f*v
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CLIMATED
U.S. Environmental Protection Agency
A growing number of companies are
stepping up to the challenge of
protecting the global climate.
Are you next?
Contents
Overview 1
Program Basics 2
Technical Assistance for Partners 3
Climate Leaders GHG Inventory Protocol 4
Climate Leaders Reporting Requirements 6
Setting a GHG Emissions Reduction Goal 9
U.S. Environmental Protection Agency
Air and Radiation (6202J)
EPA430-F-05-016
March 2007
www.epa.gov/climateleaders
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Overview
EPA's Climate Leaders is an industry-government partner-
ship that works with companies to develop long-term
comprehensive climate change strategies. Partners set a
corporate-wide greenhouse gas (GHG) reduction goal and
inventory their emissions to measure progress. By reporting
inventory data to EPA, Partners create a lasting record of
their accomplishments. Partners also identify themselves as
corporate environmental leaders and strategically position
themselves as climate policy continues to unfold.
By becoming a Climate Leader, your company can:
Be identified as an environmental leader
Increase energy efficiency and reduce energy costs
Create a lasting record of accomplishments
Receive technical assistance to complete a GHG inventory
Improve management of GHG emissions and their
associated risks
Become a well-informed player in the climate change
policy discussion
Goal Achievement and Cost Savings: IBM Corporation
IBM has focused its reduction efforts on energy efficiency, renew-
able energy procurement, and the redesign of PFC-using process-
es. Energy efficiency projects range from simple activities such as
the installation of motion detectors for lighting control to complex
controls projects, which monitor and adjust the building environ-
ment to minimize energy usage. IBM has increased its commitment
to renewable energy sources, utilizing wind, solar, and biomass
energy suppliers, supplying 4 percent of IBM electricity use global-
ly in 2004. IBM engineers took a leadership role in redesigning
PFC-using processes to either replace PFCs with nitrogen trifluo-
ride (NF3), which has a low GHG potential and is 90 to 95 percent
utilized in the process, or to convert processes to a low-flow PFC
process, reducing PFC emissions by 40 to 50 percent.
"While some
assume that
cutting carbon
dioxide (C02)
emissions cost
businesses
money, we have
found just the
opposite.
Addressing
climate change
makes business
sense. We have
saved more than
$100 million
since 1998 by
conserving
energy."
-Wayne Balta
Vice President
Corporate Environmental
Affairs and Product Safety
IBM
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Program Basics
Their footprint is getting smaller.
Yours can too.
CLIMATE
LEADERS
The Climate Leaders
public service
announcements (PSA)
highlight Partners
that have set GHG
reduction goals. This
PSA will appear in
magazines throughout
2007.
Partners commit to:
Develop a corporate-wide GHG inventory including
all emission sources of the six major gases (C02,
CH4, N20, HFCs, PFCs, SF6) using the Climate
Leaders GHG Inventory Protocol
Set an aggressive corporate-wide GHG emissions
reduction goal to be achieved over the next 5 to
10 years
Develop a corporate GHG inventory management
plan
Report annual inventory data and document
progress towards their reduction goal
Publicize their participation, reduction goal, and
accomplishments achieved through the program
In return, EPA provides:
Recognition
National press events
Public service announcements in major business
and consumer publications
Speaking engagements at industry conferences
Articles in trade publications
Case studies highlighting Partner achievements
Full page corporate profile on the Climate Leaders Web site
Credibility
A credible, transparent GHG reporting mechanism
Assurance that Partners have created a high-quality GHG
management process
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Technical Assistance for Partners
Technical Assistance to Complete Base Year Reporting
EPA provides up to 80 hours of technical assistance to each Partner as
they develop and document their Inventory Management Plan (IMP) and
complete their base year inventory. Technical assistance is available for
all aspects of creating a credible GHG inventory, including choosing and
implementing GHG accounting methods and measuring, tracking, and
reporting GHG emissions. EPA also provides an inventory review process
to offer constructive feedback on the accuracy and relevance of
Partners' GHG inventory management systems.
After completion of a Partner's base year inventory, EPA experts can
provide up to 10 hours annually of technical assistance in subsequent
years. Assistance may be needed to help Partners update their IMP,
adjust their base year inventory for significant changes, and calculate
new emission sources.
