U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Evaluation Report
Voluntary Greenhouse Gas
Reduction Programs Have
Limited Potential
Report No. 08-P-0206
July 23, 2008
LANDFILL METHANE
OUTREACH FROCRAM
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WASTE
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Report Contributors: Jill Ferguson
Jeffrey Harris
Jeffrey S. Hart
Kalpana Ramakrishnan
Thane Thompson
Steven Weber
Abbreviations
C2P2 Coal Combustion Partnership Program
CBI Confidential Business Information
CCAP Climate Change Action Plan
CFR Code of Federal Regulations
CH4 Methane
CMOP Coalbed Methane Outreach Program
C02 Carbon Dioxide
EPA U.S. Environmental Protection Agency
GHG Greenhouse Gas
GWP Global Warming Potential
HCFC Hydrochlorofluorocarbon
HFC Hydrofluorocarbon
IPCC Intergovernmental Panel on Climate Change
LMOP Landfill Methane Outreach Program
MAC Marginal Abatement Curve
MMTCE Million Metric Tons of Carbon Equivalent
MMTC02eq Million Metric Tons of CO2 Equivalent
MOU Memorandum of Understanding
OAR Office of Air and Radiation
OIG Office of Inspector General
OMB Office of Management and Budget
OSWER Office of Solid Waste and Emergency Response
PART Program Assessment Rating Tool
PFC Perfluorocarbon
SF6 Sulfur Hexafluoride
UNFCCC United Nations Framework Convention on Climate Change
VAIP Voluntary Aluminum Industrial Partnership
Cover:
Logos of some of the programs examined (from EPA).
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
08-P-0206
July 23, 2008
Why We Did This Review
We did this review to evaluate
the extent to which the U.S.
Environmental Protection
Agency's (EPA's) Greenhouse
Gas (GHG) voluntary
programs can significantly
reduce future GHG emissions,
and whether their data is
complete and reliable.
Background
Concerns about human-caused
global warming and the
potential impacts of GHG
emissions were first raised in
the 1960s. In 1992, the United
States signed and Congress
ratified the United Nations
Framework Convention on
Climate Change Treaty in
Rio de Janeiro. The "Rio"
Treaty requires the United
States to implement programs
to reduce GHG emissions.
The United States decided to
achieve this goal through
implementing voluntary
programs.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2008/
20080723-08-P-0206.pdf
Catalyst for Improving the Environment
Voluntary Greenhouse Gas Reduction Programs
Have Limited Potential
What We Found
The set of voluntary GHG programs we reviewed use outreach efforts to recruit
program partners and reduce GHG emissions. We found the greatest barriers to
participation were the perceived emission reduction costs and reporting
requirements. We also found that it is unlikely these voluntary programs can
reduce more than 19 percent of the projected 2010 GHG emissions for their
industry sectors. From this, we determined that if EPA wishes to reduce GHG
emissions beyond this point, it needs to consider additional policy options.
We recognize that data collection can be challenging for voluntary programs.
However, 8 of the 11 programs in our review showed weaknesses in their current
data collection and reporting systems - caused by limited, unverified, and
anonymous data reporting. These systems are neither transparent nor verifiable,
and are limited by anonymous reporting and use of third party industry data.
Further, none of the programs' memoranda of understanding establish
consequences for failure to report, and generally provided little assurance that
firms are actively participating in the program. EPA has been a leader in
developing protocols to produce estimates for greenhouse gas sources and sinks
categories in the United States. However, data uncertainty has continued to be a
concern the voluntary programs have struggled to address. As a result, the
reported accomplishments of these voluntary programs may be based on
unreliable data.
What We Recommend
We recommend EPA review emission reduction cost analyses annually and
update as needed. For programs that recruit and enroll participants, EPA should
adopt written partnership agreements that require stronger data quality provisions
and details on how Confidential Business Information (CBI) will be handled. For
programs that do not recruit and enroll participants, EPA should develop a policy
or procedure that specifically identifies how these voluntary GHG programs link
their reported outcomes to program efforts.
The Agency concurred with most of the recommendations, but expressed concern
with developing emission reduction cost analyses for programs that serve multiple
industry sectors, and about their ability to safeguard CBI data. The OIG believes
that developing analyses for individual sectors and specifying in partnership
agreements how CBI data will be handled will meet the intent of these
recommendations.
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#
% UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
| WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
July 23, 2008
MEMORANDUM
SUBJECT:
Voluntary Greenhouse Gas Reduction Programs Have Limited Potential
Report No. 08-P-0206
FROM:
TO:
Wade T. Najjum
Assistant Inspector General for Program Evaluation
Robert J. Meyers
Principal Deputy Assistant Administrator
Office of Air and Radiation
Susan Bodine
Assistant Administrator
Office of Solid Waste and Emergency Response
This is our report on the subject evaluation conducted by the Office of Inspector General (OIG)
of the U.S. Environmental Protection Agency (EPA). This report contains findings that describe
the problems the OIG has identified and corrective actions the OIG recommends. This report
represents the opinion of the OIG and does not necessarily represent the final EPA position.
Final determinations on matters in this report will be made by EPA managers in accordance with
established audit resolution procedures.
The estimated cost of this report - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $445,318.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this
report within 90 calendar days. You should include a corrective actions plan for agreed upon
actions, including milestone dates. We have no objections to the further release of this report to
the public. If you or your staff has any questions regarding this report, please contact me at
202-566-0827; or Jeffrey Harris, Director of Special Studies, at 202-566-0831 or
harris.ieffrev@epa.gov.
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Voluntary Greenhouse Gas Reduction Programs
Have Limited Potential
08-P-0206
Table of C
Chapters
1 Introduction 1
Purpose 1
Background 1
Noteworthy Achievements 3
Scope and Methodology 4
2 Emission Reduction Potential of Selected Voluntary
Greenhouse Gas (GHG) Programs Is Limited 5
Programs Focus on Outreach, But Barriers to Participation Remain 5
Voluntary Programs Have Limited Potential to
Reduce Additional GHG Emissions 7
Conclusions 9
Recommendations 10
Agency Comments and OIG Evaluation 10
3 Reporting and Data Limitations Impede
Assessment of Voluntary GHG Programs 11
Current Guidelines Do Not Address Voluntary Reporting Issues 11
Voluntary Program Data Are Often Incomplete 12
Memoranda of Understanding Lack Consequences for Not Reporting 13
Conclusions 14
Recommendations 14
Agency Comments and OIG Evaluation 15
Status of Recommendations and Potential Monetary Benefits 16
Appendices
A Detailed Scope and Methodology 17
B Reported Program Outcomes 19
C Example of a Voluntary Program MOU 20
D Selected Voluntary GHG Program Descriptions 23
E Agency Comments and OIG Evaluation 25
F Distribution 35
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08-P-0206
Chapter 1
Introduction
Purpose
The purpose of this evaluation was to determine whether our selected set of
EPA's Greenhouse Gas (GHG) voluntary programs are effectively managed, and
whether these programs have the potential to make significant reductions in GHG
emissions. Our specific goals for these programs were to determine:
(1) The extent to which the voluntary GHG programs in our review can
contribute to further GHG emission reductions; and
(2) Whether outcome data for the voluntary GHG programs in our review are
accurate and complete.
Background
Concerns about human-caused global warming and the potential impacts of GHG
emissions were first raised in the 1960s. By the mid-1980s, governments decided
that this complex issue needed to be addressed impartially by an independent
body and in 1988 established the United Nations Intergovernmental Panel on
Climate Change (IPCC). Establishing the IPCC led to creating the United
Nations Framework Convention on Climate Change (UNFCCC).
At the 1992 meeting in Rio de Janeiro, Brazil, the United States signed the
UNFCCC "Rio" Treaty, and it was ratified by Congress in October 1992. The
signatory governments to this treaty agreed to:
• gather and share information on greenhouse gas emissions, national
policies, and best practices;
• launch national strategies for addressing greenhouse gas emissions and
adapting to expected impacts, including the provision of financial and
technological support to developing countries; and
• cooperate in preparing for adaptation to the impacts of climate change.
After Congress ratified the Rio Treaty, the Clinton Administration developed the
1993 Climate Change Action Plan (CCAP), which implemented voluntary GHG
emission reduction programs to meet the treaty goals. Nine of the 11 programs
included in this evaluation were included in the 1993 CCAP (Table 1.1 below).
The HFC-23 program was not included as part of the CCAP but began in 1993.
The Coal Combustion Partnership Program (C2P2) began in 2003.
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08-P-0206
Table 1.1: Selected Voluntary GHG Programs included in the CCAP
Program
Industry Sector Served
Year
Begun
WasteWise
Numerous sectors
1992
AgSTAR
Manure management
1993
Natural Gas STAR
Natural gas systems
1993
SF6 Emission Reduction Program for the
Magnesium Industry* (SF6-Magnesium)
Magnesium production and
processing
1994
SF6 Emission Reduction Program for the
Electrical Power Systems* (SF6-Electric
Power)
Electrical transmission and
distribution
1994
PFC Reduction / Climate Partnership for
the Semiconductor Industry* (PFC-
Semiconductor)
Semiconductor manufacturing
1994
Coalbed Methane Outreach Program
(CMOP)
Coal mining
1994
Landfill Methane Outreach Program
(LMOP)
Landfills
1994
Voluntary Aluminum Industrial Partnership
(VAIP)
Aluminum production
1995
Source: 1993 U.S. Climate Change Action Plan.
