EPA Climate Leaders
www.epa.gov/stateply
Overview
Additionality and Quantification Procedures
Overview
Type of System/Program and Context
Climate Leaders is a US EPA voluntary GHG emission reduction program. Launched as an industry-government partnership in 2002, it provides guidance to companies that develop climate change strategies and recognizes their efforts (US EPA, 2009). The program’s goal is to focus corporate attention on cost-effective GHG reduction and energy efficiency projects within the boundary of the organization through support and assistance from the US EPA (US EPA, 2009b).
Partner companies complete a corporate-wide inventory of the six major GHGs using the Climate Leaders GHG Inventory Guidance and set a corporate-wide GHG emission reduction goal to be achieved over 5 to 10 years. They also maintain an Inventory Management Plan, which institutionalizes the process of collecting, calculating and maintaining high-quality, corporate-wide GHG data through an annual reporting process with the US EPA (US EPA, 2009b). Thus, companies create a documented record of their emission reductions and receive EPA recognition as corporate environmental leaders (US EPA, 2009b).
Each partner works individually with the US EPA to set its respective reduction goal based on the emission sources and reduction opportunities within the company (US EPA, 2009b). To achieve the goal, the company may choose to develop its own GHG mitigation offset projects or purchase GHG reductions certified through existing regulated or voluntary markets, provided that the project adheres to approved EPA methodologies. Performance-based GHG accounting protocols for offset projects were released in mid-August 2008 to provide guidance to companies using offsets to meet their goals (US EPA 2009b). Partners may also use green power purchasing and Renewable Energy Credits (RECs) to reduce their indirect electricity emissions and meet their goals under the program.
Program Authority and Administrative Bodies
The US EPA administers the Climate Leaders Program. US EPA staff provide each program partner with technical assistance as they develop, update and document their Inventory Management Plan (IMP) and complete or adjust their base year inventory.
Regional Scope
The Climate Leaders program is limited to industries with operations in the US. Program partners must report US-based emissions and may optionally include their international emissions as well.
Recognition of Other Standards/ Linkage with Other Trading Systems
Climate Leaders partners may meet their emission reduction goals through the purchase of offset credits from regulated or voluntary markets (US EPA, 2009b). The criteria for purchasing offset credits are outlined in the Screening Criteria, which include provisions to ensure that the offsets are real, additional, permanent and verifiable (US EPA, 2009b). Purchased offset credits are required to be quantified using offset protocols or accounting guidance approved by the US EPA Climate Leaders program. The US EPA reviews the purchased offset credits before deciding on their eligibility for meeting a partner’s GHG emission reduction goal.
Market Size and Scope
Tradable Unit and Pricing Information
Under the Climate Leaders program, offset credits are referred to as “external GHG reductions” and are measured in units of metric tonnes of CO2e (US EPA, 2007). No pricing information is available. Program partners may purchase offset credits from regulated or voluntary markets, where prices vary by program, or develop offset projects themselves.
Participants/Buyers
There were 281 program partners in the Climate Leaders Program as of June 2009 (US EPA, 2009b). They represent a broad range of industry sectors including cement, forest products, pharmaceuticals, utilities, information technology and retail, with operations in all 50 US states (US EPA, 2009b).
Current Project Portfolio
No information is yet available. The EPA program administrators report that projects are being developed under the Climate Leaders methodologies; however, neither a Climate Leaders registry nor a compiled report has been developed.
Offset Project Eligibility
Project Types
The EPA has developed a set of offset protocols for specific project types based on the performance standard approach, including landfill gas, manure management, captured methane end use, reforestation/afforestation, transit bus efficiency and boiler replacement for commercial and industrial projects (US EPA, 2009b).
The program’s partners are generally limited to projects that use the offset protocols developed by the EPA. They can purchase or generate GHG reductions from other offset projects but must provide the EPA with the performance standard methodology and data used to calculate the purchased GHG reductions (US EPA, 2009b), which the EPA then reviews and approves.
Project Locations
Offset project protocols are currently applicable to the US. Project developers able to develop a performance standard for an international project type can propose an international project, provided adequate country-specific data sets are available.