Types of technical assistance include:
Help understanding the Climate Leaders GHG Inventory Protocol
Guidance selecting organizational and operational boundaries
Help identifying sector-specific emissions sources
Assistance calculating emissions by identifying methods, types of
data needed, emission factors, and estimating small sources
Support and feedback creating an IMP
One onsite visit to review implementation of the IMP
On-call support for technical queries
Goal Achievement and Energy Conservation:
Baxter International Inc.
Energy conservation and management has been at the forefront of
Baxter International's GHG reduction efforts, along with facilities con-
solidations. For example, the company is moving away from more
energy-intensive sterilization methods that use ethylene oxide sterili-
zation to methods that use e-beam sterilization. The company has
also built energy-efficient new plasma collection centers. In addition,
Baxter has focused on reducing the space required for its clean
rooms, in turn decreasing the requirements for heating, ventilation,
and air conditioning (HVAC) systems, which can represent 60 to 70
percent of a manufacturing facility's energy use.
"We believe that
climate change
requires
immediate
action. Our
efforts to address
this issue have
typically led to
improved
efficiencies and
other business
benefits. Working
together with
Climate Leaders,
I believe we can
show that
climate change is
not only a serious
problem but a
real business
opportunity."
Arthur J. Gibson
Vice President
Environment,
Health and Safety
Baxter International Inc.
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Climate Leaders GHG Inventory Protocol
CLIMATE LEADERS GREENHOUSE GAS INVENTORY PROTOCOL
Design Principles
CLIMATEv
LEADERS
U S. Environmental Protoctian Agoncy
The Climate Leaders GHG Inventory Protocol
defines how Partners inventory and report
their GHG emissions. The Protocol is based on
an existing corporate GHG inventory protocol
developed by the World Resources Institute
(WRI) and the World Business Council for
Sustainable Development (WBCSD).1 Through a
collaborative process involving representatives
from industry, government, and nongovern-
mental organizations, WRI and WBCSD have
been working to develop generally accepted
accounting practices for measuring and
reporting corporate GHG emissions. The
WRI/WBCSD work has been modified by EPA to
fit the specific needs of Climate Leaders.
The Climate Leaders Protocol consists of
three major parts:
Design Principles
Core Modules Guidance
Optional Modules Guidance
Design Principles
The Design Principles of the Inventory Guidance
include overall guidance on defining inventory
boundaries, identifying GHG emission sources, and defining and
adjusting a base year. The Design Principles also define the minimum
level of data reported under Climate Leaders and various optional
emission and reduction sources that a Partner may elect to report.
May 2005
For more information on the World Resources Institute/World Business Council for Sustainable
Development GHG Protocol, visit .
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Core Modules: Required GHG Emissions Reporting
Direct Emissions
Onsite fuel use (stationary and mobile sources)
GHG process-related emissions
Refrigeration and air conditioning
Indirect Emissions
Electricity and steam purchases
Optional Modules: A Customized Approach
Every corporation has a unique mix of GHG emissions and reduction
activities. Each corporation, therefore, takes a slightly different
approach to mitigating its climate footprint. Climate Leaders offers
companies flexibility in meeting their reduction goal by allowing
Partners to broaden their management scope to include any of the
following optional activities:
Offset investments (e.g., sequestration, landfill methane)
Renewable energy
Off site waste disposal
Product transport
Employee commuting
Business travel
International operations
Goal Achievement and Return on Investment: SC Johnson
At its Waxdale facility, SC Johnson chose to install a landfill gas
combustion turbine system, which was calculated to reduce GHG
emissions by 32,000 tons a year50 percent of the facility's
emissionsand thus deliver virtually all of the company's Climate
Leaders commitment. The $5 million, 3.2-megawatt system cut
electricity roughly in half and natural gas consumption by approxi-
mately 25 percent, and is estimated to save more than $2.6 million
dollars a year in energy costs. SC Johnson projects that the overall
return on investment from the system will be nearly 20 percent.
The success of this project has prompted SC Johnson to install a
second turbine, fueled by natural gas and waste methane, at the
same facility. Together, the two-turbine system will reduce the
facility's GHG emissions by 52,000 tons per year.
"Climate
Leaders is a
win-win
partnership
where EPA and
concerned,
knowledgeable
companies work
together to
design GHG
reduction
efforts that will
benefit the
environment
and sustain the
economy. This
is the kind of
solution
SC Johnson
wants to be a
part of."
