GHG PROTOCOL INITIATIVEStandards & Guidance

November 1 2002COP8, New Delhi, India

World Resources Institute

Some background….

Convened in 1998 by WBCSD and WRI

Mission:

To develop international GHG accounting and reporting standards for business through an inclusive and transparent multi-stakeholder process

The GHG Protocol Initiative has 2 modules:

Corporate inventory module

GHG mitigation projects module

Setting the scene

Some background: Corporate Inventory

350+ stakeholders contributed and reviewed corporate standard• Businesses

• NGOs (WWF, Climate Neutral Network, TERI…)

• Governments (US EPA, Canada, UK, Australia, …)

• Inter-government organizations (UNFCCC, IPCC, IEA, EU, …)

Corporate standard tested by 30+ companies in 9 countries

Peer reviewed for verifiability and consistency

Corporate inventory standard published in 2001

Second edition scheduled for release in mid-2003

Need for an international standard on corporate GHG accounting & reporting

• Accepted by business, NGOs, and Governments

• Improve consistency, comparability, and credibility

• Simplify measurement & reporting

• Minimize cost of developing an inventory

• Harmonization across borders and initiatives

• Common building blocks for GHG markets

Setting the scene

Process of Development

GHG Protocol Initiative

Inclusive and transparent multi-stakeholder process

Build on existing approaches

Adoption and continuous improvement

Climate Initiatives(based on or informed by GHG Protocol Corporate Standards)

 U.S. Environmental Protection Agency Climate Leaders

World Wildlife Fund Climate Savers

California Climate Action Registry

RespectEurope Business Leaders Initiative for Climate Change (BLICC)

French REGES Protocol

Chicago Climate Exchange

Global Reporting Initiative

CERES Sustainable Governance Initiative

WBCSD Cement Protocol

USAID Greenhouse Gas Pollution Prevention Program

International Forum of Forest and Paper Associations Calculation Tools for

Estimating GHG Emissions from Pulp & Paper Mills

35 of the worlds largest investors with assets of more than $4.5 trillion have asked the world’s

Top 500 companies to quantify their GHG emissions by adopting the GHG Protocol

Business using GHG Protocol: Corporate Standards(as participants of schemes/initiatives or for own purposes)

Alcan Aluminum, USA

Alcoa, USAAstraZeneca, UK

AstraZeneca, UK

BP, USA

Bethlehem Steel, USA

Birka Energi, Sweden

The Body Shop, UK

Cinergy, USA

Eastman Kodak, USA

CODELCO, Chile

Edison Mission Energy, USA

Ford, USA

ENDESA, Spain

Green Mountain Energy, USA

Holcim, USA

IBM, USA

IKEA International, Sweden

International Paper, USA

Interface, USA

Johnson & Johnson, USA

Kansai Electric Power, Japan

Lockheed Martin, USA

Miller Brewing Co., USA

Mirant, USA

National Renewable Energy

Laboratory, USA

Nike, USA

Norm Thompson Outfitters, USA

Norsk Hydro, Norway

N.V. Nuon Energy, Netherlands

Philips & Yaming, China

PWC, New Zealand

PSEG, USA

SC Johnson, USA

Seattle City Light, USA

Simplex Paper & Pulp, India

Sony Electronics, Japan

STMicroelectronics, Switzerland

Suncor, USA

Tata Steel, India

Tokyo Gas, Japan

Volkswagen, Germany

We Energies, USA

500 PPM GmbH, Germany

Standards

Accounting Principles.

Organizational Boundaries.

Operational boundaries.

Historic Datum.

Public reporting.

Guidance

Business goals and

inventory design.

Accounting for GHG

reductions.

Identifying GHG sources.

Managing inventory quality.

Verification of GHG

emissions.

Calculation toolsWeb-based, user-friendly,

step-by-step guidance.

Build on IPCC methodologies

& industry best practice.

Cross sector.

Sector specific.