* From 1994 to 1997, emissions from these three industry sectors were addressed under an
initiative called Environmental Stewardship.
The current Administration has pledged to reduce GHG intensity by 18 percent by
2012.1 The programs in our evaluation set are among the tools being used to meet
that initiative. Other EPA voluntary programs focus on reducing GHG emissions
from fossil fuel combustion for energy and transportation. The voluntary
programs in our sample target a wide variety of GHGs, including carbon dioxide
(CO2), methane (CH4), and several high global warming potential (GWP) gases.
The industry sectors and emission sources addressed by these programs had the
potential to emit a total of 5472 million metric tons of CO2 equivalent
(MMTC02eq.3) in 2005. Our sample set represents about 7.5 percent of the total
U.S. GHG emissions. Most programs target specific industry sectors and GHGs.
1 GHG intensity is a comparative ratio that divides the total annual U.S. GHG emissions by the annual U.S.
economic output expressed in Gross Domestic Product. The voluntary programs do not report in GHG intensity,
rather programs report quantities of GHGs reduced.
2 Source: Global Anthropogenic Non-CO 2 Greenhouse Gas Emissions, 1990 - 2020, June 2006. This emission
volume reflects the 2005 year data for No-Action Baseline (which removes the impacts of voluntary GHG programs
outcomes) for these programs' industry sectors. According to the most recent Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2006 (April 15, 2008, EPA 430-R-08-005), which includes the impacts of reported
outcomes from voluntary GHG programs, the total emissions from these sectors is estimated at 422 MMTC02eq.
Because WasteWise addresses numerous sectors, the program's GHG emission volumes are not included in the 2005
potential GHG emissions volumes. See Appendix D for additional program details.
3 Scientists and policymakers use global wanning potentials (GWPs) to compare the ability of each greenhouse gas
to trap heat in the atmosphere in comparison to other gases. MMTCO2 eq. is calculated by converting various
gasses into an equivalent measure of C02 equivalent. C02, was chosen as the reference gas to be consistent with
international guidelines. For example, CH4 lias a GWP of 21, meaning CH4 has 21 times greater potential to trap
2
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08-P-0206
Table 1.2 below illustrates which GHG each program targets, their 2006 funding
levels, and the number of participants that each program had in 2006.
Table 1.2: Voluntary Program GHG Emission Targets, Funding, and Participants4
Program
Target
GHG Emission
2006
Funding
Level*
2006
Participant
Level
AgSTAR**
Methane (CH4)
$700,000
n/a
Coal Combustion Partnership
Program (C2P2)
Carbon Dioxide
(C02)
$383,000
150
CMOP**
ch4
$1,800,000
n/a
HFC-23 Program
Hydrofluorocarbon
(HFC)-23
$100,000
3
LMOP
ch4
$1,900,000
604
Natural Gas STAR
ch4
$3,600,000
107
PFC-Semiconductor
Perfluorocarbon
(PFC)
$480,000
17
SF6-Electric Power
Sulfur Hexafluoride
(SFe)
$300,000
80
SF6-Magnesium
sf6
$480,000
15
VAIP
PFC
$240,000
7
WasteWise
"3"
X
o
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08-P-0206
reviewed also included historical and projected emission reductions, status and
trends of industry sector, barriers to participation, program strategy and emission
reduction targets, descriptions of outreach efforts, budget information, and
program accomplishments.
Scope and Methodology
Our selected evaluation set consists of 11 EPA voluntary programs that report
GHG emission reductions from specific industry sectors. Nine of the programs in
our evaluation set are operated by the Office of Air and Radiation (OAR), and
two are operated by the Office of Solid Waste and Emergency Response
(OSWER). We selected these particular voluntary GHG programs based on their
ability to provide outcome data for the years 2003 through 2005. Further, because
the OIG was already reviewing the ENERGY STAR program, this program was
not included in this evaluation.
The total U.S. GHG emissions estimates for 2005 were 7,241.5 MMTC02eq.
The majority of these GHGs are CO2 emissions that come from fossil fuel
combustion for energy and transportation. The industry sectors and emission
sources addressed by these 11 programs in 2005 (not taking into account the
reductions attributed to EPA's voluntary programs) had the potential to emit a
total of 547 MMTC02eq. Therefore, our sample set represents about 7.5 percent
of the total U.S. GHG emissions. While the two OSWER programs addressed in
this evaluation are primarily waste reduction programs, they both report achieving
secondary GHG emission reduction benefits, which is why they are included in
this study. We also relied on EPA's program data. Shortcomings of the data are
discussed in Chapter 3. (See Appendix A for a detailed scope and methodology.)
Previous OIG reports on EPA voluntary programs include report no. 2005-P-
00007, Ongoing Management Improvements and Further Evaluation Vital to EPA
Stewardship and Voluntary Programs, February 17, 2005; report no. 2007-P-
00003, Partnership Programs May Expand EPA 's Influence, November 14, 2006;
report no. 2007-P-00028, ENERGY STAR Program Can Strengthen Controls
Protecting the Integrity of the Label, August 1, 2007; and report no. 2007-P-00041,
Voluntary Programs Could Benefit from Internal Policy Controls and a Systematic
Management Approach, September 25, 2007. We also reviewed data collected
from our 2006 report as they related to the findings discussed in this report.
We performed our evaluation between June 2007 and April 2008 in accordance
with generally accepted government auditing standards issued by the Comptroller
General of the United States. Those standards require that we plan and perform
the audit to obtain sufficient and appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
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Chapter 2
Emission Reduction Potential of Selected Voluntary
Greenhouse Gas (GHG) Programs Is Limited
The voluntary GHG programs we reviewed rely on outreach to program partners
and recruitment of new partners to reduce GHG emissions. We found the greatest
barriers to participation were perceived emission reduction costs and reporting
requirements. Because of emission reduction costs, as well as some barriers to
participation, it is unlikely these voluntary programs can reduce more than
19 percent of the projected 2010 GHG emissions for their industry sectors.
Programs Focus on Outreach, But Barriers to Participation Remain
All of the programs under review in this evaluation conduct some form of
outreach to their target industry or constituency. In fact, most programs stated
that outreach, including technical assistance, is the primary service provided to
their customers. Two general types of outreach efforts are recruitment of new
partners, and ongoing services and technical assistance for current participants.
The techniques used for both types of outreach are included in the programs'
business plans, including detailed recruitment activities, ongoing services, and
emissions reductions goals for the next fiscal year. However, several barriers
prevent some participants from adopting emissions reductions processes or
technologies.
Unlike traditional compliance programs, voluntary programs conduct outreach to
persuade their participants to engage in voluntary efforts. However, some
significant barriers and challenges exist to accomplishing this effort, some of
which have been identified in Table 2.1 below. As shown below, the greatest
challenge to getting new participants to become partners is the perceived cost of
emission reduction. Of the 11 programs, 7 stated that cost was perceived a
significant barrier. Program reporting requirements were the next most prevalent
barrier. Even for programs that have a large number of current participants,
getting them to provide data continues to be a challenge. This will be discussed
further in Chapter 3.
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Table 2.1 Barriers That Impede Program Participant Enrollment
Type of Barrier
AgSTAR
CMOP
C2P2
HFC-23
LMOP
Natural Gas STAR
PFC-Semiconductor
SF6-Electric Power
E
3
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Voluntary Programs Have Limited Potential to
Reduce Additional GHG Emissions
The EPA, aware of the challenge of the perceived cost of emission reductions, has
developed economic analyses that identify how much it would cost to reduce
emissions in each industry sector. These analyses, called Marginal Abatement
Curves (MACs), provide estimates of how much of an industry's total future
emissions can be reduced at a given cost per ton of emissions reduction.
The MACs identify which industry sectors have economically feasible reductions
that they can make. This information is one of the tools that helps EPA determine
where to target these outreach efforts.
Table 2.2: Marginal Abatement Curves for Selected Industry Sectors
Program
Projected
2010
Emissions
(MMTC02 eq.)
Potential 2010 Emission Reductions at
Abatement Costs per Ton C02
(Numbers Expressed in Percentac
Various
|es)
$0
$15
$30
$45
$60
AgSTAR
41.3
6.40
9.40
17.20
21.40
21.40
Coal Combustion
Products Partnership*
n/a
n/a
n/a
n/a
n/a
n/a
Coalbed Methane
Outreach Program
51.1
49.22
85.97
85.97
85.97
85.97
HFC-23 Emission
Reduction Program
26.3
0.00
95.06
95.06
95.06
95.06
Landfill Methane
Outreach Program
125.4
10.00
42.14
42.14
80.71
87.31
Natural Gas STAR
138.6
14.52
19.24
28.14
35.47
54.76
PFC-Semiconductor
28.2
56.74
70.92
89.36
94.33
94.33
SF6-Electric Power
17.6
48.69
57.10
57.10
57.10
57.10
SF6-Magnesium
4.6
0.00
97.83
97.83
97.83
97.83
Voluntary Aluminum
Industrial Partnership
14.7
7.76
42.04
50.88
50.88
50.88
WasteWise*
n/a
n/a
n/a
n/a
n/a
n/a
Totals for Sampled
Industry Sectors**
447.8
19.24
43.11
48.04
61.81
69.63
Source: Global Mitigation ofNon-CC>2 Greenhouse Gases, EPA Report, June 2006.