-Scott Johnson
Director, Environmental
fit Safety Actions
SC Johnson
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Third-Party
Verification
Some Climate
Leaders Partners
have
completed or are
considering third-
party verification of
their inventories. As
an alternative to the
primary reporting
option, EPA allows
Partners that under-
take a
rigorous third-party
verification of their
GHG inventories to
submit a verification
report certifying that,
at a minimum, the
requirements of the
Climate Leaders GHG
inventory review have
been met. Partners
interested in third-
party verification are
Company Name
Corporate Address
Inventory Contact
Inventory Contact
Organizational
Inclusion of Partially Owned o
d Assets
Climate Leaders Reporting Requirements
The Climate Leaders reporting requirements are designed to provide
credibility and promote continuous improvement in corporate
emissions accounting procedures. All Climate Leaders Partners can
receive free technical assistance from EPA's team of experts to
complete the program's reporting requirements.
Components of Reporting Requirements
Climate Leaders reporting requirements consist of three major
components: an Inventory Management Plan, the Annual GHG
Inventory Summary and Goal Tracking Form, and the review process.
Inventory Management Plan
Partners develop and maintain an IMP that describes their process
for completing a high-quality, corporate entity-wide inventory.
Companies use an IMP to institutionalize a process for collecting,
calculating, and maintaining GHG data. EPA provides an IMP checklist
at www.epa.gov/climateleaders/docs/IMPchecklist.doc that includes
the important elements of an IMP. Partners may have a single IMP
document that addresses all of the elements that go into developing
their corporate inventory, or they might have an equivalent
collection of procedures and other relevant information. EPA expects
the critical elements of an IMP to be developed within one year of a
Partner joining the program,
while other elements can be
phased in over time.
The seven major sections of
an IMP are:
Partner Information:
Company name, address,
and inventory contact
information
Boundary Conditions:
Organizational and opera-
tional boundary descriptions
Emissions Quantification:
Quantification methodolo-
gies and emissions factors
i
k
GHG Inventory Management Plan Checklist
The Inventory Management Plan (IMP) is an internal process for the Partner to institutionali/e the completion o
IMP should he designed with this in mind, not strictly as a reporting requirement to EPA. The IMP checklist ou
he included in an IMP and Ciin he used us a guide for creating an IMP or pulling together existing documents. 1
and should not be used as a substitute for an IMP. As pan of the Climate Leaders reporting requirements. Pann
ol llieir choice, (heir company-specific approach lor each IMP coniponenl listed below, HPA expects lhal an IN
Partner joining the program. However. EPA recognises lhal the development of an IMP is an ongoing process.
completed over lime" can be implemented over ihe length ol ihe Partner's goal period.
IMP Component Detail Required Issues to Consider
Legal name cf entity
P'ry*ir.d and mailing address
Contact name and title
Contact information (telephone/fax/email)
The basis for reporting emissions data from partially owned 01
controlled assets
Equity Approach
Control Approach'
Financial control criterion
Operational control criterion
it of all facilities with location, % ownersrtip, or % control
Is the approach consistent with the Climfl
is operational control defined7 How is cr.
or value derived from company p
Are teases adequately addressed?
Is the list complete and does it include all
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Data Management: Data sources, collection process, and
quality assurance
Base Year: Base year adjustments for structural and
methodology changes
Management Tools: Roles and responsibilities, training,
and file maintenance
Auditing & Verification: Auditing, management review,
and corrective action
Annual GHG Inventory Summary and Goal Tracking Form
CLIMATED
LEADERS
Partners complete and submit the Annual GHG
Inventory Summary and Goal Tracking Form to
EPA annually. This form describes emissions in
terms of total C02-equivalent at a corporate
level, broken out by emission source type-core
direct (e.g., stationary combustion, process,
mobile sources), core indirect (e.g., electricity
or steam purchases), optional (e.g., employee
commuting, product transport), renewables,
and offsets (e.g., sequestration)for both
domestic and international sources. The form
also includes historical totals and a
performance indicator (if applicable) that is
used to track progress toward a reduction goal.
The summary and tracking form is available at
www.epa.gov/climateleaders/docs/
summarvform.xls.
Review Process
EPA provides a desktop review of both the
Partner's IMP and its corporate GHG inventory
data. EPA also offers a desktop review of facility-level GHG
data for interested Partners. Many Partners have found the
facility-level data review to be helpful in improving the
quality of their inventory. One site visit is also conducted to
review facility-level implementation of the Partner's IMP.
ANNUAL GHG INVENTORY SU
Corporate Inventory - U.S.
Year
EMISSIONS Annual CO^-oq. {metric tons)
Oinct Emissions
Sia'.iO'Wv Combustion Sources!