Protocol Structure

5 Principles Relevance

Completeness

Consistency

Transparency

Accuracy

PrinciplesOrganizational Boundaries

Operational boundaries

Historic Datum

Reporting GHG emissions

Standards

Ensure information represents a true and fair account of

GHG emissionsEnsure information is credible and unbiased in its

treatment and presentation of issues

StandardsPrinciples

Organizational BoundariesOperational boundaries

Historic Datum

Reporting GHG emissions

Accounting emissions from

subsidiaries, JVs, etc.

Based on financial accounting

practices

Operation/entity What to report Reporting for control wholly owned or controlled 100% of emissions jointly controlled (JVs) equity share of emissions no control -- Reporting for equity wholly owned or controlled equity share of emissions share significant influence / equity share of emissions associated entities no control / no influence -- (< 20% voting interest)

StandardsPrinciples

Organisational Boundaries

Operational boundariesHistoric Datum

Reporting GHG emissions

3 scopes guarantee transparency:

scope 1: Direct emissions (must report)

scope 2: Indirect Emissions - imported

electricity, heat, or steam (must report)

scope 3: Other relevant indirect emissions

(voluntary)

Selection of scope/s depends on objectives of

inventory (e.g. internal risk management vs.

trading markets).

StandardsPrinciples

Operational Boundaries

Organizational boundaries

Historic DatumReporting GHG emissions

Set base year to compare emissions

over time.

Adjust base year emissions for

significant structural changes of the

business (investment/ divestment) or in

calculation methodologies.

No adjustment for organic growth or

decline. (e.g. changes in productivity)

Calculation toolsWeb-based, user-friendly,

step-by-step guidance

Build on IPCC methodologies

& industry best practice

Cross sector

Sector specific

Sector-specific toolsAluminum CO2 & PFC

Iron and steel CO2

Nitric acid N20

Ammonia CO2

Adipic acid N20

Cement CO2

Lime CO2

HCFC-22 HFC-23 Semi-conductor PFC

Cross sector toolsStationary combustion CO2

Mobile combustion CO2

Air conditioning/refrigeration HFC

Structured feedback process for corporate standard (Feb 2002)

• Revise and Improve the 1st Edition

• Update Existing GHG Calculation Tools

• Develop New GHG Calculation Tools

Publication of 2nd edition by June 2003

Outreach & adoption

Next Steps…

Setting the scene

Project Accounting Standard - Motivation

The absence of clear international accounting rules for GHG mitigation projects under different trading schemes and initiatives

Setting the scene

Purposes of the Project Accounting Standard

Identify and compare GHG reduction and storage opportunities

Select a credible and robust baseline underpinned by GHG accounting and reporting principles

Facilitate and accelerate required government acceptance and approval procedures in host countries

Lower project transaction costs, while improving the quality and credibility of quantification procedures

Increase accounting consistency between trading schemes

Setting the scene

Key Steps in GHG Project Accounting

GHG Project Objectives

Project Accounting Principles

Identification

• Types of projects

• Project boundary and ownership

• Project eligibility (e.g. sustainable development criteria, scheme-specific rules)

Quantification

• Selection of baseline scenarios, calculation of baseline and project emissions

• Project and crediting lifetime, baseline adjustment

Monitoring and Verification

• Presentation and disclosure of information

• Calculation tools

Setting the scene

Key Accounting Issues

Eligibility e.g. regulatory, sustainable development, scheme specific

Setting project boundaries and assessment of leakage: using causation and significance tests

Calculating baseline emissions: identification and selection of most likely baseline scenarios using benchmark and project specific baselines

Project typology: addressing boundary and baselines attributes of specific projects/technologies

Oct, 02 Jan Feb May Sept, 03

Task Forcework

continues

WRI/WBCSDcollates

doc

COP9?

External Review

and Road

Testing

WRI/WBCSD external review

Printing

Release

July

Revisions

Project Module Timeline