the individual registered and attending the training course for private and research study purposes and must not be copied or circulated in whole or in part. Under no circumstances can the material be used for third party training or commercial activities without written agreement from AEE. Any unauthorized use of AEE’s materials will constitute an infringement of copyright. AEE reserves the right to grant permission to use its copyright materials to approved training providers, valid licensing agreements with AEE must be in place for the material to be presented. AEE makes every effort to provide the most reliable material, should there be any omissions or errors we cannot be held responsible. We, however, always welcome your valuable feedback so please complete the seminar evaluation you will receive as a part of the course. For questions: AEE 3168 Mercer University Drive Atlanta, GA 30341 Telephone: 770-447-5083 CAP_v2023.06 11  The Need for Carbon Reduction and Overview of Opportunity Section A Course “Compass” Carbon Reduction Process Emissions Accounting Process 1 Understand the 1. Identify Problem/Opportunity 2. Measure Reduce, Reuse, Recycle, Energy 2 Management/Efficiency, etc. 3. Report Get Green Power/Alternative 3 Energy Sources 4. Verify 4 Offset/Use Carbon Credits/Carbon Trading CAP_v2023.06 12  Is Climate Change Real? Discussion: Your Views How has it impacted you—thus far? How might it impact you—in the future? The Effects of Climate Change Arctic Sea Ice – Comparison of Ice Levels in the Arctic Source: https://www.epa.gov/climate-indicators/climate-change-indicators-arctic-sea-ice CAP_v2023.06 13  The Effects of Climate Change Comparison photos of the McCarty Glacier in A comparison of the landscape of the Alaska. Image: 1909 by Ulysses Sherman Grant Blomstrandbreen glacier in Svalbard in 1918 and and 2004 by Bruce F. Molnia 2002 (Photo: Greenpeace Magazine) The Effects Closer to Home – CT/RI CAP_v2023.06 14  What Is the Cause of Climate Change? “There’s a more than 95 percent probability that human activities over the past 50 years have warmed our planet. The industrial activities that our modern civilization depends upon have raised atmospheric carbon dioxide levels from 280 parts per million to 400 parts per million in the last 150 years. The panel also concluded there’s a better than 95 percent probability that human-produced greenhouse gases such as carbon dioxide, methane, and nitrous oxide have caused much of the observed increase in Earth’s temperatures over the past 50 years.” —NASA, IPCC with 1,300 independent scientists Sources: NASA – Global Climate Change: https://climate.nasa.gov/causes/ | IPCC Sixth Assessment Report, 2022 Mapping the Impacts of Climate Change Source: The Center for Global Development, http://www.cgdev.org/page/mapping-impacts-climate-change CAP_v2023.06 15  Energy/Environmental/Economic Challenges Air Quality Conflict and War Supply NIMBY and Waste Global Warming Energy Costs Potential Climate Change Impacts Weather-related mortality Decreased crop yield Change in forest composition Spread of infections diseases Increased irrigation demands Shift geographic range of forests Air quality Forest health and productivity Change in water supply and quality Erosion of beaches Shift in ecological zones Increased competition for water Inundated costal lands Loss of habitat and species Mitigation costs CAP_v2023.06 16  The Jialing riverbed at the confluence with the Yangtze River is exposed due to drought on August 18, 2022, in Chongqing, China. Human Mobility and Climate Change Source: https://www.odi.org/opinion/10470-infographics-climate-change-migration-and-displacement CAP_v2023.06 17  Source: https://www.odi.org/opinion/10470-infographics-climate-change-migration-and-displacement External Costs From fires to floods to sea level rise to crop impact to… Perhaps reduce by 11% or more of the global economy by 2050. Poorer countries to be hit the worst. Source: Swiss Re Institute, April 2021 CAP_v2023.06 18  How to View CO2e Emissions Per capita Per country Over time How to View Emissions Per Capita CAP_v2023.06 19  Source: Global Carbon Project How to View Emissions Per Country CAP_v2023.06 20  How to View Emissions Cumulative Over a Long Period of Time Source: Global Carbon Project CAP_v2023.06 21  How to View Emissions Growth Over Time What About All This Added CO2? CAP_v2023.06 22  Strategic Weakness for Oil/Gasoline Fuels Status – United States US is heavily dependent on oil for delivery of almost all goods, services, and foods. Like most countries, has little leverage on oil pricing as it is a worldwide commodity. Strategic Weakness for Oil/Gasoline Fuels Status – Other Countries Demand in China and India is still growing or likely to grow China imports about 60% of its oil. India is the second net crude oil importer behind China, including USD 10 billion of oil from United States per year EU: 75% of “extra” oil from Russia, 9% from United States, then others. South Africa imported ZAR 80.4 billion of crude oil in 2017. Oil exporters have no incentive to increase their supply (or reduce price) of a dwindling resource on which their economies depend. Source: Eurostat CAP_v2023.06 23  Energy Consumption by Fuel – US Only In first half of 2022, renewables were 24% of total electrical generation Source: US EIA | https://www.eia.gov/outlooks/aeo/pdf/AEO2021.pdf Sources of Emissions – US, Overall Source: EPA, 2010 CAP_v2023.06 24  US Sources of Emissions – Potential Breakdown Source: EPA, 2010 CAP_v2023.06 25  EU – Energy Mix Oil is biggest energy source overall. Considerable variability by country. For example: In France, nuclear is 40% of total energy. Sweden (chart) is about 50% renewable. Germany is 26% natural gas. Source: Eurostat, 2020 China – Energy Mix Coal delivers 70% of electricity, more than 60% of total energy used Source: World Energy Balances, 2022 CAP_v2023.06 26  China Energy by Fuel Type (2019) Petroleum and other liquids 20% Hydroelectricity 8% Nuclear 2% Other renewable Coal sources 58% Natural gas 5% 8% Source: researchgate.net/figure/China-total-primary-energy-consumption-by-fuel-type-2019-Environmental-Impact_fig4_356174303 