Project Size
All project sizes are eligible, but commercial boiler replacement projects have specific size restrictions. (Commercial boiler replacement projects must have an input capacity of between 300,000 and 8 million Btu per hour.)
Start Date
Offset projects must have started on or after February 20, 2002. Exceptions may be made for projects developed by partners through state or other federal GHG programs.
Crediting Period
The crediting period for Climate Leaders offset projects has not been specified.
Co-benefit Objectives and Requirements
Climate Leaders offset guidance document specifies that projects “should be evaluated for any significant non-GHG impacts, both positive and negative … including but not limited to: economic development, sustainability, technology transfer, public participation, and capacity building” (US EPA, 2009a).
Additionality and Quantification Procedures
Additionality Requirements
Offset program protocols use a “performance standard” methodology to assess additionality. Depending on the project type, emissions performance may be defined as an emission rate, a technology standard or a practice standard (US EPA, 2007). Offset projects are required to achieve performance emission reductions that are significantly better than business-as-usual practices determined from similar, recently undertaken or planned practices in a similar geographic region (US EPA, 2007).
Quantification Protocols
The project protocols developed by the US EPA are based on a top-down performance standard approach. Quantification protocols for eligible project types are consistent with the Greenhouse Gas Protocol: The GHG Protocol for Project Accounting (see WBCSD/WRI GHG Protocol for Project Accounting).
Project-specific guidelines regarding leakage and permanence are addressed in the protocols for each project type. If it is determined that leakage may result in significant emissions, these emissions must be quantified and included in the calculation of reductions; however, a specific quantification methodology is not required. The EPA states that “all associated activities determined to contribute to leakage should be monitored.”
Project Approval Process
Validation and Registration
The US EPA reviews all proposed external GHG emission reductions from offset projects, generated or purchased, for eligibility in meeting the Climate Leaders reduction goal. The review is based on the project information provided by the program partner.
Monitoring, Verification and Certification
Protocols for monitoring offset projects have to be submitted to and reviewed by the US EPA during its review process for external GHG emission reductions (US EPA, 2007). Although third-party verification is widely recommended for purchased offset credits, third-party verification of offset credits used by partners to meet their GHG reduction goals is encouraged but not required.
There is no process for certifying offsets under the Climate Leaders program.
Registries and Fees
Although not a requirement, Climate Leaders partners are encouraged to retire their offset credits permanently on an appropriate registry (US EPA, 2007).There are no fees associated with the Climate Leaders program.
Selected Issues
While offsets are only one component of the Climate Leaders program, it has developed offset project protocols that reflect nearly a decade of EPA research and review and provide an important contribution to improving methods and rigor in the growing domestic US offset market. Climate Leaders has placed emphasis on standardized and performance-based elements of protocols in order to increase predictability, lower costs, and enhance consistency.
In some senses, Climate Leaders is currently more of framework than a complete offset system, as compared with voluntary market offset programs such as VCS, CAR, or CCX. For example, Climate Leaders does not provide or require the registration of offset credits to track ownership of credits generated or provide another mechanism to ensure credits are not used in multiple contexts. Climate Leaders recommends that public participation be evaluated, but does not have specific requirements or guidelines. Similarly, Climate Leaders protocols require accounting for permanence and leakage, but leaves open how they addressed.
References
United States Environment Protection Agency (US EPA) (2007). Climate Leaders Fact Sheet, December 2007.
United States Environment Protection Agency (US EPA) (2009a). Climate Leaders Greenhouse Gas Inventory Protocol Optional Module Guidance, EPA-430-F-09-046, January 2009.
United States Environment Protection Agency (US EPA) (2009b). Climate Leaders, 25 June 2009.
United States Environment Protection Agency (US EPA) (2009c). EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress, 23 June 2009.
United States Environment Protection Agency (US EPA) (undated). Climate Leaders GHG Inventory Protocol, Chapter 8.
United States Government Accountability Office (US GAO) (2006).Climate Change: EPA and DOE Should Do More to Encourage Progress Under Two Voluntary Programs, GAO. April 2006.