Yclj e :~J:v-:i:_='ii -> =o_ ;=;
Refnqe'B-JDn ,' AC Equip Use
r ,. ----- = ;i j- ^ - i", -.-
Total Direct Emissions
Indirect Emissions
Purchased 3-,d Used E ecfi=:>
Pi, "ir,-.: ,;r; Jr^..: '- - '-.-
Pu-c^aseO anc JseC Hot Water
Pii-;-?-:-: .:,-: _:-.-: > £:: A,;^
Total Indirect Emissions
Optional Emissions 'aaectv si j'=e.
Total Optional Emissions
Cireet + J.'io1'.'.:'.- - ., : . , .- .:"' , _.L,IWIS
Total U.S. Emissions
REQL RED SUPPLE V-NTi.. INFO-MA 'ON
BiomassCO; Emissions - (metric tonsfyr.)
Total Stationary - Biomass C03
el GHG
nd the
the
jcted to
IMP.
Rsqji^d CBliora |
Partner Name:
Reporting Year: |
Inventory Contact P^reun:
Dcpartmont'Division:
Sfee; Adsreas:
City:
State:
' : .
E-mai Adrttess:
Base Year
Year 2 Year 3
_
Ye
0
0
0 0
0 0
o
0 0
0
0 0
7
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The Reporting Requirements Flowchart below describes the full reporting process.
Year 1 - Base Year Data
Partner Joins
Climate Leaders
Partner Submits 3rd Party Auditor Report
and Inventory Summary for Review
i
Feedback on 3rd Party Auditor Report
Provided to Partner
EPA Offers Desktop Review of Facility
Level Data and Provides Technical Support on
Inventory and Inventory Management Plan
(IMP) Documentation, as Needed
Partner Submits Draft IMP Documentation
and Draft Inventory Summary for Review
Feedback on Draft IMP Documentation and
Draft Inventory Summary Provided to Partner
Partner and EPA Select One Site For On-Site
IMP Review
Partner Makes any Changes and Submits
Final Base Year Inventory Summary and 3rd
Party Verification Report
I
Feedback on On-Site IMP Review Provided
to Partner
Partner Makes any Appropriate Changes and
Submits Final Base Year Inventory Summary
and IMP Documentation
Year 2 Through
Goal Year
Partner Submits Current Year Inventory
Summary and 3rd Party Verification Report
in Goal Year
Are There
Outstanding Required
IMP Components --
Partner Submits New IMP Documentation
and Draft Current Year Inventory Summary
for Review
Feedback on New IMP Documentation and
Inventory Summary Provided to Partner
I
Partner Submits Any Changes to IMP and
Current Year Inventory Summary
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Setting a GHG Emissions Reduction Goal
EPA offers flexibility in goal-setting because every company has a unique set of GHG
emissions sources and reduction opportunities. Once Partners have completed their base
year GHG inventory, EPA works closely with Partners to set an individualized GHG
reduction goal. This goal must be:
Corporate-wide (including at least all U.S. operations)
Based on the most recent base year for which data are available
Achieved over 5 to 10 years
Expressed as an absolute GHG reduction or as a decrease in GHG intensity
Aggressive compared to the projected GHG performance for the Partner's sector
Goal Evaluation Considerations
Partners represent a diverse group of companies, including energy producers,
manufacturers, and service-oriented businesses. The standard for an aggressive goal might
vary for different sectors and for different companies depending on a variety of factors:
Sector Issues: Historically, GHG intensity tends to decrease over time in most sectors
as equipment is replaced with newer, more efficient technology. This trend can be
rapid in sectors where capital stock turns over quickly, and much slower in traditional
manufacturing sectors. The rate of intensity improvement can also be affected by the
growth rate of the sector.
Company Issues: Partners within the same sector can have different GHG emissions
sources and a wide range of reduction opportunities. In addition, some Partners have
undertaken GHG reduction activities prior to joining Climate Leaders. These actions are
taken into consideration when evaluating a Partner's proposed goal.
Goal Evaluation Methodology
EPA individually evaluates each proposed GHG reduction goal through the following
process:
1) Evaluation Against Benchmark. The goal is evaluated against a projected benchmark
GHG emissions improvement rate for each Partner's sector. In cases where a Partner
operates in multiple sectors, a weighted average is used. The benchmark is a combina-
tion of projected average energy intensity improvement and any projected process-
related emissions intensity changes. EPA expects every goal to be markedly better
than the projected benchmark performance for the Partner's sector.