India – Energy Mix CAP_v2023.06 27  Example of Other Countries South Africa – Eskom Generation Mix Energy mix highly dependent on coal Base load power stations Variable/peaking power stations Shown in infographic: production source Source: Eskom Eskom Generation – South Africa 14 coal-fired base load power stations Installed capacity: 39,342 MW 1 nuclear base load power station Installed capacity: 1,940 MW 2 Conventional hydroelectric + 3 hydro pumped storage Installed capacity: 2,732 MW 2 QR Gas Turbine power stations – Diesel 2 OCGT power stations – Kerosene Installed capacity: 2,426 MW Other: IPP, imports, etc. Total capacity: 47,201 MW New build: 9,564 MW (not online) CAP_v2023.06 28  Environmental Considerations South Africa Output Per MWh Generated CO2 1.01 tons Particulates 0.37 kg SOx 8.25 kg NOx 4.22 kg Water 1.41 kL Ash 155 kg Eskom generated 220,166,000 MWh in 2017. Characteristics of Greenhouse Gases Greenhouse Gas Source Sinks Importance for Climate Burning of fossil fuel Carbon Dioxide Ocean uptake Absorbs infrared radiation Land-use change (CO2) Plant photosynthesis Affects stratospheric O3 (deforestation) Biomass burning Reactions with OH Absorbs infrared radiation Methane Enteric fermentation Microorganism uptake by Affects stratospheric O3 (CH4) Rice paddies soils and H2O; produces CO2 Biomass burning Removal by soils Nitrous Oxide Absorbs infrared radiation Fossil-fuel combustion Stratospheric photolysis (N2O) Affects stratospheric O3 Fertilizers and reaction with O CAP_v2023.06 29  Source: WRI | https://www.wri.org/publication/navigating-numbers Sankey Diagram Major Contributing Greenhouse Effect Gases Carbon dioxide (CO2) Methane (CH4) Nitrous oxide (N2O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF6) Nitrogen trifluoride (NF3) Source: NASA – Global Climate Change | https://climate.nasa.gov/causes/ CAP_v2023.06 30  GHG Global Warming Potential (GWP) GWP values describe the radiative forcing impact of one unit of a given GHG relative to one unit of CO2. GWP values convert GHG emissions data for non-CO2 gases into units of carbon dioxide equivalent (CO2e). Radiative forcing is a function of the concentration of GHGs in the atmosphere, and because the methodology to calculate GWP continues to evolve, GWP factors are reassessed every few years in the IPCC Assessment Reports. A GHG’s GWP value depends on the time horizon over which the potential has been calculated. IPCC Assessment Reports express GWPs over 20-, 100-, and 500-year time horizons. Under UNFCCC/Kyoto Protocol requirements, national inventories must use 100-year values from the Second Assessment Report. GHG Global Warming Potential(s) Source: The Climate Registry CAP_v2023.06 31  Emissions Factors for US Federal Facilities (2016) Source: https://www.sustainability.gov/pdfs/federal_ghg%20accounting_reporting-guidance.pdf MOST PEOPLE ONLY CARE WHEN THE ENVIRONMENT AFFECTS THEM. CAP_v2023.06 32  How Does It Affect Them? Money? How Can It Affect You or Your Organization? Directly—e.g., carbon tax, with this added to “energy” cost. Counties with a carbon tax (as of June 2022): Argentina, Canada, Chile, China, Colombia, Denmark, European Union, Japan, Kazakhstan, Mexico, New Zealand, Norway, Singapore, South Africa, South Korea, Sweden, UK, and Ukraine. Countries considering a carbon tax: Brazil, Brunei, Indonesia, Pakistan, Russia, Serbia, Thailand, Turkey, and Vietnam. Countries with the highest carbon tax: (in USD per metric ton of CO2e: Sweden (137), Switzerland (101), Liechtenstein (101), Norway (69), Finland (62), and France (52). Source: https://www.gccfintax.com/articles/what-countries-have-a-carbon-tax--4100.asp CAP_v2023.06 33  National and Subnational Carbon Pricing Initiatives What About the US? Despite being one of the world’s biggest CO2 emitters, the US currently doesn’t have a carbon tax at a national level. But several states, including California, Oregon, Washington, Hawaii, Pennsylvania, and Massachusetts, have introduced carbon pricing schemes that cover emissions within their territory. President Biden has pledged to cut emissions by 50% by 2030 and achieve net-zero by 2050. But the concept of a carbon tax is regarded by his administration as politically risky and difficult to get passed in the US Congress. Source: World Economic Forum, July 8, 2022 CAP_v2023.06 34  Carbon Pricing Policies in the US Nothing at the National Level RGGI = Regional Greenhouse Gas Initiative Source: Center for Climate and Energy Solutions (C2ES) Compared to command-and-control regulations, carbon pricing is a market-based mechanism that creates financial incentives to reduce greenhouse gas (GHG) emissions. Twelve states that are home to over a quarter of the US population and account for a third of US GDP have active carbon-pricing programs and are successfully reducing emissions. Those states are California and the eleven Northeast states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia—that make up the Regional Greenhouse Gas Initiative (RGGI). RGGI is the first mandatory cap-and-trade program in the United States to limit carbon dioxide emissions from the power sector. California’s program was the first multi-sector cap- and-trade program in North America. Massachusetts has also implemented regulations to establish an additional cap-and-trade program for its power sector that runs in parallel with RGGI but extends out to 2050. Washington state recently enacted new cap-and-invest legislation to take effect beginning in 2023. Source: https://www.c2es.org/document/us-state-carbon-pricing-policies/ CAP_v2023.06 35  What About China? New rules to report carbon emissions and total power output from 2019 and 2020 from roughly 2,225 power plants. This determined “allowances.” July 2021: trading of allowances started. 