New EPA Rules on Emission Accounting for 2023

The Environment Protection Agency (EPA), the?independent regulatory agency?of the?United States tasked with?environmental protection?matters, published a proposed rule titled “Revisions and Confidentiality Determinations for Data Elements Under the Greenhouse Gas Reporting Rule”1 (87 FR 36920) recently.?This draft contains revisions to the rules governing greenhouse gases emissions (GHG). The proposed changes are varied and designed to address the wide range of the current set of emission rules. The new rules take a fresh look at the factors and computation algorithms of several emission categories, and lists significant sources of N?O, SF? and PFC emissions known to the EPA. The broad array of changes covered in 87 FR 36920 are slated to take effect January 1st, 2023 (which is quickly approaching!) and the associated ongoing annual reporting will commence from January 1, 2024. This will have a large impact on existing solutions for GHG emission calculation and Methane emission detection. It also requires alterations to current GHG inventory configurations, computations, and reporting structures. Given the impact, and the timing, it is imperative for organizations to understand and take stock of the salient aspects of this proposal.

Due focus is given to greenhouse gases that are comparatively small in quantity but have significant global warming potential (GWP).?Because of their relatively small presence, these gases are frequently overlooked in organizations’ greenhouse gas (GHG) inventories.?Listing of typical emission sources for these high GWP gases is quite helpful for overall tracking and containment. Emission sources identified for N?O (GWP 298 times CO??Equiv.), SF? (GWP 22800 times CO??Equiv.) and PFCs (GWP >7000 times CO? Equiv.) are identified in the rules and shown in Figure 1 below.

Figure 1: Greenhouse Gases with Significant Global Warming Potential

As can be seen in Figure 1, there are many sources for these GHGs, but the prominent ones are the Electronics, Electrical, Cosmetics and Medical Applications.?Incorporating these additional sources in Scope 1, 2 and 3 emissions reporting and tracking greatly expands the range of emissions visibility and coverage.?It also exposes a significant number of new GHG emission sources.

Tracking additional GHGs and their sources requires appropriate incremental investment in technology and infrastructure to capture, expand and improve data quality. The EPA draft rules revision proposal contains measures covering five different emissions streams and aims at improving the accuracy of the reported data. Updates are proposed for GHG emissions linked to electronics, pneumatic devices in gas pipelines, biogenic emission on tire burning, and municipal waste landfills. These changes are designed to cover more emitters and account for their associated processes and technologies. The new rules target gaining better data and insights over time.

Further, changes are proposed to emission estimation methodologies. These changes concentrate on accounting for carbon dioxide used in the manufacturing processes of ammonia, hydrogen, and lime, leading to what is known as carbon capture. Changes have also been made to more accurately estimate petroleum refinery emissions and align with revalidated assumptions. There are also revisions that plug gaps in reported emission data, cover additional attributes including emissions from controls deployed for hydrocarbon emissions such as emissions from acid gas removal vents in liquid natural gas (LNG) pipelines, and improving the validation and accuracy of reported data overall. An example of cross verification is a requirement to report facility-level annual averages of chemical compositions of inputs which?can then be used to verify emission levels recorded by continuous emission monitoring systems in a cement production facility.

Besides improving data quality, the draft rule revision focuses on better implementation of GHG reporting mandates. Three measures have been suggested in this regard:

1. Review of the applicability of the rules to certain industrial sectors. For example, approximation based on nameplate estimation is proposed to be dropped in favor of a recommended calculated method for determining SF? and PFC 25000 MT CO? equivalent emission thresholds. This change will help establish better parity in coverage.
2. Streamlining of monitoring and calculation.?One such aspect is changes in monitoring frequency in cases where changes are unlikely in measures even if the measurement interval were to be longer. This removes the burden of redundant and unnecessary reporting and optimizes compliance resources as well.
3. Changes to recordkeeping and reporting requirements. This measure proposes doing away with recordkeeping of irrelevant data and minimizing duplication in reporting.

In terms of industry coverage, the EPA’s rules revision proposal will impact many industrial sectors. A list containing the sectors impacted, along with their North American Industry Classification System?(NAICS), is provided in Figure 2. However, the impact is not limited only to the sectors mentioned in the list.?Other sectors also need to be assessed?to account for specific processes and use of equipment, assets, and facilities as listed in the detailed section of the revision proposal.?

Figure 2: North American Industry Classification System Sectors Affected by EPA Rule Proposal

As can be seen from the overview provided above, the new proposal from EPA will bring about significant changes to rules governing GHG emission reporting. Changes will impact data quality as well as the way GHG emission reporting programs are managed.?These changes are built on the knowledge gained over years in managing emission inventory and are quite appropriate. Many industrial sectors, as listed above, are going to be impacted by these changes.?Therefore, it is important to have a close look at the upcoming changes for respective sector to prepare the respective organizations in advance. Revamping of the digital spine and adoption of appropriate solution, to align with proposed changes to the rules, is a highly recommended course of action, lest one is caught napping in face of regulatory asks.

About Tata Consultancy Services

Tata Consultancy Services (TCS) is an IT services, consulting and business solutions organization that has been partnering with many of the world’s largest businesses in their transformation journeys for over 50 years.?TCS’ proactive stance on climate change and award-winning work with communities across the world have earned it a place in leading sustainability indices such as the MSCI Global Sustainability Index.?

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Reference:

Environment Protection Agency (June 21, 2022).?Federal Register :: Revisions and Confidentiality Determinations for Data Elements Under the Greenhouse Gas Reporting Rule. Federal Register, Vol 87 Number 118 , Page 39620- 37119, Agency/ Docket Number EPA-HQ-OAR-2019-0424 / FRL-7230-02-OAR, 2022-09660.pdf (govinfo.gov).

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About the Author:

Dwarika Mishra is Head of Product Management at TCS and a specialist in sustainable operations.