GHG PROTOCOL INITIATIVE Standards & Guidance November COP8, 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 tools Web-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 Principles Organizational Boundaries Operational boundaries Historic Datum Reporting GHG emissions Standards  Ensure information represents a true and fair account of GHG emissions  Ensure information is credible and unbiased in its treatment and presentation of issues

Standards Principles Organizational Boundaries Operational boundaries Historic Datum Reporting GHG emissions  Accounting emissions from subsidiaries, JVs, etc.  Based on financial accounting practices

Standards Principles Organisational Boundaries Operational boundaries Historic 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).

Standards Principles Operational Boundaries Organizational boundaries Historic Datum Reporting 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 tools Web-based, user-friendly, step-by-step guidance Build on IPCC methodologies & industry best practice Cross sector Sector specific Sector-specific tools Aluminum CO 2 & PFC Iron and steel CO 2 Nitric acid N 2 0 Ammonia CO 2 Adipic acid N 2 0 Cement CO 2 Lime CO 2 HCFC-22 HFC-23 Semi-conductor PFC Cross sector tools Stationary combustion CO 2 Mobile combustion CO 2 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 2 nd 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, 02JanFebMaySept, 03 Task Force work continues WRI/ WBCSD collates doc COP9? External Review and Road Testing WRI/ WBCSD external review Printing Release July Revisions Project Module Timeline