2021 closed at 43.85 yuan (roughly USD 6.89) per metric ton. Source: https://chinadialogue.net/en/climate/the-first-year-of-chinas-national-carbon-market-reviewed/ What About India? India contributes roughly 7% of the world’s CO2 emissions, making it the third-highest in the world after China and the US. It does not tax carbon emissions directly but has placed a tax on both imported and domestically produced coal since 2010. Coal powers more than half of the country’s electricity generation. Source: World Economic Forum, July 8, 2022 CAP_v2023.06 36  South Africa – 12L Tax Incentives Tax incentive of 95 c/kWh Effective rate: 26.6 c/kWh (28% nominal tax rate) Proven energy savings All energy sources Must be independently M&V’d by SANAS-accredited M&V team Only claimable until January 1, 2020 The Penalty: South African Carbon Tax South Africa's commitment to the UN and COP Reduce greenhouse gas (GHG) emissions by: 34% by 2020 42% by 2025 against a “business as usual” curve Businesses and companies Commenced January 2020 R120 per ton of CO2e All energy sources: electricity, coal, fuel oils, etc. CAP_v2023.06 37  How Can Climate Change and Its Regulations Affect You or Your Organization? Extra cost—with tax revenue going back to… Could be a positive image—goodwill. Giving employees what they want Forbes, October 31, 2021 Giving investors what they want Giving communities what they want What is your green image? Marketing-oriented motivators CAP_v2023.06 38  Marketing Ideas What could energy, water, and environmental benefits be worth when you consider: Annual report to shareholders, Community morale and “green image” Productivity improvements, cost-competitiveness Avoided capital/avoided costs/op. savings Legal risk reduction, avoided penalties LEED points, white certificates, recs FREE public press (political/strategic) Joint ventures (organizations too), business reciprocation, etc. College Sustainability Report Cards Climate change is part of this formally. But other issues have crossover impact (e.g., green buildings). CAP_v2023.06 39  Examples – Harvard, 2021 CDP – Carbon Disclosure Project – Cities Number of cities (over 1,100) using CDP, with the number of times they have reported (2020) CAP_v2023.06 40  CDP – Carbon Disclosure Project – Cities with 70% or More Renewable Energy Source: https://www.cdp.net/en/cities/world-renewable-energy-cities The CDP A List 2017 The Climate A List was established in 2011 and introduced for water and forests in 2015 and 2016, respectively. Due to the more established nature of CDP’s climate program, it has proportionately more responding companies and therefore more companies achieve an A score in climate. A significantly smaller pool of organizations are asked to respond on forests and water. Where relevant, we encourage companies to disclose to all programs to achieve double or triple A status. CAP_v2023.06 41  Airlines – Examples of Different Carriers What impacts CO2e from airlines? What Can You Do About Climate Change? Driving In 2020 American drove 2.83 trillion miles. Don’t idle your car (next slide). Drive more slowly! Drive sensibly—but still “hit the gas as needed” to merge. Lighten the load (empty the trunk) Reduce drag—roof racks, clean car, wax car, etc. Combine errands Telecommute, carpool, public transport Bike or e-bike—or walk! More! Source: https://www.energy.gov/energysaver/saving-money-gas CAP_v2023.06 42  What Can You Do About Climate Change? Idling of Cars and Trucks Twenty-second rule (ten?) Not at traffic lights (even though newer EU cars do this automatically) Don’t use drive-through windows—go inside! Don’t idle while waiting for someone You can still use your car’s battery when off—typically without problems Removing USA idling in cars and trucks could reduce greatly—or perhaps even eliminate—the need for Keystone XL Keystone XL was to move 830,000 barrels of Alberta tar sands oil per day to refineries on the Gulf Coast of Texas. Course “Compass” Carbon Reduction Process Emissions Accounting Process 1 Understand the 1. Identify Problem/Opportunity 2. Measure Reduce, Reuse, Recycle, Energy 2 Management/Efficiency, etc. 3. Report Get Green Power/Alternative 3 Energy Sources 4. Verify 4 Offset/Use Carbon Credits/Carbon Trading CAP_v2023.06 43  So Far, We’ve Discussed… Next Up Specifics about this course—next two days Present Regulatory Frameworks and Guidance The CAP examination The climate change problem Opportunities presented by climate change Who has carbon tax schemes Some carbon emission “equivalents” Simple things that can be done—individually → We’ll keep coming back to this. CAP_v2023.06 44  Introduction to Kyoto (and Other Agreements) and Basic Agreement Principles Section B Course “Compass” Carbon Reduction Process Emissions Accounting Process 1 Understand the 1. Identify Problem/Opportunity 2. Measure Reduce, Reuse, Recycle, Energy 2 Management/Efficiency, etc. 3. Report Get Green Power/Alternative 3 Energy Sources 4. Verify 4 Offset/Use Carbon Credits/Carbon Trading CAP_v2023.06 45  Why Did Kyoto Pick Seven Types of Gases? The Kyoto Protocol to the Convention commits its These have the greatest impact on global parties to binding targets for a “basket” of GHGs, warming and have long “active” lifetimes. including: Example: Sulfur dioxide (causes acid rain) only Carbon dioxide (CO2) stays active in the atmosphere for 30 to 60 days, Methane (CH4) versus GHGs, which can last for decades. Nitrous oxide (N2O) Now—let’s break down these into emissions types: Scope 1, 2, and 3. Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF6) Nitrogen trifluoride (NF3)* *NF was added to reporting after the COP18 meeting in Doha, 2012. 3 What Are Scope 1, 2, and 3 Emissions? Scope 1 Scope 2 Scope 3 Direct GHG emissions that Indirect GHG emissions Indirect GHG emissions that occur from sources controlled associated with the purchase are the result of activities from or owned by an of electricity, steam, heat, or assets not owned or organization (e.g., emissions cooling. controlled by the reporting associated with fuel organization, but that the combustion in boilers, organization indirectly furnaces, vehicles). impacts in its value chain. CAP_v2023.06 46  What to Report On – TCR Anthropogenic: From human activity | Biogenic: Produced or brought about by other living organisms Emissions Terminology – Diagram CAP_v2023.06 47  Emissions Terminology within Reporting Scope/Boundary Scope Check: 1, 2, or 3? On-site natural gas use in boiler to create steam Fuel used in company delivery fleet On-site biofuel use in boiler to create steam Employee commuting Purchased steam from town/city Free steam from neighboring sulfuric acid generation site Purchased chilled water from neighboring site Emissions from a site’s HVAC systems Purchased electricity from supplier/utility Emissions from a site’s fire suppression systems Electricity generated by on-site oil boiler Electricity generated on-site by solar field CAP_v2023.06 48  Scope Check: 1, 2, or 3? 