Trucost Blog / 26 May 2010

Proposed Amendment US EPA Rule on Mandatory GHG Reporting – useful for both shareholders and stakeholders

The addition of corporate identification would help to facilitate a greater understanding of the associated risks and opportunities posed on companies by climate change.

Reported data is of little value to investors, companies, stakeholders, without company identifiers.

June 11th is the deadline for comments on the EPA’s proposed ‘Subpart A’ Corporate Parent/NAICS Code Amendments to the Mandatory Reporting of Greenhouse Gases Rule.

In the Mandatory Reporting of Greenhouse Gases Rule , facilities that emit 25,000 metric tons or more per year of GHG emissions are required to submit annual reports to EPA (in addition, suppliers of fossil fuels or industrial greenhouse gases, and manufacturers of vehicles and engines need to report). (see Trucost’s previous comment on the draft rule)

The rule will create a source of data similar to the Toxic Release Inventory (TRI), which was established in 1986, as part of the Emergency Planning and Community Right-to-Know Act (EPCRA), and expanded in the Pollution Prevention Act of 1990.  The TRI requires reporting across a wide range of industries (i.e. chemical, mining, paper, oil and gas) that produce more than 25,000 pounds or handle more than 10,000 pounds of listed toxic chemicals.

Effective use of TRI data has been significantly hampered over the years, in large part due to a lack of identification of the ultimate parent, or facility owning company/organization.

The addition of corporate identification would enable researchers across the investment, governmental, NGO, academic, and corporate communities to more readily aggregate company reported data made available by the Mandatory Reporting of Greenhouse Gases Rule, and would help to facilitate a greater understanding of the associated risks and opportunities posed on companies by climate change and/or an applied cost of carbon.

The addition of corporate identifiers has been supported in the EPA’s initial Mandatory Reporting of Greenhouse Gases Rulemaking  by many stakeholder and shareholder groups including the US Social Investment Forum, the Carbon Disclosure Project, investors like Calvert Asset Management Company,  professors and academics representing 57 institutions, ESG research companies like RiskMetrics Group, and environmental data organizations like Trucost.

While adding a corporate level identifier to the Mandatory Reporting of Greenhouse Gases Rule would provide significant value, the limitations of this data should also be acknowledged.

First, the data would only capture those facilities that emit above the EPA’s threshold of 25,000 metric tons of GHG emissions. Second, the data reported would only be available for corporate operations that are located in the US.  Thus, only a partial picture of company’s overall emissions would be represented.  However, the net result would be a useful resource for researchers focusing on sector overviews or reviewing geography of major GHG emission sources.

To date – only 6 comments have been made on this rule, 3 were posed by climate skeptics opposing regulating GHG sources generally, 2 comments made were from organizations supporting the Corporate Parent/NAICS Code Amendments, and one generally supports regulating GHG sources.

Trucost will be submitting a supporting statement in the coming week, and encourages others to comment.

More details on how to submit comments ahead of June 11th, available from regulations.gov here.

Background information on the Corporate Parent/NAICS Code Amendments rule at the EPA’s Website,

Draft Corporate Parent/NAICS Code Amendment

Final Rule on the Mandatory Reporting of Greenhouse Gases published in the Federal Register October 30th, 2009

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