* MACs not calculated for these industry sectors.
** Emission reduction percentages for the total MAC percentage levels are calculated using
emission-weighted averages.
Further, the MACs show how much potential (in projected 2010 emission levels)
a voluntary program can have in reducing emissions in each industry sector, and
can demonstrate to industry participants the net economic benefit of installing
abatement technology.
For example, Table 2.2 above shows the range of net abatement costs for reducing
GHG emissions in a given industry sector. These costs range from $0/ton CO2 eq.
through $60/ton C02 eq., and the table then shows the corresponding percentage
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08-P-0206
of all emissions that could be reduced at that cost. Note that EPA's current
voluntary program effort is equivalent to the $0/ton C02 eq. level. What
Table 2.2 illustrates is that, on average, our selected voluntary GHG programs
have the potential to reduce an additional 19 percent of projected emissions in
2010. However, this assumes that all economically feasible emission reductions
will be reduced. This projected potential, however, does not take into account the
various challenges to participation or other barriers discussed above. Further, the
19-percent potential is not a static level. It only shows the additional emission
reduction potential for the voluntary programs in this study.
Figure 2.1 on the next page shows the potential emission reductions that could be
achieved if additional abatement costs were reduced. For example, if abatement
costs were offset or reduced up to $15/tC02eq., the potential economically
feasible emissions reductions of these programs would increase from 86 tons of
CO2 eq. to 193 tons of CO2 eq. in 2010.
The utility of MAC analyses is dependent upon the quality of the incorporated
data.6 For example, the MAC data in Table 2.2 above incorporates projected
abatement technology costs and uses estimates for the total GHG emissions for
each sector. These calculations are generally updated every other year, but
sometimes only when new emission reduction technology has been developed.
The existing MAC analyses calculate the abatement potential that can be achieved
economically. However, the Coal Combustion Products Partnership and
WasteWise programs do not have MACs. Without the most up-to-date MACs,
EPA may not have the information that it needs to best target their resources to
participants that have the highest likelihood of participating in the program.
6 These emission reductions are projections, and are not based on complete data because MACs do not exist for the
Coal Combustion Partnership Program (C2P2) or the WasteWise program.
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Figure 2.1: Emission reduction volumes per program for various MAC levels
Projected 2010 Reductions Using MACs
120
100
80
o-
0)
CM
8 60
40
20
-AgSTAR
-Coalbed Methane
Outreach Program
HFC 23 Emission
Reduction Program
Landfill Methane Outreach
Program
-Natural Gas STAR
-PFC Emission Reduction
Partnerships for Semi-
conductors
-SF6 Emission Reduction
Partnership for Electric
Power Systems
-SF6 Emission Reduction
Partnership for the
Magnesium Industry
-Voluntary Aluminum
Industrial Partnership
$15 $30 $45
$/Ton C02eq Reduced
Source: Global Mitigation ofNon-C02 Greenhouse Gases, EPA Report, June 2006
Conclusions
The EPA uses voluntary programs to reduce emissions in targeted industry
sectors. However, ongoing participation and new partner recruitment is
challenged by numerous barriers, including the perceived cost of abatement and
reporting requirements. The overall MAC projections do not include all GHG
sectors, and may not be updated as frequently as changes occur. If EPA
determines a need for emissions reductions beyond the 19 percent identified in
MAC projections, it will need to consider additional options beyond its current
voluntary program approach.
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Recommendations
To ensure that EPA and potential program participants have the most up-to-date
abatement cost data for each industry sector, we recommend that the Principal
Deputy Assistant Administrator for the Office of Air and Radiation:
2-1 Review MAC analyses annually and update as needed based on the
availability of updated cost and abatement technology information.
We also recommend that the Principal Deputy Assistant Administrator for the
Office of Air and Radiation and the Assistant Administrator for the Office of
Solid Waste and Emergency Response:
2-2 Develop applicable MAC analyses for GHG-emitting sectors where
they do not exist, and/or work with EPA offices responsible for the
corresponding voluntary GHG programs and share the methodologies
and tools necessary for them to develop their own analyses.
Agency Comments and OIG Evaluation
The Agency concurred with Recommendations 2-1 and 2-2 but expressed
concerns in developing MACs for programs that serve more than one sector. OIG
recognizes the concern. Analyses for individual industry sectors served by EPA
voluntary programs will meet the intent of the recommendation. The Agency's
complete written response, as well as our evaluation of Agency comments, is
presented in Appendix E.
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Chapter 3
Reporting and Data Limitations Impede
Assessment of Voluntary GHG Programs
The 11 voluntary GHG programs we reviewed report program accomplishments
using data that may be neither complete nor reliable. We do recognize that data
collection can be challenging for these programs due to their voluntary nature.
However, 8 of the 11 programs in our review showed weaknesses in their current
data collection and reporting systems caused by limited, unverified, and
anonymous data reporting. These programs' data collection systems are neither
transparent nor verifiable, and are limited by anonymous reporting and use of
third party industry data. Further, none of the programs' memoranda of
understanding establish consequences for failure to report, and generally provided
little assurance that firms are actively participating in the program. Data
uncertainty has continued to be a concern the voluntary programs have struggled
to address. As a result, the reported accomplishments of these voluntary
programs may be based on unreliable data.
Current Guidelines Do Not Address Voluntary Reporting Issues
While the Agency has actively managed voluntary programs since the mid 1990s,
EPA has not developed adequate guidance to ensure that data received from
participants are reliable. Specifically, in 2006, a guidance document titled
Guidelines for Measuring the Performance of EPA Partnership Programs was
developed for EPA managers and staff and their contractors to use when
developing Partnership Programs. However, it does not address issues relating to
developing program-specific reporting requirements, developing written
agreements, providing guidance to address data quality issues in a voluntary
approach, or addressing failure to report. As a result, the guidance provides
limited benefits to programs currently operating.
Program managers told us they generally utilized the reporting requirements of
the Voluntary Reporting of Greenhouse Gases Program under Section 1605(b) of
the 1992 Energy Act as the framework for developing the reporting requirements
for their programs. These requirements were available when most of the
programs were initiated. The 1992 Act provides a method for participants to
document their emission reduction efforts and disclose their commitment to
voluntarily achieving environmental policy goals. However, critics of the 1605(b)
program warn that this mechanism is very flexible and weaknesses have been
identified, including:
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- voluntarily submitted GHG reduction is based on wide discretion in
calculating emission reductions;
data are self-certified and generally no outside verification is required; and
supporting documentation is not required and the potential exists for
double-counting reductions.
EPA told us it agreed that the reporting protocols for the 1605(b) program lacked
the rigor necessary to ensure a robust accounting of accomplishments. It further
advised that each program has developed its own more rigorous and
comprehensive methods and protocols that are specific to the target industry.
Voluntary Program Data Are Often Incomplete
EPA's voluntary GHG programs provide influential data and need to have
sufficient, accurate, and reliable data collection systems to track progress toward
meeting UNFCCC7 treaty and administration goals. This information must also
be supportable, transparent, and verifiable. The inherent weakness of a voluntary
program is that the decision to report is solely left up to the participant. Voluntary
program managers rely on participants' discretion to report timely and accurately.
In theory, failure to report can result in termination from the program with
specific conformance requirements established in a written agreement. In
practice, EPA program managers told us their goals are to obtain the data, not
eliminate non-compliant participants.
Issues relating to data quality have beset the EPA voluntary programs designed to
address greenhouse gas reductions. For example, the programs we reviewed for
this evaluation were included in a 2004 Office of Management and Budget
(OMB) PART (Program Assessment Rating Tool) review. The review examined
20 of EPA's Climate Change Programs and, in the area of data collection, the
programs received a collective score of zero. EPA also acknowledged that its
data have weaknesses. Specifically, within the 2007 Greenhouse Gas Inventory,8
EPA stated, "Emissions calculated for the U.S. Inventory reflect current best
estimates; in some cases, however, estimates are based on approximate
methodologies, assumptions, and incomplete data."
Various barriers limit these voluntary programs' ability to report reliable,
complete, and accurate data on GHG emissions reductions. For example, many
programs receive data not directly from the participant. The PFC-Semiconductors
Industry program and HFC-23 are two examples of programs that receive data
from a third party firm. In this case, third parties compile program results, and
because the results are considered Confidential Business Information (CBI), the
data are transmitted to EPA blindly. Anonymous reporting reduces data
transparency and prevents the program from verifying individual participants'
7 As noted in Chapter 1 above, the United States joined other countries in signing the United Nations Framework
Convention on Climate Change (UNFCCC), an international treaty to address the danger of global climate change.
8Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006, April 15, 2008, EPA 430-R-08-005.
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GHG emissions reductions. Even though EPA has the ability to protect and
safeguard CBI, the Agency told us that some industries still do not trust the
security of data submitted to EPA.
Often, programs with fewer numbers of partners seemed to have better results in
obtaining annual reports. For example, all partners in the Voluntary Aluminum
Industry Program reported annual outcomes, whereas only 12 percent of
WasteWise partners reported annual outcomes. Limited incentives exist for
participants to report—primarily recognition in EPA publications and awards;
generally, there are not consequences for not reporting.
Memoranda of Understanding Lack Consequences for Not Reporting
As shown in Table 3.1, many of the programs we reviewed use a memorandum of
understanding (MOU) as their written agreement between the participating firm
and EPA.9 This document generally establishes the requirements relating to
participation in many of the programs we reviewed. The MOUs we reviewed
outline expectations for both EPA and the partner entity, including annual
reporting. However, none of the MOUs establish consequences for failure to
report, and generally provided little assurance that firms are actively participating
in the program. Further, the MOUs do not provide provisions for EPA to
independently verify data that are reported. As a result, limited assurance exists
that the reported program accomplishments, which are influential both inside and
outside of EPA, are reliable and accurate.
Table 3.1: Programs That Use a Memorandum of Understanding (MOU)
Program
Use MOUs
Do Not Use MOUs
AgSTAR
X
Coal Combustion Products Partnership
X
Coalbed Methane Outreach Program
X
HFC-23 Emission Reduction Program
X
Landfill Methane Outreach Program
X
Natural Gas STAR
X
PFC-Semiconductor
X
SF6-Electric Power
X
SF6-Magnesium
X
Voluntary Aluminum Industrial Partnership
X
WasteWise
X
Source: OIG program questionnaires, interviews, and business plans from EPA program
managers.
Program managers told us more rigorous requirements, such as specific
environmental emission reduction goals, baseline and historical data, or the
Agency's ability to verify the accuracy of data currently reported would result in
loss of participants. They stated that their goal was to add and maintain the
9
See Appendix C for an example of an MOU that EPA's voluntary programs use.
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current participants in their programs. Since their programs address GHGs that
are not regulated, they were limited in dealing with non-participating partners.
These programs do not have a written policy on what program managers can do
when the reporting requirements are not followed. The MOUs do not have
oversight or monitoring provisions within their written agreements with
participants. The program manager for the WasteWise program told us that
WasteWise maintains a database of all partners, including those that do not report.
The program recently purged its database of all partners no longer interested in
participating in the program and is contacting nonreporting partners to encourage
them to track their progress and submit reports.
Some programs, such as AgSTAR and CMOP, do not have MOUs because they
do not have formal participants. The EPA does not take credit for AgSTAR
reductions in methane emissions. The program generally serves as a technical
assistance and best practices clearinghouse. CMOP utilizes data from the U.S.
Mine Safety and Health Administration, State oil and gas commission reports, and
the coal mining industry. CMOP does collect mine-specific data annually and
estimates the total methane emitted from coal mines and the quantity of methane
gas recovered and utilized. Although CMOP does not have formal partners, the
program asserts that methane emissions from coal mines have decreased
34 percent from 1990 levels, and takes credit for a percentage of these reductions
based on the program's coal mine-specific interactions and activities.
Conclusions
The EPA's voluntary GHG programs report achieving emissions reductions.
However, current data collection processes lack transparency, and some programs
allow anonymous reporting or use third-party industry data. Also, some
industries still do not trust the security of data submitted to EPA, which prevents
the Agency from getting data directly from some participants. Further, program
MOUs do not require specific emission reduction goals and lack consequences for
not reporting. As a result, the reported accomplishments of these voluntary
programs may be based on unreliable data.
Recommendations
To ensure rigorous data collection and reporting for their GHG emission
reductions, we recommend that the Principal Deputy Assistant Administrator for
the Office of Air and Radiation and the Assistant Administrator for the Office of
Solid Waste and Emergency Response implement the following:
3-1 For programs that recruit and enroll participants, implement written
partnership agreements that require accurate data reporting and
verification, include consequences for not reporting, and provide
partners with information on how CBI will be handled.
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3-2 For those programs that do not recruit and enroll participants, EPA
should develop a policy or procedure that specifically identifies how
voluntary GHG programs link their reported outcomes to the efforts of
the program.
Agency Comments and OIG Evaluation
The Agency generally concurred with Recommendation 3-1. It stated that, as
directed under the FY08 Omnibus Appropriations bill signed into law on
December 22, 2007, it is drafting a proposed rule concerning mandatory reporting
of greenhouse gas emissions which will help improve data accuracy of these
voluntary programs. With respect to consequences for not reporting, the Agency
agreed to review and amend processes that address nonreporters in the programs
as appropriate. The Agency did not fully concur with the portion of the
recommendation relating to CBI assurances but recognized the importance of the
issue. The Agency noted that for the two OSWER programs, CBI is protected
consistent with the Resource Conservation and Recovery Act's CBI regulations.
However, the Agency stated that it cannot offer blanket assurances to safeguard
and protect CBI data to its partners under the Clean Air Act. We amended our
recommendation and ask the Agency to include a section on how CBI will be
handled in its partnership agreements.
The Agency concurred with Recommendation 3-2. It acknowledged the
importance of having robust, meaningful policies for reporting outcomes,
especially for programs without formal participant/partner status.
The Agency's complete written response as well as our evaluation of Agency
comments is presented in Appendix E.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (in $000s)2
Rec.
No.3
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Agreed To
Amount
2-1 10 Review MAC analyses annually and update as
needed based on the availability of updated cost
and abatement technology information
2-2 10 Develop applicable MAC analyses for GHG-
emitting sectors where they do not exist, and/or
work with EPA offices responsible for the
corresponding voluntary GHG programs and share
the methodologies and tools necessary for them to
develop their own analyses.
3-1 14 For programs that recruit and enroll participants,
implement written partnership agreements that
require accurate data reporting and verification,
include consequences for not reporting, and
provide partners with information on how CBI will
be handled.
3-2 15 For those programs that do not recruit and enroll
participants, EPA should develop a policy or
procedure that specifically identifies how voluntary
GHG programs link their reported outcomes to the
efforts of the program.
Principal Deputy
Assistant Administrator,
Office of Air and Radiation
Principal Deputy
Assistant Administrator,
Office of Air and Radiation
and
Assistant Administrator,
Office of Solid Waste and
Emergency Response
Principal Deputy
Assistant Administrator,
Office of Air and Radiation
and
Assistant Administrator,
Office of Solid Waste and
Emergency Response
Principal Deputy
Assistant Administrator,
Office of Air and Radiation
and
Assistant Administrator,
Office of Solid Waste and
Emergency Response
1 0 = recommendation is open with agreed-to corrective actions pending;
C = recommendation is closed with all agreed-to actions completed;
U = recommendation is undecided with resolution efforts in progress
2 Identification of potential monetary benefits was not an objective of this evaluation.
3 In accordance with EPA Manual 2750, the Agency is required to provide a written response to this report within 90 calendar days that will include a corrective
actions plan for agreed upon actions, including milestone dates.
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Appendix A
Detailed Scope and Methodology
Our evaluation set consists of 11 EPA voluntary programs that report GHG emission reductions
from specific industry sectors. This sample set represents approximately 7.5 percent of the total
U.S. GHG emissions. For 2005, the total U.S. GHG emissions estimates were 7,241.5 MMTCO2
eq. The industry sectors served by these programs had the potential to emit 547 MMTC02eq. in
2005. We selected these particular voluntary GHG programs based on their ability to provide
outcome data for the years 2003 through 2005. Because the OIG was already reviewing the
ENERGY STAR programs, those programs were not included in this evaluation. The majority
of U.S. GHG emissions come from motor vehicles and fossil fuel combustion for energy, but
neither of these emission sources falls within the scope of this evaluation.
Greenhouse gases are expressed in a common metric so the emission reductions can be
accurately compared. Some gases have higher global warming potential (GWP) than others and
therefore have greater impacts on global warming overall. The international standard practice is
to express the potential impacts of gases in CO2 equivalents. See Table A. 1 below for the
various GWPs of most of the gases represented by the programs in our evaluation.
Table A.1: Global Warming Potential of Various GHGs
Greenhouse Gas
GWP
CM
O
O
1
ch4
21
CF4 (Perfluorocarbon, PFC)
6,500
C2F6 ( Perfluorocarbon, PFC)
9,200
Hydrofluorocarbon - 23 (HFC-23)
11,700
Sulfur Hexafluoride (SF6)
23,900
Source: Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2005, EPA Report, April 2007
Programs can report outcomes in either MMTCO2 or in million metric tons of carbon equivalent
(MMTCE). The difference in these two measures relates to the molecular weights of carbon and
oxygen. Outcomes in MMTCE are converted to million metric tons of C02 equivalent by
multiplying the MMTCE by 3.667.
During field work, we reviewed and assessed EPA's guidance documents and publications
related to voluntary programs, stewardship opportunities, partnership programs, and innovation
activities. We collected each program's background and implementation information through
questionnaires. We conducted follow-up interviews with all program officers to verify reported
information.