1 On-site natural gas use in boiler to create steam Fuel used in company delivery fleet 1 1 On-site biofuel use in boiler to create steam Employee commuting 3 2 Purchased steam from town/city Free steam from neighboring sulfuric acid generation site 2 2 Purchased chilled water from neighboring site Emissions from a site’s HVAC systems 1 2 Purchased electricity from supplier/utility Emissions from a site’s fire suppression systems 1 1 Electricity generated by on-site oil boiler Electricity generated on-site by solar field – International Mechanisms to Reduce GHG Emissions Protocol Overview and Terminology 1992 – Rio Earth Summit 1997 – Kyoto Protocol International negotiators adopted the United Nations Came into force in 2005. Framework Convention on Climate Change (UNFCCC). Set binding GHG emissions reduction targets for a The UNFCCC itself set no mandatory limits on GHG group of industrialized countries. emissions for individual countries and contains no enforcement mechanisms. Reduce GHGs by 5.2% relative to 1990 emissions. UNFCCC provides for updates (“Protocols”) that set Annex 1 countries could purchase offsets from two mandatory emission limits. schemes (the Clean Development Mechanism and Joint Implementation). Commitment period 1: 2008–2012 All Parties to the UNFCCC are required to compile national inventories of the emissions and removals of Commitment period 2: 2013–2020 the GHGs that are not controlled by the Montreal Protocol on Substances That Deplete the Ozone Layer Over 190 countries have ratified the UNFCCC and its (Montreal Protocol). Kyoto Protocol. CAP_v2023.06 49  More Kyoto Definitions Annex I Countries: industrialized countries Annex II Countries: developed countries that pay for costs of developing countries Developing Countries China, India, and South Africa are classified as a developing countries for the purposes of the UNFCCC and the Clean Development Mechanism (CDM). Kyoto – More Definitions Annex I countries: agree to reduce their emissions below their 1990 emissions levels. If they cannot do so, they must buy emission credits or invest in conservation. Annex II countries: must provide financial resources for the developing countries, are a sub-group of the annex I countries consisting of the OECD (Organization for Economic Co-operation and Development) members, without those that were with transition economy in 1992. CAP_v2023.06 50  Annex I and Annex II Countries ( ) Kyoto – More Definitions, Understanding Developing countries have no immediate restrictions under the UNFCCC. This serves three purposes: Avoids restrictions on growth, because pollution is strongly linked to industrial growth, and developing economies can potentially grow very fast. Cannot sell emissions credits to industrialized nations to permit those nations to over-pollute. Get money and technologies from the developed countries in Annex I. CAP_v2023.06 51  Kyoto – Example: South Africa Developing Country It can attract capital for projects that assist in the shift to a more prosperous but less carbon- intensive economy. It encourages and permits the active participation of private and public sectors. It can be an effective tool of technology transfer if investment is channelled into projects that replace old and inefficient fossil fuel technology or create new industries in environmentally sustainable technologies. It can help developing countries define investment priorities in projects that meet their sustainable development goals. 360 CDM projects submitted to the DNA—220 Project Idea Notes (PINs) and 140 Project Design Documents (PDDs). Out of 140 PDDs, 90 have been registered by the CDM Executive Board as CDM projects (15 Issued with CERs), and 48 are at different stages of the project cycle. Mechanisms to Reduce GHG Emissions All parties to the UNFCCC are required to compile national inventories of the emissions and removals of the GHGs that are not controlled by the Montreal Protocol on Substances That Deplete the Ozone Layer (Montreal Protocol). CFCs and HCFCs are GHGs, also potent ozone-depleting substances, and are not covered by the UNFCCC. When compiling national inventories, all parties use a methodological framework provided by the Intergovernmental Panel on Climate Change (IPCC). Technical body established by the United Nations to provide a clear scientific summary of the physical basis for the climate system and climate change. This summary is periodically updated and published in IPCC Assessment Reports. Fifth Assessment Report published in 2013–2014. The UK emissions trading scheme (ETS) was the world’s first economy-wide GHG trading platform. Started in 2002. CAP_v2023.06 52  Some History of Global Climate Change Action Source: Energetics, Global carbon offset markets analysis, July 2017 Other Agreements to Reduce GHG Emissions Protocol Overview and Terminology 2012 – Doha Conference of Parties Global governments agreed to work toward a new climate agreement. 