EPA’s New Mandatory GHG Reporting Rule and Solar Energy

Smoke StacksIndividuals interested in solar energy and climate policy are likely aware that the U.S. Environmental Protection Agency (EPA) published its final Mandatory Greenhouse Gas Reporting Rule in the Federal Register on October 30, 2009. (74 Fed. Reg. 56260) This regulation represents the first U.S. effort to require public reporting of certain greenhouse gas (GHG). However, few of these observers may be aware that the final rule will not require the tracking of progress by electricity consumers in reducing greenhouse gas (GHG) emissions by substituting on-site solar energy for purchased fossil fuel-fired electricity.

Nonetheless, a close reading of the final EPA rule indicates that solar energy supporters should not pack their bags and go home. Although the final rule is focused on direct emissions from electric generation sources, the Agency signaled its interest in conducting a future rulemaking to address the treatment of electricity purchases. According to the preamble to the final rule, EPA stated as follows:

While EPA is not collecting data on electricity purchases in this rule, we understand that acquiring such data may be important in the future. Therefore, we are exploring options for possible future data collection on electricity purchases and indirect emissions, and the uses of such data. Such a future data collection on indirect emissions would complement EPA’s interest in spurring investment in energy efficiency and renewable energy.

 

In other words, the EPA’s current regulation does not require separate reporting of so-called indirect GHG emissions – emissions associated with the consumption of purchased electricity by an entity that occur at sources owned or controlled by another entity. For example, emissions that occur at a power plant as a result of electricity used by a manufacturing plant represent the manufacturer’s indirect emissions.

Supporters of solar energy have a strong interest in a future EPA rulemaking. First, without such a regulation, the Agency’s reporting framework will only track direct emissions from large facilities, such as electric utilities. Thus, although electric utilities will be able to demonstrate a reduction in their average and marginal GHG emissions, the Federal government will not have a recognized methodology for tracking the performance of individual companies in reducing electricity purchases through use of on-site solar, other distributed generation and energy efficiency measures. The inclusion of electricity purchases in a mandatory Federal GHG reporting rule is the only way to accomplish that objective.

Second, an EPA rulemaking will need to address the pivotal question of the type of methodology used to calculate the GHG emission reduction benefits of solar energy and other renewable energy technologies. This methodology issue is extremely important since the most widely used methodology at the current time – the so-called eGRID system average methodology – significantly understates the emission reduction benefits of solar energy in most regions of the country.

So, the bottom-line is that individuals and companies interested in solar energy deployment should encourage EPA to initiate a second GHG Reporting Rule that addresses purchased electricity. In addition, they should urge the Agency to adopt an accurate methodology for calculating the emission reduction benefits of renewable energy.

Debra Jacobson

*Comments posted below will receive replies from Debra Jacobson.