We reviewed annual business plans for all programs, with the exception of the HFC-23 program.
The business plans had information on the program achievements and emissions reductions,
outreach efforts (such as technical guidance, workshops, and conferences), potential program
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participants, barriers to participation, program funding requests, and program objectives and
goals.
We also reviewed the Office of Atmospheric Programs report titled Global Mitigation o/Non-
CO2 Greenhouse Gases. This report provides Marginal Abatement Curves (MACs) for non-CC>2
industry sectors which show the costs of reducing an additional ton of carbon emissions. These
analyses assess the various levels of mitigation options that an industry sector can apply, and
determine the potential reductions that industries can adopt. We used this information to
calculate the additional potential to reduce GHG emissions by voluntary programs, at $0/ton of
MMTCO2 eq.
The outcome reports for these programs lagged by about 2 years. When we contacted these
voluntary programs in our evaluation set, in July 2007, they had just completed compiling the
2005 data. They were able to give us projected outcomes for 2006, but most programs did not
have final data for that year. As a result, the OIG decided that it was appropriate to use the
reported outcomes for 2003-2005 in the report.
Previous OIG reports on EPA voluntary programs include Ongoing Management Improvements
and Further Evaluation Vital to EPA Stewardship and Voluntary Programs, report no. 2005-P-
00007, February 17, 2005; Partnership Programs May Expand EPA's Influence, report no. 2007-
P-00003, November 14, 2006; and Voluntary Programs Could Benefit from Internal Policy
Controls and a Systematic Management Approach, report no. 2007-P-00041, September 25,
2007. We also reviewed data collected from our 2006 report as it related to the findings
discussed in this report.
We reviewed management controls of the Agency-wide guidance regarding designing and
measuring voluntary programs.
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Appendix B
Reported Program Outcomes
Table B.l below discusses the emissions reductions data reported by EPA's voluntary GHG
programs from 2003 through 2005. With the exception of WasteWise, which reported the same
reductions in 2004 and 2005, and the HFC-23 program, which reported fewer reductions from
2004 to 2005, the programs we reviewed reported greater GHG emissions reductions in each
succeeding year.
Table B.1: EPA Reported Program Outcomes, 2003-2005
Program
2003
2004
2005
in MMTCO2 Equivalents
AgSTAR
0.37
1.03
1.10
Coal Combustion Products Partnership
11.11
12.80
13.60
Coalbed Methane Outreach Program
6.23
6.60
7.70
HFC-23 Emission Reduction Program
22.44
23.47
22.73
Landfill Methane Outreach Program
15.03
16.13
16.50
Natural Gas STAR
21.27
24.35
29.92
PFC Reduction / Climate Partnership for
Semiconductors
2.93
5.13
7.70
SF6 Emission Reduction Program for
Electric Power Systems
3.30
4.11
5.13
SF6 Emission Reduction Program for
the Magnesium Industry
0.07
0.59
0.81
Voluntary Aluminum Industrial Partnership
6.34
7.55
8.07
WasteWise
10.63
12.10
12.10
Total MMTC02 eq. Reductions per Year
99.73
113.85
125.36
Source: OIG program questionnaires, interviews, and business plans from EPA program managers.
Totals may not sum exactly due to rounding.
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Appendix C
Example of a Voluntary Program MOU
The MOU shown in this Appendix is an example that would be applicable to most EPA
voluntary greenhouse gas programs.
VOLUNTARY ALUMINUM INDUSTRIAL PARTNERSHIP
I. PREAMBLE
A. This is a voluntary agreement between the [company] (hereinafter, the
partner company) and the United States Environmental Protection Agency (EPA) by which the
partner company and EPA build on the progress already achieved through the Voluntary
Aluminum Industrial Partnership from 1995 through 2000.
B. The purpose of this agreement is to avoid emissions of CF4 and C2F6 (perfluorocarbons
- PFCs) from primary aluminum manufacturing. As of 2000, the Partner Companies had
cumulatively reduced emissions by 30%-60% from the 1990 baseline, the stated goal of VAIP.
This agreement seeks to make further reductions by expanding the opportunity for technically
feasible, cost-effective emission reductions by 2005. The partnership believes such reductions
help protect the climate.
II. COMMON AGREEMENTS AND PRINCIPLES
A. The partner company and EPA agree that only technically feasible and cost effective
efforts to reduce or maintain emissions of PFCs are sought.
B. The partner company and EPA agree that consistent measurement methods for PFCs,
knowledge of the relationships between PFC generation and process and design variables, and
the development of emission factors for these gases are critical to the overall success of the
partnership.
C. The partner company and EPA recognize that while there should be no expectation of
zero emissions of PFCs from aluminum smelting operations, there is some minimum level of
emissions that reflect the best facility-specific control possible.
D. EPA and the partner company will work together to ensure that the record of the
reductions is at a high level of quality. EPA and the partner company expect that companies that
possess high quality emissions reductions records will be in a preferred position to participate in
any future program that provides appropriate rewards and recognition for early action.
E. Either the partner company or EPA can discontinue this agreement 30 days after the
receipt of written notice by the other party with no penalties or continuing obligations. If either
party ends the MOU, both parties will refrain from representing that the partner company is
participating in the partnership.
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III. EPA RESPONSIBILITIES
A. EPA will work to improve the availability of information on the generation of PFCs and
on techniques to reduce emissions.
B. EPA will encourage other aluminum producing countries to include PFC emission
reductions in their respective climate protection strategies and to share information on successful
emission reduction strategies.
C. EPA will coordinate with the Department of Energy with respect to reporting under this
program and Section 1605(b)l of the Energy Policy Act of 1992.
D. EPA will provide the partner company with recognition for its achievements in reducing
PFC emissions and for its public service in protecting the environment. EPA will publicize the
success of the partnership and/or sponsor meetings/conferences on issues relating to the
partnership.
E. EPA will hold confidential any information designated as confidential business
information by the Partner in accordance with applicable regulations at 40 CFR Part 2.
F. This MOU is not a fund-obligating document. All of EPA's activities are subject to the
availability of appropriations.
G. EPA will continue to provide a single representative for the partnership. EPA will notify
the partner company within 30 days of any change in the representative's identity.
IV. PARTNER COMPANY RESPONSIBILITIES
A. The partner company will provide, on the basis of best available information and to the
degree technically and economically feasible, necessary data for calculating annual PFC
emissions including: annual production, anode effect frequency, anode effect duration; anode
effect minutes per cell day (the product of frequency and duration); and slope coefficients for
both CF4 and C2F6. The partner will provide annual data by March 31 each year, using the
reporting form in Attachment B.
B. The Partner Company will update its emissions reduction goal(s). The year 1990 will
still be used as the base year for the partnership. If the partner so chooses, it can provide
emissions data for years prior to 1990. At a minimum the partner will strive to maintain
reductions achieved since between 1990 and 2000. The partner will submit its PFC emissions
reduction goal in conjunction with the signed MOU. The goal should include reducing one or
more of the following key factors:
* Anode Effect Minutes per cell day
* Anode effect frequency
* Anode effect duration
* PFC Emissions
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C. The partner company agrees that the activities it undertakes connected with this MOU are
not intended to provide services to the Federal government, and that the Partner will not submit a
claim for compensation to any Federal agency.
D. The partner company agrees to appoint a single representative for the partnership
(designated in attachment A of this MOU). The partner will notify EPA within 30 days of any
change in the representative's identity.
V. Signatories
The undersigned do hereby execute this Memorandum of Understanding on the latter of the dates
indicated below.
For the United States Environmental Protection Agency:
On:
Brian J. McLean, Acting Director
Office of Atmospheric Programs
For the Partner
On:
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Appendix D
Selected Voluntary GHG Program Descriptions
Program Name
Program Description
AgSTAR
The AgSTAR Program is a voluntary effort jointly sponsored by EPA, the
U.S. Department of Agriculture, and the U.S. Department of Energy. The
program encourages the use of methane recovery (biogas) technologies at
the confined animal feeding operations that manage manure as liquids or
slurries. These technologies reduce methane emissions while achieving
other environmental benefits.
Coal Combustion
Partnership Program
The Coal Combustion Products Partnership (C2P2) program is a
cooperative effort between EPA, the American Coal Ash Association, the
Utility Solid Waste Activities Group, the U.S. Department of Energy, the
U.S. Department of Agriculture-Agricultural Research Service, the U.S.
Federal Highway Administration, and the Electric Power Research Institute
to help promote the beneficial use of Coal Combustion Products and the
environmental benefits that result from their use.
Coalbed Methane
Outreach Program
The Coalbed Methane Outreach Program (CMOP) is a voluntary program
whose goal is to reduce methane emissions from coal mining activities.
The mission is to promote the profitable recovery and use of coal mine
methane, a greenhouse gas more than 20 times as potent as carbon
dioxide. By working cooperatively with coal companies and related
industries, CMOP helps to address barriers to using coal mine methane
instead of emitting it to the atmosphere. In turn, these actions mitigate
climate change, improve mine safety and productivity, and generate
revenues and cost savings.