2015 – Paris Agreement (COP21) Paris Agreement was adopted in 2015. Now forms the basis of global emissions reductions moving forward. Paris Agreement became the fastest-ever UN agreement to come into force. Countries have committed to maintaining levels of warming to 2°C and agreed in principle to aim to limit warming to 1.5°C above pre-industrial levels. Parties to the agreement must set targets: Nationally Determined Contributions (NDCs) Review every five years. President Trump announced that the US would withdraw from the Paris Agreement (July 2017), but now back in under President Biden. Despite the US withdrawal, the agreement continues to stand as long as it covers 55 countries with more than 55% of global emissions. CAP_v2023.06 53  Paris Agreement – More Specifics Legally binding international treaty on climate change. Adopted by 196 parties in 2015, in force November 2016. Set to limit global warming to below 2 C (3.6 F), but hopefully 1.5 C (2.7 F), compared to pre-industrial levels. Each country made initial Nationally Determined Contributions (NDC: actions to reduce CO2e, actions for resilience). Provides that $100 billion in public and private funds will be needed each year to finance projects to adapt to impacts or reduce emissions. By 2020, countries were to communicate their plans to each other—with their updated NDCs. Framework of support for countries needing it with financial, technical, and capacity-building support. By 2024, countries report on actions actually taken. Nothing “legal” if NDC not met—basically “name and shame.” Source: https://www.diplomatie.gouv.fr/en/french-foreign-policy/climate-and-environment/the-fight-against- climate-change/2015-paris-climate-conference-cop21/cop21-the-paris-agreement-in-four-key-points/ Adequacy of Initial Country Pledges Source: Energetics, Global carbon offset markets analysis, July 2017 CAP_v2023.06 54  Nationally Determined Contributions Registry For Latest NDCs Source: https://unfccc.int/NDCREG Paris Agreement – United States US formally withdrew on November 4, 2020. On first day in office, January 20, 2021, President Biden signed US up again. Formally rejoined on February 19, 2021. To rejoin, the US submitted new NDC—more ambitious than the last. New NDC submitted April 2021. Goal: Reduce net GHG emissions by 50–52% below 2005 levels in 2030. Mentioned are: Electricity (about 1/3 of GHG): 100% carbon pollution free by 2035. Transportation (about 1/3 of GHG) – Tailpipe and efficiency standards, incentives for zero-emission vehicles. Buildings: efficient electric heat, energy codes Industry: develop low/zero carbon processes, hydrogen Agriculture: reforestation, smart agricultural practices, more Non-CO2 GHG plan CAP_v2023.06 55  Paris Agreement – India India sent updated NDC on August 26, 2022—two years after deadline and two months before COP27. Committing to reduce “emissions” intensity of its GDP to 45% below 2005 levels by 2030. (Was 33% in past NDC.) Note: There is no globally agreed-upon benchmark to measure this type of target. Half of installed electrical generating capacity will be non- fossil fuel by 2030 (conditional on transfer of technology and finance from others). CAP_v2023.06 56  Paris Agreement – European Union (EU) Goal is first climate-neutral economy and society by Climate law enacted in June 2021—legally binding 2050. countries Reduce emissions by 55% compared to 1990 levels. “Fit for 55 package”: plan to turn goals into EU law, with rules on energy, transport, emissions trading, All EU countries ratified the Paris Agreement. and land use and forestry. Goal is to spend 30% of overall budget for 2021– 2027 on tacking climate change and its effects Proposals 20% was spent between 2014 and 2020. Improving green finance standards Strengthening EU emissions trading system Spurring climate-friendly innovation Ensuring fairness and cost-effectiveness Paris Agreement – China Two days before COP26, China submitted updated 2030 pledge and new long-term strategy. Looking to peak CO2 emissions by 2030 and achieve net-zero emissions before 2060. NDC specifics—enhancements: Cut CO2 emissions per unit of GDP by 65% or more from 2005 levels. Increase share of non-fossil energy to around 25%. Raise forest stock volumes. Bring installed capacity of wind and solar to more than 1,200 gigawatts (new from 2016). CAP_v2023.06 57  China NDC Comparison – 2016 and 2021 Paris Agreement – South Africa Source: climateactiontracker.org CAP_v2023.06 58  Hong Kong – Climate Action Plan 2050 (2021) Review past efforts Push toward targets for 2050 and action plans to meet targets Includes sections on Challenges Targets Mitigation measures (both sides—supply and demand) Adaption Resilience Sources: https://www.climateready.gov.hk/ | https://www.info.gov.hk/gia/general/202110/08/P2021100800588.htm COP27: November 6–19, 2022, Egypt 27th conference of parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) COP is an annual meeting. First held in Berlin in 1995. COP27 is about follow-through on COP26, held in Glasgow in 2021 (goals set). To now work on how to achieve goals and how to pay for climate actions: Goal: 1.5 degree C rise (2.7 degrees F) CAP_v2023.06 59  COP27 – Results Generally mixed results. Agreement for wealthy countries to compensate low-income countries for “loss and damage.” Damage includes: Acute (e.g., weather events) Chronic/slow moving (e.g., sea level rise) Some/many details still to be worked out 24 countries to “operationalize” this arrangement—results to be delivered at COP28 in Dubai in 2023. Limited progress on new plans for reducing GHG Some focus on Global Methane Pledge from COP26 20 methane-related events at COP27 Global Methane Pledge Pushed by US, EU in September 2021 Launched internationally at COP 26 in Glasgow (November 2021) 120+ countries have now signed Goal: Reduce methane by at least 30% by 2030 compared to 2020 Applies especially to oil and gas sector (e.g., flaring, venting, fugitive emissions) CAP_v2023.06 60  Can International Conferences and Agreements Work? Yes. Vienna Convention – on the law of treaties (1969). LRTAP – long-range transboundary air-pollution convention (1979). Particulate emissions dropped by 40% or more, sulfur by 30–40%. Montreal Protocol (1987), Kigali Agreement (2016) – a closer look. Success Story – Montreal Protocol Montreal Protocol (signed in 1987, effective in 1989). Goal: To mitigate the “ozone hole” in atmosphere by reducing CFCs. Phasing out the production and consumption of ozone-depleting substances (ODS) – hydrochlorofluorocarbons (HCFCs) and chlorofluorocarbons (CFCs). Signed by 160 countries (now 197 member parties). 1994: Ozone depleting emissions peaked and have been declining 2006: recovery 22% complete. 