Companies Required to Report Greenhouse Gas Pollution

Beginning in 2010, thousands of businesses around the country will have to track their greenhouse gas emissions and report them to the U.S. Environmental Protection Agency (EPA), according to new agency rules. The information collected by EPA will be publicly available and used to inform policies to reduce these emissions and protect against the worst impacts of climate change.

On Sept. 22, the EPA released its final rule [1], required by Congress, creating a greenhouse gas (GHG) registry that will compile the emissions data from the largest emitters across the economy. EPA expects the new registry [2] will track 85 percent of GHG emissions and cover 10,000 facilities. With a threshold of 25,000 tons, only the largest emitters will be required to monitor and report. Covered facilities must begin tracking their emissions on Jan. 1, 2010, and report them every year, beginning in 2011. The final rule also notes that under Clean Air Act authority, companies that fail to monitor or report their emissions could be subject to enforcement action, including fines up to $37,500 per day per violation.

Soon after the European Union initiated its emissions trading plan in 2005, the price of carbon crashed. The E.U. did not have accurate emissions data, which reduced the effectiveness of its cap-and-trade program. Congress is considering a similar program, and policymakers hope that accurate and consistent monitoring will help prevent [3] a similar price crash.

Potential Benefits of the Registry

Transparent, public data on emissions allows the public to hold polluters accountable for the cost of the pollution. Citizens, community groups, and labor unions have previously made use of such information to obtain pollution reductions from companies, even without government regulation. Such negotiations with polluters will be informed by the data collected in the GHG registry. The information in the GHG registry could also drive new technologies that reduce emissions. The data could also allow businesses to track their own emissions and compare them to similar facilities and help in identifying ways to reduce emissions.

The Toxics Release Inventory (TRI), another program that requires reporting of pollution by individual facilities, has seen much success in prompting voluntary reductions of toxic pollution since the program's inception in the late 1980s. Facility operators frequently first learned of their toxic releases through disclosure under TRI. The database allows governments and technology vendors to identify potential sources for reductions.

The damage to a company's reputation resulting from public awareness of its pollution is another motivator for voluntary pollution reductions. Such a dynamic is expected to be present under the GHG reporting program as well.

In its analysis [4] of the impact of the mandatory reporting rule, EPA cited these mechanisms for promoting voluntary reductions, as well as the expanding use of eco-labels that could inform consumers by rating a product based on emissions data from the GHG registry.

Reaching the Registry's Potential

The GHG reporting rule creates a registry that will also be capable of significantly aiding the nation's climate change policies. However, many questions remain over the implementation of the rule, which will largely determine to what extent the registry reaches its potential to assist the climate change battle.

EPA will require electronic reporting of emissions, which should reduce the reporting burden on companies while increasing the accuracy of reports. However, many of the covered facilities have little or no experience with such reporting, and agency training and outreach will need to be sufficient to head off preventable reporting errors.

The agency will likely gather public comments later in 2009 on the design of the electronic reporting system. Although such plans can get very technical, they are important to the overall usefulness of the database. This basic architecture will determine what kinds of analyses can be done once the data start coming in and how hard it will be to expand the database in future years.

What EPA does with the data is another looming issue. The agency's first release of data will not occur until 2011, and there will only be one year's worth of emissions data at that time. However, there are many other data sets – such as voluntary registries like the Carbon Disclosure Project, which already possess years of emissions data – that can be compared to and compliment EPA data. If EPA provides the data in useful formats, then outside groups should be able to combine them with other data sets, map the data, or otherwise manipulate the information. To maximize the effectiveness of the program, open government advocates have asked that the public have access to information beyond the raw emissions numbers, extending to information on the way facilities track their emissions and what quality control plans are in place.

Another concern [5] raised by transparency advocates is the potential to deny disclosure of important data under trade secrets protections. The final reporting rule does not elaborate on how the agency will handle claims that information being reported is confidential business information and therefore must not be disclosed to the public. Rather, the agency intends to seek additional comment from the public before it decides how to address trade secrets allegations.

This registry could become one of the most anticipated and broadly used environmental data sets ever collected by the government. The potential climate policies impacted by the data include research and development initiatives, economic incentives, new or expanded voluntary programs, adaptation strategies, emission standards, a carbon tax, and a cap-and-trade program. The degree of usefulness of the reporting system will be determined by decisions made during the months ahead.