Greenhouse Gas (GHG) Monitoring, Greenhouse Gas (GHG) Monitoring, Reporting and RegistriesReporting and Registries

Pierre Boileau

Greenhouse Gas Division

Presentation for the Kyoto Mechanisms Seminar for the Manitoba Business Sector

2

Outline of PresentationOutline of Presentation

Background and Context What are the Kyoto Rules for Trading and how do Entities

participate? Current GHG Reporting

National InventoryVoluntary Challenge and Registry

Reporting Implications of the Kyoto Protocol National System / National Registry Domestic Reporting Commitments Large Emitters System under Covenants/DET

3

Background Background and and

ContextContext

4

BackgroundBackground The Kyoto Protocol and Marrakech Accords established a framework

for the international emissions trading market Created 4 types of units (AAUs, ERUs, CERs, & RMUs) Set rules for the treatment of these units in 6 types of Registry transactions

(issuance, transfer, acquisition, cancellation, retirement and carryover)

This framework determines three key characteristics of the international emissions trading market (transfer and acquisition between Registries) Who can trade When trading for each unit starts and ends How much of each unit can be traded

And has secondary implications for transactions outside that market (eg. Forward transactions)

5

Who Can TradeWho Can Trade

Parties1. To be eligible to trade (transfer or acquire), an Annex 1 Party must first:

Ratify the Protocol Establish its initial assigned amount Establish a national system to estimate emissions by sources and removals by

sinks Establish a national registry to track and account for units

To continue to be eligible to trade, An an Annex 1 Party must Submit annual emissions inventory of acceptable quality (NIR) Submit annual sinks inventory (NIR) Submit annual assigned amount report (NIR)

Expedited procedure to reinstate eligibility if lost

Entities Must be authorized to trade by an eligible Party

6

When Trading Can OccurWhen Trading Can Occur

Two issues determine when trading occurs :

I) When the (authorizing) Party is eligible to trade first commitment period units

From: 1 January, 2008 at the latest Following review of pre commitment period report (submitted no later

than 1 January, 2007)

To: 24 July, 2015 Final day of the true-up period

II) When the unit being traded is issuedCERs: 2003? onwards

AAUs: January 1, 2008 at the latest

ERUs: January 1, 2008 onwards

RMUs: April, 2011 (Annual Accounting); April, 2015 (Commitment Period Accounting)

7

How Much Can be TradedHow Much Can be Traded

Quantity restrictions imposed by Marrakech Accords limited to:

Throughout trading period

i) Maintenance of the Commitment Period Reserve Lower of 90% of initial allocation or 100% of 5 times latest inventory Transfers and cancelled units affect compliance with reserve level

End of trading period

ii) Cap on net acquisitions of sinks CERs 1% of 1990 emissions times 5

iii) Caps on Carry Over AAUs (no cap); ERUs and CERs (2.5% of initial allocation); RMUs (0%)

8

Implications for Market ParticipantsImplications for Market Participants

•Spot transactions (involving transfers between Registry accounts) should be undertaken in a manner consistent with the Marrakech framework:

– To avoid risk of transaction termination or invalidation of units involved

– Parties responsible for accounting quality and legal entity participation

•Forward transactions should be mindful of the Marrakech framework

– Minimize cases of delivery default

9

Looking AheadLooking Ahead

This is just a starting point. Some issues for further consideration include:

• What tools are available to maximize the consistency of forward transactions with the Marrakech framework?

• How will transaction structure be affected by the elaboration of detailed technical and function specifications for registries and the transaction log?

• How will transaction structure be affected by Parties’ implementation of the provisions of Marrakech Accords, particularly within the context of domestic emissions trading?

10

What Does this Mean What Does this Mean Domestically?Domestically?

11

Current GHG ReportingCurrent GHG Reporting

Canada’s National GHG Inventory Developed by Environment Canada Adheres to International Methodologies (IPCC) & International

Reporting Guidelines (UNFCCC). Generally top down inventory, with limited point source

information.

Voluntary Challenge & Registry Industry/Government Partnership Designed to promote voluntary GHG reductions Acting as registry for BPI (6 projects) & GERT (4 projects)

12

The National Greenhouse Gas InventoryThe National Greenhouse Gas InventoryHow it is prepared - Responsibilities and Procedural ArrangementsHow it is prepared - Responsibilities and Procedural Arrangements

National Greenhouse Gas Inventory

•National Inventory Report (NIR)

•Trends Fact Sheets & GHG Indicators

•UNFCCC & IPCC Monitoring & Reporting Guidelines

Agriculture CanadaAgriculture Research Data

Some Emissions & Removals

Consulting GroupsSpecialty Emissions Expertise

Natural Resources Canada

Activity Data

Statistics CanadaEnergy & Other Activity Data

INP

UT

S

Review

Exchange

PR

OD

UC

TS

Natural Resources Canada

Energy Forecasting Division

Emissions Data & Energy Analysis

Energy & Greenhouse Gas Forecast

Environment Canada

(Other Groups)Specialty Surveys &

ResearchSpecific Emissions Data

Additional Peer Review•Environmental and Industry Stakeholders•Federal/Provincial Colleagues (NAICC-cc and NAICC-A)•Federal Departments (NRCan; AgCan, Industry Canada)

Industries & Association’s

Activity Data, Research & Information

Mandatory Facility Reporting

(NPRI) (MOE)

Ind

us

try

VCRFacilitate Participant Reporting

GHG Verification Centre

Develops standards & protocols for estimating and verifying domestic greenhouse gas emission reductions and provides outreach services for the GHG Division.