HFC-23 Program
The purpose of the program is to work with the producers of HCFC
(hydrochlorofluorocarbon)-22 refrigerant to help them reduce the byproduct
HFC-23 emissions. The program works to "maintain low levels of
Hydrofluorocarbon [HFCj-23 through production process optimization, and
the adoption of thermal destruction processes."
Landfill Methane
Outreach Program
EPA's Landfill Methane Outreach Program (LMOP) is a voluntary
assistance and partnership program that promotes the use of landfill gas as
a renewable, green energy source. Landfill gas is the natural byproduct of
the decomposition of solid waste in landfills and is composed primarily of
carbon dioxide and methane. By preventing emissions of methane (a
powerful greenhouse gas) through developing landfill gas energy projects,
LMOP helps businesses, States, energy providers, and communities
protect the environment and build a sustainable future.
Natural Gas STAR
The Natural Gas STAR Program is a flexible, voluntary partnership between
EPA and the oil and natural gas industry. Through the program, EPA works
with companies that produce, process, and transmit and distribute natural
gas to identify and promote implementing cost-effective technologies and
practices to reduce emissions of methane, a potent greenhouse gas.
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Program Name
Program Description
PFC Reduction /
Climate Partnership for
Semiconductors
EPA's PFC Reduction/Climate Partnership for the Semiconductor Industry
supports the industry's voluntary efforts to reduce high global warming
potential (GWP) greenhouse gas emissions by following a pollution
prevention strategy. The greenhouse gas emissions of primary concern are
perfluorocarbons, trifluoromethane, nitrogen trifluoride, and sulfur
hexafluoride, collectively termed perfluorocarbons (PFCs). EPA's partners
have committed to reduce PFC emissions 10 percent below their 1995
baseline by 2010.
SF6 Emission
Reduction Partnership
for Electric Power
Systems
The SF6 Emission Reduction Partnership for Electric Power Systems is a
collaborative effort between EPA and the electric power industry to identify
and implement cost-effective solutions to reduce sulfur hexafluoride (SF6)
emissions. SF6 is a highly potent greenhouse gas used in the industry for
insulation and current interruption in electric transmission and distribution
equipment. The most common use for SF6, both domestically and
internationally, is as an electrical insulator in high voltage equipment that
transmits and distributes electricity.
SF6 Emission
Reduction Partnership
for the Magnesium
Industry
The SF6 Emission Reduction Partnership for the Magnesium Industry is a
cooperative effort between EPA and the U.S. magnesium industry to better
understand and reduce emissions of SF6, a potent greenhouse gas, from
magnesium production and casting processes. In February 2003, EPA's
Partners and the International Magnesium Association, committed to
eliminate SF6 emissions by year-end 2010. EPA's voluntary partnership
with the magnesium industry is facilitating remarkable progress towards
eliminating SF6 emissions by identifying, evaluating, and implementing cost-
effective climate protection strategies and technologies including alternative
cover gases.
Voluntary Aluminum
Industrial Partnership
The Voluntary Aluminum Industrial Partnership (VAIP) is an innovative
pollution prevention program developed jointly by EPA and the primary
aluminum industry. Participating companies (partners) work with EPA to
improve aluminum production efficiency while reducing perfluorocarbon
(PFC) emissions, potent greenhouse gases that remain in the atmosphere
for thousands of years. PFCs are potent greenhouse gases, characterized
by strong infrared radiation absorption and relative inertness in the
atmosphere. Primary aluminum production is a major source of global PFC
emissions.
WasteWise
WasteWise is a free, voluntary, EPA program through which organizations
eliminate costly municipal solid waste and select industrial wastes,
benefiting their bottom line and the environment. WasteWse is a flexible
program that allows partners to design their own waste reduction programs
tailored to their needs. Large and small businesses from any industry
sector are welcome to participate. Institutions, such as hospitals and
universities, nonprofits, and other organizations, as well as State, local, and
tribal governments, are also eligible to participate in WasteWse.
Source: OIG program questionnaires, interviews with EPA program managers and, Websites of EPA Partnership
Programs: www.epa.gov/partners/proarams.
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Appendix E
Agency Comments and OIG Evaluation
MEMORANDUM
SUBJECT: Comments on the Office of Inspector General (OIG) Evaluation Report,
"Voluntary Greenhouse Gas (GHG) Reduction Programs Have Limited Potential"
FROM: Robert J. Meyers
Principal Deputy Assistant Administrator
Office of Air and Radiation
Susan Parker Bodine
Assistant Administrator
Office of Solid Waste and Emergency Response
TO: Jeffrey K. Harris
Director of Special Studies
Office of Inspector General
The EPA Offices of Air and Radiation and Solid Waste and Emergency Response
appreciate the opportunity to review and comment on OIG's draft evaluation report "Voluntary
Greenhouse Gas Reduction Programs Have Limited Potential" (Assignment No. 2007-000748).
We appreciate OIG's input on the important hurdles EPA faces in our efforts to address global
climate change.
While we acknowledge the inherent challenges in implementing partnership programs,
we also recognize that these programs have played a significant role in addressing climate
change. Through these programs, EPA has been able to establish a substantial understanding of
the policy, technical, and economic issues surrounding this multi-faceted problem, while
achieving real, tangible greenhouse gas (GHG) emission reductions.
For all of the methane and high global warming potential (GWP) gas programs covered
in this evaluation, OAR has been able to quantify baseline emissions and reduction opportunities,
define and analyze available mitigation technologies and costs, formulate emission projections
and define emission reduction targets, and quantify the outputs and outcomes of our efforts. In
addition, OAR is doing this in a systematic and transparent way through our business planning
process. For the two OSWER programs (WasteWise and the Coal Combustion Partnership
Program (C2P2)), which achieve GHG reductions indirectly through source reduction, recycling,
and more effective materials management, we also have been able to quantify GHG reduction
benefits. We believe that our approach and rigor on these issues are not only unique within EPA,
but also are rarely observed in government.
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Most importantly, these programs have demonstrated that achieving greenhouse gas
emission reductions is not only achievable, but can be cost-effective and realized in the near-
term. In the U.S. today, methane emissions are 11 percent below 1990 levels and EPA expects
that they will remain below 1990 levels through 2020. For the High-GWP gases, these
partnership programs have also achieved significant emission reductions and industry partners
are expected to maintain emissions below 1990 levels beyond the year 2010. In the case of our
OSWER programs, in 2006, WasteWise partners who reported indicated a reduction in GHG
emissions of 40.7 MMTC02E and the C2P2 program recycling rate resulted in GHG emission
reductions of 13.6 MMTCO2E. These are impressive achievements given the potential for
sizable expansion in many of these industries.
Below are EPA's responses to OIG's specific recommendations.
2-1. Review MAC analyses annually and update as needed based on the availability of
updated cost and abatement technology information.
• Response: OAR's current policy is to update the marginal abatement curve (MAC) analyses
every two years. This decision was arrived at over the last decade based on our evaluation of
the rate of technological change, the rate of change in other drivers of emissions, and the
required resources. Our experience indicates that the underlying factors do not change
significantly on an annual basis and that our industry sectors and mitigation technologies do
not evolve at a rate faster than reflected in our MAC curves. We do agree, however, that it is
prudent to continue to monitor this situation, and are prepared to act more frequently in
specific situations where it is clear that our analyses are not providing accurate information.
Therefore, OAR concurs with the OIG recommendation and will review our analyses
annually and update them as needed and appropriate.
OIG Response: The Agency has accepted this recommendation.
2-2. Develop applicable MAC analyses for GHG-emitting sectors where they do not exist,
and/or work with EPA offices responsible for the corresponding voluntary GHG programs
and share the methodologies and tools necessary for them to develop their own analyses.
• Response: MAC analyses have not been developed for the two OSWER programs
mentioned in the report - C2P2 and WasteWise. With respect to the C2P2 program, certain
elements of this partnership program may be appropriate for the development of MAC
analyses. Thus, OSWER will work with OAR to develop a MAC curve for this partnership
program. (EPA notes that C2P2, like WasteWise, is different from other GHG programs, in
that it does not directly seek reduced emissions from targeted sectors. Instead, C2P2 efforts
are aimed, among other things, at substitution of coal ash for Portland cement, leading to less
Portland cement production. In developing this MAC, we will focus on the costs associated
with this substitution.).
• On the other hand, a MAC analysis is not feasible for the WasteWise program because of the
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wide array of sectors and materials covered by the program. WasteWise addresses multiple
sectors, including manufacturers, retailers, governments, and academic institutions. When
WasteWise promotes source reduction and recycling in these sectors, it can lead to GHG
savings in a wide range of industries, including mining, forestry, agriculture, transportation,
manufacturing, and waste management. The materials targeted include metals, wood, paper,
plastic, food, electronics, and similar materials. It is simply not possible to conduct a MAC
analysis for such a wide range of materials, not the least because the curve will differ
markedly from one part of the country to another (for example, because of differences in
local markets, collection infrastructure, and disposal rates). Therefore, EPA strongly
disagrees with the recommendation that it develop a MAC analysis for the WasteWise
program. The task would not yield useful or meaningful information for managing the
program.