2) Analysis of Current Performance. EPA also considers a Partner's current emissions inten-
sity when evaluating its GHG reduction goal. By comparing the Partner's current per-
formance to its sector, EPA recognizes that many companies have already made signifi-
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"GM has
demonstrated
that voluntary
programs work,
and they make
good business
sense. Our
partnership with
EPA's Climate
Leaders program
is an excellent
example of how
government and
industry
together can
encourage
innovation and
strong,
forwardthinking
action."
-Elizabeth Lowery
Vice President
Environment and
Energy Policy
General Motors
cant reductions in their GHG emissions or GHG intensity.
Companies that are currently very efficient for their sector will
not be expected to commit to a reduction goal that is as aggres-
sive as companies that are less efficient than their sector average.
Defining Projected Sector Benchmarks for GHG Emissions Performance
EPA currently uses the following models to develop an appropriate
benchmark:
For commercial and industrial companies, EPA uses both the U.S.
Department of Energy's National Energy Modeling System (NEMS)
and the Bureau of Labor Statistics' (BLS) forecast input/output
tables for the U.S. economy to project benchmark energy inten-
sity improvement by sector.
To project GHG emissions from electric generators, EPA uses the
Integrated Planning Model (IPM) developed by ICF Resources Inc.
In cases where emissions from industrial processes are a significant
source of a Partner's inventory (such as cement or semiconductor
manufacturing), EPA performs additional analyses based on sector-
specific sources of process-related emissions data and projections.
These data are then combined with the projected energy intensity
improvement to develop a benchmark GHG emissions improvement
rate for the Partner's sector.
Goal Achievement and Inventory Management:
General Motors
After surpassing their first Climate Leaders goal and achiev-
ing GHG emissions reductions of 23 percent from 2000 to
2005, GM is working closely with EPA to set an aggressive
second goal. Strategies to meet the next goal include lever-
aging two integral components to the Climate Leaders
Inventory Management Plan: the company's energy and GHG
management systems, and its Web-based energy data collec-
tion system. GM will further reduce its GHG footprint by
growing its renewable energy portfolio with the nation's
largest corporate solar photovoltaic installation, and continu-
ing as a top corporate user of landfill gas.
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Choosing a Key Performance Indicator for Normalized Goals
EPA allows goals to be expressed as an absolute GHG emissions
reduction or as a decrease in GHG intensity. Absolute GHG reduction
goals compare total GHG emissions in the goal year to those in a base
year. GHG intensity goals allow a company to account for increases or
decreases in production over time. The ratio of GHG emissions over an
appropriate normalizing factor becomes the Partner's key performance
indicator to measure GHG intensity. Normalizing factors are typically
measured in physical units (e.g., tons of steel) or economic units (e.g.,
value of shipments). Due to the large variability in economic metrics,
Climate Leaders generally prefers metrics based on physical values,
which track year-to-year changes in emissions intensity more accurately.
For companies that produce a wide diversity of products, however, using
an economic metric might be more appropriate. EPA offers technical
assistance to help Partners choose a suitable key performance indicator.
Reporting and Goal Tracking
Climate Leaders Partners report annual GHG inventory data to EPA to
document progress towards their reduction goal. Partners with a
worldwide goal report domestic and international emissions
separately as well as reporting a worldwide total. This system allows
EPA to ensure that Partners are demonstrating leadership through
achieving a portion of their GHG reductions in the United States.
Once Partners meet their initial Climate Leaders goal, EPA will work
with them to set a new reduction goal.
Goal Achievement and Green Power: National
Renewable Energy Laboratory
The laboratory has met its GHG emissions reduction goal primari-
ly through the use of multiple onsite renewable energy projects,
including several photovoltaics installations, and the use of wind
power to offset electric load at its National Wind Technology
Center. In fiscal year 2005, NREL purchased renewable energy
certificates (RECs) that offset 100 percent of its annual electric
use in Department of Energy-owned buildings. Several solar ther-
mal projects include solar hot water systems, trombe walls, and
ventilation air preheat systems. The laboratory's belief in making
a positive local impact on the environment led NREL to make
green power purchases in Colorado.
"NREL believes
in the balanced
pursuit of
economic
viability,
environmental
stewardship,
and public
responsibility, so
Climate Leaders
serves as a good
opportunity for
us to highlight
and expand on
what we've
already done."
-Dan Bilello
Manager
Environmental and
International Group
National Renewable
Energy Laboratory
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