2017: successfully curbed 98% of the production of CFC and other ODSs Expect near complete recovery of the ozone layer by the middle of the 21st century. CAP_v2023.06 61  Success Story – Kigali Amendment (October 15, 2016) Parties to the Montreal Protocol adopted the Kigali amendment (adopted by 197 nations) to phase down production and consumption of hydrofluorocarbons (HFCs) worldwide. Legally binding Came into effect on January 1, 2019 (developing countries: 2024) Strengthens the Paris Agreement, which sets an ambitious target of restricting the rise in global temperature below 2 degrees Celsius, compared to preindustrial levels. Unlike Paris Agreement, it gives clear, concrete, and mandatory targets with fixed timelines. It would prevent the emission of HFCs equivalent to 70 billion tons of CO2. United States signed up in September 2022. Who Must Report GHG Emissions? Depends on… The country, what it has signed up for, and its specific rules Timing, updates, changes National politics (In the United States) the current presidential administration The following slides will provide an overview of conditions as of late 2022—from a country perspective, at least. CAP_v2023.06 62  Reporting Requirements/Schemes Change Often Example from 2000 to 2012 Only European Union Reporting Requirements As parties to the UNFCCC, its Kyoto Protocol, and the Paris Agreement, the EU and its member countries are required to report to the UN: annually on their greenhouse gas emissions (“greenhouse gas inventories”); regularly on their climate policies and measures and progress toward the targets (“biennial reports” and “national communications”). CAP_v2023.06 63  European Union Reporting Requirements European Union DRAFT Results CAP_v2023.06 64  China Reporting Guidance/Requirements Nothing yet in terms of requirements, but… March 26, 2021: PR of China published “Guidelines for Verification of Corporate GHG Emission Report.” Will apply to coal-fired power providers, steel mills, and oil and gas producers—those with 26,000 metric tons of CO2e or above. These sites will need to develop GHG monitoring plans by the end of 2022. This data will them be used for trading, allowance, etc. Source: https://www.mee.gov.cn/xxgk2018/xxgk/xxgk06/202103/t20210329_826480.html Hong Kong Reporting Guidelines (2010) For residential and commercial buildings (90% of electricity, 54% of overall GHG) For schools, universities, community centers, sports complexes Not intended for industrial buildings Same GHGs except SF6 (not typical in building types) Scope 1 – emissions and sinks (uses of CO2) Provides emission factors and GWP to use CAP_v2023.06 65  India Reporting Requirements The India GHG Program is a voluntary initiative to standardize measurement and management of GHG emissions in India. No mandatory reporting. Established in 2012 with goal of helping companies monitor their progress toward voluntary reduction goals. United States Legislation/Requirements Renewable portfolio standards (RPS) Environmental Protection Agency (EPA) Executive orders for US federal facilities Securities and Exchange Commission (SEC) Local context: state, county, city, etc. CAP_v2023.06 66  US Renewable Portfolio Standards (RPS) Regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. Electricity supply companies obligated to produce a specified portion of their electricity from renewable energy sources. Certified renewable energy generators earn certificates for every unit of electricity produced and can sell these along with their electricity to supply companies. Supply companies then pass the certificates to some form of regulatory body to demonstrate their compliance with their regulatory obligations. In jurisdictions such as California, minimum RPS requirements are legislated. (October 2015 requires retail sellers and publicly owned utilities to procure 50 percent of their electricity from eligible renewable energy resources by 2030.) RPS-type mechanisms have been adopted in several countries, including the United Kingdom, Italy, Poland, Sweden, Belgium, and Chile, as well as in 29 of 50 US states and the District of Columbia. CAP_v2023.06 67  United States EPA Mandatory Reporting Requirements US Environmental Protection Agency (EPA) published a rule for the mandatory reporting of greenhouse gases (GHG) from sources that in general emit 25,000 metric tons or more of carbon dioxide equivalent per year in the United States (October 30, 2009). Greenhouse Gas Reporting Program (GHGRP) 85–90% of the total US GHG emissions from over 8,000 facilities are covered by GHGRP. Commenced with 2010 calendar year. Reports are submitted annually and provide data collected during the previous calendar year (i.e., the reporting year). Reports are due on March 31 for emissions. Applies to utilities and 41 categories (refineries, chemical, pulp and paper, etc.). See 98 FR for categories/subparts. Source: EPA | https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator Source: EPA | https://www.epa.gov/ghgreporting United States EPA GHGRP CAP_v2023.06 68  United States EPA Electronic GHG Reporting Tool (e-GGRT) E-GGRT supports facility and supplier reporting for the EPA Greenhouse Gas Reporting Program. The rule requires electronic reporting of greenhouse gas (GHG) emissions from large sources and suppliers in the United States. United States 2021 GHG Emissions – Large Facilities CAP_v2023.06 69  Federal Buildings Executive Order March 19, 2015 Overall: 40% reduction in GHGs Some Specifics By 2025: Require 30% of building electricity to be from renewable sources. Reduce GHG emissions from fleets by 30% from 2014 levels. Reduce energy intensity by 2.5% per year (2015–2025). Reduce water intensity by 2% per year (2015–2025). Source: https://www.whitehouse.gov/the-press-office/2015/03/19/executive-order-planning-federal-sustainability-next-decade OK, We Have Data—Now What? First step to manage any problem: define the Basically: Deming Cycle PDCA (PDSA) problem (size, extent, area, and more). Must be good data! One reason for this course! Next/second step—do something to reduce the size of the problem. Set Goals Make a plan to achieve goals Execute the plan Check (study) to see how you’re doing Revise as needed CAP_v2023.06 70  What Can Be Done? Some Possibilities Switch to renewables: no or low CO2e Buy carbon offsets (e.g., tree planting, low carbon solutions) Reduce usages (and hence emissions) as much as possible Global policies, treaties, regulations (e.g., Global Methane Pledge) National policies and/or regulations Local policies Local action (that means you!)