OIG Response: The Agency concurred with Recommendation 2-2, but expressed
concerns in developing MACs for programs, like WasteWise, that serve more than one
sector. OIG recognizes the concern. Analyses for individual industry sectors served by
EPA voluntary programs will meet the intent of the recommendation.
3-1. For programs that recruit and enroll participants, implement written partnership
agreements that require accurate data reporting and verification, assure participants that
CBI data will be safe guarded and protected, and include consequences for non-reports.
• Response: The Agency recognizes the critical importance of accurate data reporting and
verification. Currently, as directed by Congress under the FY08 Omnibus Appropriations
bill signed into law on December 26, 2007, OAR is in the process of developing a rule to
require mandatory reporting of greenhouse gas emissions across all sectors of the economy.
Pending publication of the draft rule and following the public comment period, the final rule
will require these data to be submitted on at least an annual basis, according to
methodologies to be specified for each sector. Requirements for data quality assurance /
quality control and verification will also be included in the rule. The outcome of the
rulemaking process will help to inform all of the voluntary programs' efforts to improve data
accuracy. The Agency plans to review and amend our program requirements in light of what
is learned from the mandatory rulemaking process
• On the specific question of partnership agreements, we agree with the recommendation that
these programs have written partnership agreements, and we agree on the importance of
accurate reporting within EPA's programs. As discussed later in this response, we believe
the programs under review already require accurate data reporting and verification.
• Regarding the recommendation to "assure participants that CBI will be safeguarded and
protected," EPA cannot offer blanket assurances to partners under the Clean Air Act given
the complex legal issues surrounding the determination of CBI data. EPA's ability to protect
information that partner companies may consider "business sensitive" is limited due to the
Clean Air Act's requirement to disclose "emissions data" to the public. We recognize the
importance of this issue, however, and have developed mechanisms to address issues related
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to CBI as they are brought up by partners in our programs. For example, in situations where
disclosure of company-specific data may inform competitors about a unique production
process or level of activity, OAR's partnership programs may establish a mutually acceptable
third party to act as a data repository and provide an increased level of confidentiality. OAR
acknowledges that such third party reporting mechanisms can increase EPA's administrative
burden, and may hamper its review of data quality, and these types of arrangements are
uncommon in our programs. With respect to the two OSWER Programs, the Agency rarely
receives information that is claimed as CBI, but when such information is submitted, we will
protect it consistent with the Resource Conservation and Recovery Act's (RCRAs) CBI
regulations.
• With respect to the importance of consequences for non-reporters, EPA programs have
processes in place if partners do not report. For instance, the Gas STAR program has a clear,
documented, three-step process to deal with late or non-reporters. The program follows this
process rigorously and removes non-compliant Partners from the program. EPA does not
accept new members to the WasteWise program who don't give baseline information, and
WasteWise partners who don't report are not eligible for awards, recognition, or climate
profiles. However, while EPA's voluntary partnerships have removed non-reporting partner
companies on occasion, the programs typically exercise patience recognizing the firms'
varying business challenges and the value of maintaining an industry sector network through
which to share information on emission reduction technologies. EPA will review and amend
our processes in these programs as appropriate.
OIG Response: The Agency generally concurred with Recommendation 3-1. It stated
that, as directed under the FY08 Omnibus Appropriations bill signed into law on December
22, 2007, it is drafting a proposed rule concerning mandatory reporting of greenhouse gas
emissions which will help improve data accuracy of these voluntary programs. With respect
to consequences for not reporting, the Agency agreed to review and amend processes that
address nonreporters in the programs as appropriate. The Agency did not fully concur with
the portion of the recommendation relating to CBI assurances but recognized the importance
of the issue. The Agency noted that for the two OSWER programs, CBI is protected
consistently with CBI-RCRA regulations. However, the Agency stated that it cannot offer
blanket assurances to safeguard and protect CBI data to its partners under the Clean Air Act.
We amended our recommendation and ask the Agency to include a section on how CBI will
be handled in its partnership agreements.
3-2. For those programs that do not recruit and enroll participants, EPA should develop a
policy or procedure that specifically identifies how voluntary GHG programs link their
reported outcomes to the efforts of the program.
• Response: The Agency acknowledges the importance of having robust, meaningful policies
for reporting outcomes, especially for programs without formal participant / partner status.
Many of the programs which fall into this category, such as the Coalbed Methane Outreach
Program (CMOP), have in fact developed a standardized, documented procedure that
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specifies how the program's annual reported outcomes are linked to the program's efforts.
For example, CMOP's annual business plan documents the methodology by which the
program assesses the emission reductions associated with coal mines on a mine-specific
basis, linked to the extent of the program's historical association with and level of effort to
promote particular coal mine methane recovery projects.
• We concur that having policies and procedures to link program results and outcomes is
important. Therefore, EPA concurs with this recommendation, and we will review our
programs that do not recruit and enroll participants in light of this recommendation and
develop a procedure, or document existing procedures, as appropriate. Also, while C2P2
does enroll partners, partners do not make specific commitments (C2P2 members are
generally not users of coal ash themselves; instead, C2P2 works to reduce barriers to coal ash
reuse, or to increase opportunities for reuse). However, EPA will include C2P2 in this
recommendation.
OIG Response: The Agency has accepted this recommendation.
Attached to this document are additional comments.
Thank you again for the opportunity to comment on the draft evaluation report. If you have
questions, please contact Dina Kruger, Director of the Climate Change Division, at
(202) 343-9039 or Vern Myers, Acting Associate Director of the Municipal and Industrial Solid
Waste Division, at 703-308-8660.
ATTACHMENT
Additional Comments on OIG Report " Voluntary Greenhouse Gas Reduction Programs Have
Limited Potential" Assignment No. 2007-000748
General Comments
• The study states that its focus is on voluntary programs that report GHG emissions reductions
from (a) specific industry sectors that (b) do not release emissions from motor vehicles and
fossil fuel combustion. However, the WasteWise program targets multiple sectors, and the
C2P2 and WasteWise programs do not target direct emissions from fossil fuel combustion.
Thus, we suggest that the report be revised by making note of this and expanding the criteria
for including programs accordingly.
OIG Response: We believe our descriptions of the programs are adequate. On page 2
of the draft report, the WasteWise program is noted as serving multiple industry sectors. On
page 4, the first paragraph under Scope and Methodology explains that programs were
chosen because they report GHG emissions reductions. The second paragraph under Scope
and Methodology states that C2P2 and WasteWise programs report achieving secondary
GHG emissions reductions benefits.
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• The report in other respects mischaracterizes the C2P2 and WasteWise programs. For
example, the C2P2 program is not designed to sign up partners and measure the progress
those partners have made. Rather, the C2P2 program was designed to increase the amount of
coal combustion products that are reused/recycled, by reducing barriers to and increasing
opportunities for coal ash recycling, which would have the benefit of reducing GHG
emissions. (For example, as part of its contributions to C2P2, EPA works with state materials
reuse programs to foster the beneficial use of coal ash, it provides technical advice on coal
ash use to construction projects and engineers, and it works with the Federal Highway
Administration (FHWA) and state DOTs to foster the use of coal ash in highway
construction.)10 Therefore, we suggest that the report more accurately characterize these
programs.
OIG Response: Based on the data that OIG collected, we believe that we have
appropriately characterized these programs in the report.
• WasteWise, C2P2, and several of the climate change programs in OAR have additional
benefits besides reducing GHG emissions, such as resource conservation, air and water
quality improvements, and energy benefits. In the case of the OSWER programs, however,
the report only briefly mentions that the main purpose of these programs is resource
conservation and not GHG emission reductions. The report would be improved by
acknowledging these additional benefits.
OIG Response: We believe that the report adequately addressed this topic. The
second paragraph under Scope and Methodology states that the C2P2 and WasteWise
programs report achieving secondary GHG emissions reductions benefits and provides that
the two programs are primarily waste reduction programs.
Chapter 1 - Introduction
• On page 2, the report states that the industry sectors and emission sources addressed by these
11 programs had the potential to emit 547 MMTCO2E. However, this does not acknowledge
that WasteWise targets many industry and commercial sectors, as well as governmental and
academic institutions. It also addresses emissions indirectly. As a result, this figure may be
an underestimate. The report could be strengthened by providing information on how this
number was derived, as well as the limitations in deriving this value. Additionally, here and
elsewhere in the report where the 11 sectors are mentioned, it should state that there are 10
specific sectors covered and acknowledge that WasteWise is a broad program targeting
multiple sectors.
111 EPA notes that C2P2 is part of a broader EPA effort with FHWA, USD A, states, and the Industrial Resources
Council to increase the beneficial use of secondary materials from industrial processes, including coal ash, foundry
sands, iron and steel slag, and construction and demolition debris.
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OIG Response: We have removed the number "11" from the text of this section and
in the footnote have added the following: "Because WasteWise addresses numerous sectors,
the program's GHG emission volumes are not included in the 2005 potential GHG
emissions volumes."
