Evaluation of metrics and baselines for tracking greenhouse gas emissions trends: Recommendations for the California climate action registry

The California Climate Action Registry, which was initially established in 2000 and began operation in Fall 2002, is a voluntary registry for recording annual greenhouse gas (GHG) emissions. The purpose of the Registry is to assist California businesses and organizations in their efforts to inventory and document emissions in order to establish a baseline and to document early actions to increase energy efficiency and decrease GHG emissions. The State of California has committed to use its "best efforts" to ensure that entities that establish GHG emissions baselines and register their emissions will receive "appropriate consideration under any future international, federal, or state regulatory scheme relating to greenhouse gas emissions." Reporting of GHG emissions involves documentation of both "direct" emissions from sources that are under the entity's control and indirect emissions controlled by others. Electricity generated by an off-site power source is considered to be an indirect GHG emission and is required to be included in the entity's report.

Registry participants include businesses, non-profit organizations, municipalities, state agencies, and other entities. Participants are required to register the GHG emissions of all operations in California, and are encouraged to report nationwide. For the first three years of participation, the Registry only requires the reporting of carbon dioxide (CO₂) emissions, although participants are encouraged to report the remaining five Kyoto Protocol GHGs (CH₄, N₂O, HFCs, PFCs, and SF₆). After three years, reporting of all six Kyoto GHG emissions is required. The enabling legislation for the Registry (SB 527) requires total GH G emissions to be registered and requires reporting of "industry-specific metrics" once such metrics have been adopted by the Registry.

The Ernest Orlando Lawrence Berkeley National Laboratory (Berkeley Lab) was asked to provide technical assistance to the California Energy Commission (Energy Commission) related to the Registry in three areas:

1. assessing the availability and usefulness of industry-specific metrics,
2. evaluating various methods for establishing baselines for calculating GHG emissions reductions related to specific actions taken by Registry participants, and
3. establishing methods for calculating electricity CO₂ emission factors.

The third area of research was completed in 2002 and is documented in Estimating Carbon Dioxide Emissions Factors for the California Electric Power Sector (Marnay et al., 2002). This report documents our findings related to the first areas of research.

For the first area of research, the overall objective was to evaluate the metrics, such as emissions per economic unit or emissions per unit of production that can be used to report GHG emissions trends for potential Registry participants. This research began with an effort to identify methodologies, benchmarking programs, inventories, protocols, and registries that use industry-specific metrics to track trends in energy use or GHG emissions in order to determine what types of metrics have already been developed. The next step in developing industry-specific metrics was to assess the availability of data needed to determine metric development priorities. Berkeley Lab also determined the relative importance of different potential Registry participant categories in order to asses s the availability of sectoral or industry-specific metrics and then identified industry-specific metrics in use around the world. While a plethora of metrics was identified, no one metric that adequately tracks trends in GHG emissions while maintaining confidentiality of data was identified. As a result of this review, Berkeley Lab recommends the development of a GHG intensity index as a new metric for reporting and tracking GHG emissions trends.Such an index could provide an industry-specific metric for reporting and tracking GHG emissions trends to accurately reflect year to year changes while protecting proprietary data. This GHG intensity index changes while protecting proprietary data. This GHG intensity index would provide Registry participants with a means for demonstrating improvements in their energy and GHG emissions per unit of production without divulging specific values.

For the second research area, Berkeley Lab evaluated various methods used to calculate baselines for documentation of energy consumption or GHG emissions reductions, noting those that use industry-specific metrics. Accounting for actions to reduce GHGs can be done on a project-by-project basis or on an entity basis. Establishing project-related baselines for mitigation efforts has been widely discussed in the context of two of the so-called "flexible mechanisms" of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol) Joint Implementation (JI) and the Clean Development Mechanism (CDM). Issues regarding the development of entity-specific baselines, which can be used by such entities as companies, municipalities, and organizations, have been explored in the context of baseline protection, emissions trading, credit for early action initiatives, and climate change registries. Berkeley Lab developed a baseline typology and assessed the complexity and robustness of each type of baseline vis-a-vis potential future emissions limits and/or emissions trading schemes. Berkeley Lab found that only a statutorily established future target baseline and an ex-post reconstructed baseline were robust enough to be considered as a basis for granting credits for early actions of these two baseline types, the future target baseline is the easiest to construct; the ex-post reconstructed baseline is accurate because actual emissions are known and reductions can be verified by a third party, but it can be more complex and costly.

Finally, Berkeley Lab conducted three case studies in order to explore issues related to both industry-specific metrics and baselines. These case studies were done for Advanced Micro Devices (AMD), Fetzer Vineyards, and the City of Berkeley. The case studies demonstrated numerous issues related to the use of metrics and recommended that industry-specific metrics be disaggregated to a certain degree, depending upon both the specific sector and data availability, in order to best capture the energy or GHG emissions trends experienced at the participant s facilities. The case studies also discussed various baseline issues and concluded that it is difficult to clearly identify any one baseline that is preferable to another based on the limited number of years of data available as well as due to the wide variation observed in the differences between the baselines and actual GHG emissions. Data availability, baseline complexity, baseline robustness, and the ultimate desired use of the baseline must all be considered when choosing a baseline upon which to measure future GHG emissions reductions.