—driving, thermostat, etc. Make it “harder” for carbon emissions to occur: Cap and trade We’ll cover many of these in more detail later in the training! United States Inflation Reduction Act of 2022 Signed August 16, 2022 Includes $369 billion to bring the US closer to goal of cutting CO2e by 40% or more from 2005 levels by 2030. Under Paris Agreement, USA to lower emissions by 50%) Areas of Focus Clean trucks and buses (e.g., United States Postal Service and its 200,000 vehicles). Methane emission reduction program will charge oil and gas for wasteful emissions (starting at $900 per ton). Production tax credits (e.g., solar) Home, consumers: tax credits CAP_v2023.06 71  South Africa The Paris Agreement was adopted by consensus on 12 December 2015 by 196 countries, including South Africa. South Africa ratified the agreement in November 2016—bound to reduce its national greenhouse gas emissions. South Africa’s Nationally Determined Contribution (NDC): emissions will range between 398 and 614 MTCO2e between 2025 and 2030, after which emissions will continue to decline. South Africa’s national greenhouse gas emissions amounted 468 MTCO2e (2016), ranking 13th among the world’s biggest GHG emitters. The objectives of the National Greenhouse Gas Emission Reporting Regulations are to: Establish a system for South Africa to capture information on its national carbon footprint; So that South Africa can report on its progress in terms of achieving its national greenhouse gas emissions reductions target; and Inform further formulation and implementation of climate change related legislation and policy. South Africa The Intergovernmental Panel on Climate Change (IPCC) has developed guidelines for establishing National Greenhouse Gas Inventories. Department of Environmental Affairs adopted Technical Guidelines for Monitoring Reporting and Verification of Emissions by Industry. Support the National Greenhouse Gas Emission Reporting Regulations National Environmental Management: Air Quality Act National Atmospheric Emissions Inventory System (NAEIS). Companies and entities that emit more than 100,000 tons of GHGs annually or that consume electricity that results in more than 100,000 tons of emissions from the electricity sector will be required to report. 31 March 2021! CAP_v2023.06 72  South Africa The greenhouse gas (GHG) emissions reported by companies will be used as the basis for the carbon tax calculations. Companies, in control of certain GHG emitting activities and with an associated capacity exceeding a predetermined threshold, will be required to submit GHG emission data in a format prescribed by the Regulations. The calculations of the emissions must be done in line with Technical Guidelines that were published with the Regulations. Companies should note that the calculation methodologies in these Technical Guidelines differ from the conventional corporate calculation methodologies as GHG Protocol Corporate Standard and IS014064. Source: https://www.gao.gov/products/GAO-18-188 Recap Regulatory frameworks and international Who must report—various country examples. agreements: Start discussion: what to do once you have the Kyoto Protocol data? Paris Agreement Montreal Agreement Kigali Protocol Global Methane Pledge COP27 NDCs CAP_v2023.06 73  Carbon Footprint Measurement and Reporting Section C Course “Compass” Carbon Reduction Process Emissions Accounting Process 1 Understand the 1. Identify Problem/Opportunity 2. Measure Reduce, Reuse, Recycle, Energy 2 Management/Efficiency, etc. 3. Report Get Green Power/Alternative 3 Energy Sources 4. Verify 4 Offset/Use Carbon Credits/Carbon Trading CAP_v2023.06 74  Session Agenda Guidance Documents, Processes and Tools Carbon Footprint Measurement Software Some Local Regulations/Specifics Various Emissions Reporting Guidelines CAP_v2023.06 75  GHG Reporting Programs/Guidance Greenhouse Gas Protocol: http://ghgprotocol.org Early Basic Guidance, Revised and Expanded Since ISO: https://www.iso.org/home.html Short Legal Requirements Carbon Disclosure Project: https://www.cdp.net/en Investor’s Risk The Climate Registry: https://www.theclimateregistry.org Guidance with Examples, Software, Registry Repository EPA: https://www.epa.gov Climate Leaders, Mandatory Reporting 2010 Onward Greenhouse Gas Protocol Source: http://ghgprotocol.org/standards CAP_v2023.06 76  International Organization for Standardization Source: https://www.iso.org/home.html CAP_v2023.06 77  International Organization for Standardization ISO 14064-1:2018 ISO 14065:2020 Greenhouse gases – Part 1: Specification with Greenhouse gases – general principles and guidance at the organization level for requirements for bodies that undertake validation quantification and reporting of greenhouse gas and verification of environmental information emissions and removals ISO 14067:2018 ISO 14064-2:2019 Greenhouse gases – Carbon footprint of products Greenhouse gases – Part 2: Specification with – Requirements and guidelines for quantification guidance at the project level for quantification, monitoring and reporting of greenhouse gas ISO 14080:2018 emission reductions or removal enhancements Greenhouse gas management and related activities – Framework and principles for ISO 14064-3:2019 methodologies on climate actions Greenhouse gases – Part 3: Specification with guidance for the validation and verification of greenhouse gas statements Source: https://www.iso.org/home.html CAP_v2023.06 78  The Climate Registry (TCR) Let’s drill into TCR specifics as an example of typical systems and reporting in general. Source: https://www.iso.org/home.html CAP_v2023.06 79  Modules and Descriptions Designed to be used as a set. Modules mirror the chronology of the reporting process. Always look for updates. CAP_v2023.06 80  Section B Inventory Boundaries