• On page 4, the report acknowledges that the majority of U.S. GHG emissions come from
fossil fuel combustion for energy and transportation, and states that neither of these emission
sources falls within the scope of this evaluation. However, many of the GHG benefits
attributable to both WasteWise and C2P2 are attributable to reduced energy demand as a
result of displacing virgin material extraction and manufacturing with recycled feedstocks.
Therefore, it may be misleading to state that the report does not address energy and
transportation emission sources. It does so at least indirectly, by evaluating the results of the
WasteWise and C2P2 programs.
OIG Response: The statement indicating that GHG emissions from fossil fuel
combustion are outside the scope of this study has been removed.
Chapter 3 - Reporting and Data Limitations Impede Assessment of Voluntary GHG
Programs.
• We strongly assert that all of OAR's Non-C02 GHG programs have robust, transparent
reporting methods, protocols, and systems in place to ensure the accuracy of our reported
outcomes. Due to the inherent nature of voluntary programs, EPA cannot mandate that the
companies or entities we are partnering with report comprehensive data to EPA. However,
EPA can, and does for all of the Non-C02 Programs, strongly encourage participating entities
to report detailed information and data on their activities to ensure that we are accurately
accounting for their efforts and for the outcomes of our programs. In addition to auditing data
for completeness and other QA/QC checks, training in some programs is routinely offered on
data collection methods to better ensure consistency and accuracy of reporting. To this end,
our Non-C02 programs have actually been world leaders in developing methodologies for
calculating and reporting emissions and emission reductions.
OIG Response: Our report demonstrates that the Agency needs to strengthen
weaknesses in data collection and reporting activities to ensure the reliability and accuracy
of information provided to the public. We did not review the Agency's methodology for
calculating emissions levels. However, 8 out of 11 programs reviewed had specific
weaknesses relating to the data used to report accomplishments, the sources, reliability, and
transparency of data as it relates to specific programs. While our report acknowledges the
inherent challenges of voluntary programs, we believe that the areas of data collection and
reporting are critical to demonstrate the progress of these programs. As such, reporting that
is anonymous and unverifiable in some cases in our opinion is not transparent.
Additionally, when a program only receives annual reports from 12 percent of its
participants, or when programs report results, without participants, or without the ability to
verify third party data, the credibility of the data reported becomes an issue.
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• OSWER's partnership programs have similar approaches. WasteWise relies on direct reports
from partners, which are not anonymous. EPA reviews reports from partners, and believes
that our current approach to collection of data is appropriate for partnership programs. It
allows us to demonstrate program results without creating a burdensome and intrusive
process that might drive down participation while running up costs for partners and the
Agency. With regard to the C2P2 program, the national data are a result of an extensive
survey by the American Coal Ash Association and supplemental work by the Department of
Energy. This information developed on a yearly basis, has been in the public domain for
over a decade, and EPA is not aware of any significant challenges to the extent or soundness
of this data.
OIG Response: Based on the information OIG collected, OSWER does not verify the
accuracy of the data submitted at the participant level or provided by third parties. See our
response to OAR's comment above.
• The first paragraph on page 12 begins with "EPA told us it agreed that..." Other sections of
the narrative contain similar text (i.e., page 13: "the Agency told us..."). These give the
mistaken impression that the authors are not also part of EPA. Thus, we suggest that the
report would be strengthened by an editorial correction here.
OIG Response: The document indicates the author of the report is the EPA Office of
Inspector General. The OIG is a part of the Agency; however, the OIG was created by
Congress as an independent oversight organization.
• Also on page 12, the report states that "The inherent weakness of a voluntary program is that
the decision to report is solely left up to the participant." The report would be strengthened
by a balancing statement, acknowledging the inherent strength of a voluntary program (e.g.,
implementation of environmentally beneficial strategies at a significant reduction in
transactional costs to U.S. industry).
OIG Response: Our statement refers to the challenges of voluntary program data
collection, and does not address the overall transaction costs of the participants.
• On page 12, the report also implies that these voluntary programs utilize the 1605(b)
reporting requirements of the 1992 Energy Act and highlights some of the weaknesses of that
approach. OAR emphasizes that the Non-C02 voluntary programs have long believed that
the 1605(b) reporting protocols lacked the rigor necessary to ensure a robust accounting of
our accomplishments. As such, none of the Non-C02 programs use the 1605(b) system.
Each program has developed its own more rigorous and comprehensive methods and
protocols that are specific to our target industry and greenhouse gas. WasteWise does not
use the voluntary reporting under 1605(b). Rather, since 2005, EPA has required every new
WasteWise partner joining the program to submit baseline data.
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OIG Response: As a result of previous communication with the Agency, the OIG
refocused its discussion of the Section 1605b requirements. We believe that we have been
clear regarding the Agency's use of the 1605b requirements as a reporting framework. The
report also mentions that EPA determined the inadequacies of the 1605b reporting format,
and that the Agency has made improvements beyond the minimum requirements of 1605b.
• The IG report cites "a recent" review by the Office of Management and Budget (OMB)
Program Assessment Rating Tool (PART) of EPA Climate Change Programs, which scored a
zero for "data collection." The report quotes the PART: "While EPA collects a lot of data ...
on progress for certain programs / sectors and in those cases the programs / sectors clearly
use the data to make resource and planning decisions this is not the case for all programs /
sectors reviewed in this PART." OAR strongly disagrees with this statement as it applies to
the current performance of its programs under review by the IG in this report.
o The PART assessment of EPA's climate change programs covers 20 different
programs. The assessment does not specify which of the 20 programs it reviewed are
deficient in this regard, and cites no evidence to support this statement. Thus, OAR
believes that it is impossible to say whether there is in fact any overlap between the
PART critique of 20 climate change programs and the programs under IG review in
this case.
o Furthermore, the OMB PART review cited was conducted in 2004, and to OAR's
knowledge, has not been revised or updated since then. OAR is not aware of any
recent review that scored these programs "zero" on data collection. In response to the
2004 report, OAR has provided annual updates of aggregate program metrics, as
requested by OMB, and OAR has not received any communication from OMB that
these annual updates are insufficient.
OIG Response: We revised the report to reflect the change from "recent" to "2004."
We have revised the report to read, ".. .the programs we reviewed for this evaluation were
included in a 2004 Office of Management and Budget (OMB) PART (Program Assessment
Rating Tool) review. The review examined 20 of EPA's Climate Change Programs and, in
the area of data collection, the programs received a collective score of zero."
• The IG also cites the 2007 Greenhouse Gas Inventory in support of its conclusion that
voluntary program data are incomplete. The scope of the U.S. Inventory is national
greenhouse gas emissions from all sources. The IG report implies that deficiencies in data
collection apply to the US emissions inventory and are relevant to the voluntary programs as
well, citing the 2007 report in part: "in some cases, estimates are based on approximate
methodologies, assumptions, and incomplete data." OAR believes that this comment is
misleading and inaccurate. The national inventory is far broader in scope than the 11
voluntary programs under review in this report, which represent only about 7.5% of national
emissions. The U.S. Inventory is completed annually in accordance with treaty obligations
under the UN Framework Convention on Climate Change. Prior to 2008, EPA did not have
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legislative authority to compel reporting on emissions. Nonetheless, the U.S. Inventory is
completed using methods prescribed by the Intergovernmental Panel on Climate Change to
address incomplete data, and other challenges associated with estimating emissions across
numerous sectors. Per the inventory reporting requirements under the UN Framework
Convention on Climate Change, the U.S. Inventory is subject to annual peer reviews by
panels of international greenhouse gas inventory experts. In February 2008, an international
team of experts convened in Washington DC to peer review the 2007 Greenhouse Gas
Inventory, and the experts' review findings complimented the excellent quality of the U.S.
Inventory.
OIG Response: The report cites an example of how EPA results were qualified within
the Annual Inventory as having data collection issues. This is an example of a data
collection issue cited by the Agency. The statement in the draft report did not cite or project
deficiencies to the total U.S. Greenhouse Inventory or its processes or collection
methodologies as these were not in the scope of this review.
• On page 14, the report states that "The program manager for the WasteWise program told us
that they have recently purged their program of non-reporting participants." That sentence
should be revised to read as follows: "WasteWise maintains a database of all partners,
including those that do not report. The program recently purged its database of all partners no
longer interested in participating in the program and is contacting non-reporting partners to
encourage them to track their progress and submit reports."
OIG Response: We modified the report to read, "The program manager for the
WasteWise program told us that WasteWise maintains a database of all partners, including
those that do not report. The program recently purged its database of all partners no longer
interested in participating in the program and is contacting nonreporting partners to
encourage them to track their progress and submit reports."
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Distribution
Office of the Administrator
Deputy Administrator, Office of the Administrator
Associate Administrator, Office of Policy, Economics, and Innovation
Principal Deputy Assistant Administrator, Office of Air and Radiation
Assistant Administrator, Office of Solid Waste and Emergency Response
Office of General Counsel
Agency Follow-up Official (the CFO)
Agency Follow-up Coordinator
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Audit Follow-up Coordinator, Office of Air and Radiation
Audit Follow-up Coordinator, Office of Solid Waste and Emergency Response
Deputy Inspector General
Appendix F
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