Inventory Agency

•Develops emission estimation methods & emission and removal estimates.•Prepares, publishes & reports National Inventory, Fact Sheets, and GHG Indicators

Greenhouse Gas Division

13

Reporting Implications of the Reporting Implications of the Kyoto ProtocolKyoto Protocol

14

Monitoring, Monitoring, & Reporting & Reporting under the Kyoto Protocolunder the Kyoto Protocol(Articles 5(Articles 5 & & 7) 7)

Kyoto requires that by January 1, 2007 Parties meet international guidelines related to :

• The National Inventory System (Article 5.1) - the institutional arrangements necessary to estimate, verify and report emissions and removals of greenhouse gases

• The National Registry (Article 7.4) – the electronic database to account for transaction of Kyoto credits

• The Annual Inventory Report – (Article 7.1) the reporting of all information required to assess compliance with the target

Compliance with these guidelines is mandatory to:• establish an emissions allowance (initial assigned amount)• participate in the Kyoto Mechanisms• Avoid a third-party “adjustment” to our emissions estimate

15

Monitoring Monitoring & Reporting & Reporting under the Kyoto Protocolunder the Kyoto Protocol(Articles 5, (Articles 5, & & 7)7)

International Requirements• Each Party must establish a National System and National Registry• Single entity must be designated Inventory Agency with overall

responsibility for the National Inventory • Annual National Inventory Report – Must include:

• Description of National System/Institutional Structure• Detailed sectoral trends analysis• QA/QC activities – Key Sources• Quantified Uncertainties,• National Registry information (AAUs, CERs, ERUs, RMUs), • Details on forest and agriculture carbon stocks, and• Information on activities undertaken to minimize adverse impacts on

developing countries.

Domestic Requirements• Reporting requirements related to Large Emitters System• Linkages of Large Emitters System to National Inventory

16

Domestic Reporting CommitmentsDomestic Reporting Commitments

Canada Gazette (January 4, 2003) provided an explanatory note related to reporting on GHGs. It stated that:

The Government of Canada is committed to requiring reporting of GHGs, beginning with reporting on 2004 emissions,

Reporting will be mandatory, Suitable provisions for facility level reporting will be included

and The Government would consult with stakeholders on detailed

reporting requirements arising from the Climate Change Implementation Plan.

17

Large Emitters SystemLarge Emitters System

Reporting Implications Climate Change Plan envisages a large industrial emitters

system with Covenants/DET Mandatory Reporting will be required under the system.

Reporting Objectives Reporting should link with the National GHG Inventory to ensure

reductions are included Reporting requirements related to emissions, covenants, trades

and the national GHG inventory should be consistent with international methodologies, protocols and standards.

Where possible, facility/company level information should be publicly available

18

UNFCCC & KYOTO REPORTINGUNFCCC & KYOTO REPORTING

Current Inventory System

Kyoto Implications

InformationGathering(Including

NPRI/CIPEC/SC)

Inventory

Review

Trends

Analysis

Good Practice

Guidance

• QA/QC

• Methodologies

• Research

• Verification

• Uncertainty Analysis

• Central Archive

NATIONAL

INVENTORY

SYSTEM

(EC - Single Entity with

Overall Responsibility)

National Inventory

Report

(

Trends Analysis

+GPG)

AAUs,CERs

,

ERUs/

RMUs

Linkages with

IET/CDM/JI

DC Impacts

Reporting on

Articles 3.3 & 3.4

(Sinks) Domestic

Initiatives &

ISO

Standards

National

Registry

Large

Industrial

Emitters

GHG

Verification

Centre

DTR

19

The GHG Verification CentreThe GHG Verification Centre

Established to assist domestic initiatives with GHG calculation methodologies and verification

Activities over the last 1½ years: Developed calculation protocols for

stationary fuel combustion (entity GHG inventory)landfill gas (GHG emission reduction project)capture and geologic storage of CO2 (project)

Begun development of GHG verifier training coursein consultation with SCC, CICA, CEAs

Providing technical assistance via email and phone

20

In SummaryIn Summary

Canada negotiated flexible allowance and credit trading rules that allow entities to participate;

International framework requires rigour in GHG calculations at the National and Entity level for participating in trading;

National GHG Inventory moving towards expanded reporting and verification that will include reporting of information on National Registry;

GHG Verification Centre developing products to assist entities and projects with GHG calculations that are consistent with international requirements.