Defining Operations The greenhouse gas (GHG) emitting activities within an inventory are based on the intersection of the selected organizational boundary and reporting boundary as defined below. While an organizational boundary encompasses all an organization’s business activities, organizations may define their own reporting boundary to include all activities (matching the organizational boundary), or a subset of activities Section B Inventory Boundaries Organizational Boundaries Businesses, government agencies and non-profits can utilize a range of organizational structures to define the degree of ownership or control they exert over different activities. Some examples of these structures include wholly owned operations, divisions, subsidiaries and joint ventures. When added together, the activities within these structures define the organizational boundary GHG emissions inventories can be constructed to reflect three different views of an organizational boundary: Operational control Financial control Equity share CAP_v2023.06 81  Section B Inventory Boundaries Operational Control Reflects the activities where the organization or its subsidiaries has the full authority to introduce and implement operating policies. The organization that holds the operating license for an activity typically has operational control. Operational control is the authority to develop and carry out the operating or health, safety, and environmental (HSE) policies of an activity. One or more of the following conditions establishes operational control: Wholly owning and controlling an activity, operation, facility, or source; or, Having the full authority to introduce and implement operational and HSE (including both GHG- and non GHG related policies). It should be noted that an organization need not control all aspects of an activity to have operational control. For instance, an organization with operational control may not have the authority to make decisions on major capital investments without the approval of other parties in a joint venture. Section B Inventory Boundaries Financial Control Reflects activities where the organization has the ability to direct the financial policies of the activity with an interest in gaining economic benefits from the activity. An organization has financial control over an activity if the activity is fully consolidated in the organization’s financial accounts. Financial control is the ability to dictate or direct the financial policies of an activity with the ability to gain the economic rewards from the activity. One or more of the following conditions establishes financial control: Wholly owning an activity, operation, facility, or source; Considering an activity to be, for the purposes of financial accounting, a group company or subsidiary, and consolidating its financial accounts in an organization's financial statements Governing the financial policies of a joint venture under a statute, agreement or contract; or, Retaining the rights to the majority of the economic benefits and/or financial risks from an activity or facility that is part of a joint venture or partnership (incorporated or unincorporated), however these rights are conveyed CAP_v2023.06 82  Section B Inventory Boundaries Equity Share Reflects activities that are wholly owned and partially owned according to the organization’s equity share in each. Under the equity share approach, an organization accounts for GHG emissions from activities according to its share of equity in each activity. The equity share reflects economic interest, which is the extent of rights an organization has to the risks and rewards flowing from an activity. Typically, the share of economic risks and rewards in an activity is aligned with the organization’s ownership percentage of that activity, and equity share will normally be the same as the ownership percentage. Where this is not the case, the economic substance of the relationship the organization has with the activity always overrides the legal ownership form to ensure that equity share reflects the percentage of economic interest. CAP_v2023.06 83  Similar to Greenhouse Gas Protocol Equity share approach Control approach For joint operations, boundaries and resulting emissions may differ depending upon approach used. Be careful not to double count. Contracts might exist that spell out who, etc. Much more discussion in: https://ghgprotocol.org/sites/default/files/ standards/ghg-protocol-revised.pdf CAP_v2023.06 84  Section B Gases to Report Section B Reporting Emissions in Carbon Dioxide Equivalents (CO2e) In addition to reporting GHG emissions by gas, organizations must also report emissions from non CO2 gases in units of carbon dioxide equivalent (CO2 e). Converting emissions of non-CO2 gases to units of CO2 e allows the ability of each GHG to trap heat in the atmosphere to be compared on a common basis. Tables 5.1 and 5.2 include the Global Warming Potential (GWP) of each GHG, which is used to calculate the carbon dioxide equivalent of the individual gases. GWP factors represent how much heat each GHG is able to trap in the atmosphere relative to the heat trapping ability of CO2 CAP_v2023.06 85  Section B Reporting Emissions in Carbon Dioxide Equivalents (CO2e) GWP defaults are published by the Intergovernmental Panel on Climate Change (IPCC). As part of its activities, the IPCC revisits and updates these defaults in periodic assessment reports. Organizations may use GWPs from the assessment report most relevant to their operations provided that the following conditions are met: All GWPs must be 100-year values. Where possible within an inventory, all GWPs must come from a single assessment report. If a GWP for a particular gas is not provided in the chosen assessment report, organizations must select the more recent GWP for that gas. The source of all GWP values must be disclosed publicly. It is best practice to use GWP values from the most recent assessment report. However, when a base year has been set, it is best practice to use the same GWP values for the current inventory and the base year inventory. Section B GHG Sources CAP_v2023.06