ISO 14064 Why Should You Care Presented

ISO 14064 “Why Should You Care? ” Presented to ASQ-EED August 29, 2006 Russell Thornton DNV Certification, Inc. Contains Bonus Information-Comparison of U. S. A. GHG Registries/Programs

Overview of ISO 14064 -GHG Standard n Introduction n Development of ISO 14064 - Overview n Description of 3 “Parts” and ISO 14064 n Benefits to an organization Appendix n Linkages to other tools and programs--BONUS 2

Overview of ISO 14064 -GHG Standard n “General process standards” that are GHG policy neutral; n Can be applied across organization and project types, sizes and sectors; n Involved a wide range of stakeholders; n Act as a common “building block” to initiatives or GHG programs; n Are auditable (ie, validation/verification). n Have widespread support - USA, EU, Japan, China, Brazil, India, … all approved 3

Development of ISO-14064 n ISO TC 207 WG 5 included roughly 175 experts from 45 countries and 23 liaison organizations. n Compatible with existing knowledge and approaches (WRI/WBCSD GHG Protocol; several national/regional programs) n GHG Protocol – Corporate Module was used as a primary seed document to ISO 14064 Part 1 (Inventories). n WRI/WBCSD staff and GHGP Revision Working Group members contributed to development of ISO 14064 n ISO 14064 considered as the “what to do” and GHG Protocol considered as the “how to do it” 4

The ISO 14064 GHG Standard Organizations Greenhouse gases - Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals (ISO 14064 -1). Projects Greenhouse gases - Part 2: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions and removal enhancements (ISO 14064 -2). Validation / Verification Greenhouse gases - Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions (ISO 14064 -3). Accreditation Greenhouse gases - Specification for greenhouse gas validation and verification bodies for use in accreditation and other forms of recognition (ISO 14065 DIS – work in progress). 5

ISO 14064 -Principles n Relevance n Completeness n Consistency n Accuracy n Transparency 6

Framework for ISO 14064 GHG Standards Part 1 – ISO 14064 Design and Develop Organizational GHG Inventories Part 2 – ISO 14064 Design and Implement GHG Projects GHG Inventory Documentation and Reports GHG Project Documentation and Reports Verification of the GHG Assertion Level of assurance consistent with needs of intended user Validation and/or Verification of the GHG Assertion Part 3 – ISO 14064 Validation and Verification Process Figure Copyright ISO (2006) – modified Conformance with applicable: • GHG Program(s) – CCX, CCAR, US EPA Climate Leaders • Legislation – federal, state/provincial, local • Protocols/Standards – industry guidance (CCAP, IPIECA, etc. ), the GHG Protocol, CDM, technical and safety standards/ codes, etc. ISO 14065 Specifications for Validation or Verification Bodies 7

ISO 14064 -Linkages Good Practice Guidance (eg, recognized criteria, methodologies, tools and guidance on how to do it) eg, GHG Protocol, INGAA, IPIECA, API, CAPP, GRI Relevant Standards (eg, recognized criteria, rules, methodologies, equipment) Standard (ie, auditable general process requirements) ISO 14064 The company should consider these linkages to plan and implement, validate, verify, quantification, monitoring and reporting documentation Applicable GHG Program/Registry (eg, additional requirements, criteria, rules and policies) eg, CCX, CCAR, US DOE 1605 b, Canada, Australia, … Relevant Legislation (eg, regulatory requirements) Markets for GHG Units 8

Why ISO 14064 -Is GHG Management Important? n Are your key stakeholders interested/concerned about GHGs? (customers, investors, your BOD, etc. ) n Does your organization have GHG risks & opportunities (major emission sources, duty of care) – brand/PR? compliance? competitiveness? physical? n Does your organization know: - GHG footprint? (facilities, main operations, products) - GHG reduction opportunities? (upgrades, new technologies, offset projects, climate-friendly products) n Does your organization need to know how to manage GHG’s? 9

General Benefits of ISO 14064 ---- “Why Should You Care? ”---n Enhance the credibility, consistency, and transparency of GHG accounting and reporting; n Increase investor confidence; n Facilitate the certification and trade of GHG emission reductions or removal enhancements; n Facilitate the development and implementation of organization GHG management strategies and plans; n Allow entities to track performance and progress in the reduction of GHG emissions and/or increase in GHG removals; n Assist in the identification of GHG risks or liabilities; and n Facilitate the development and implementation of GHG projects. 10

Common issues to undertaking ISO 14064 n What’s the business case? Why do it? n There’s still so much uncertainty about policies – how can I be sure what I’m doing is right? n What’s the incentive – what’s the return? (PR value, SRI premium, tradable GHG units, internal efficiencies – energy savings) n How much does it cost? (capital investment, O&M, FTEs) n How burdensome is this going to be? n Can your organization manage GHG’s? - have/need in-house capability (tools, training, GHG management systems, verification) - Have the capability to plan, do/implement, report, manage a GHG inventory or GHG projects? 11

ISO 14064 Strategic Benefits In the absence/uncertainty of government policies! The voluntary application of ISO 14064, together with good practice guidance established for your sector: n Can help an organization to prepare and act and to provide you with the capabilities, information and systems for managing risks and creating value for your organization n And demonstrating/communicating with key stakeholders (customers, investors, general public) 12

ISO 14064 Operational Benefits 1. Managing Risks 2. Public relations 3. Creating value from opportunity or threats 4. Compliance/Regulations 5. Investment disclosure 13

ISO 14064 -1: What’s a GHG Inventory? n ISO’s definition of a GHG Inventory: an organization’s GHG sources, sinks, emissions and removals n DNV’s definition of a GHG Inventory: The procedures, methodologies, data, information systems and reports associated with an organization’s quantification of GHG emissions and GHG removals. 14

ISO 14064 -Part 1: Organizations/Inventory Scope, Definitions, Principles GHG inventory design and development n Operational boundaries n Quantification of GHG emissions and removals n GHG information management and monitoring n Document retention and record keeping Organizational boundaries n GHG inventory quality management GHG Inventory components n GHG emissions and removals n Organizational activities to reduce GHG emissions or increase GHG removals n Base year GHG inventory GHG reporting n GHG report planning n GHG report content n GHG report format n GHG report dissemination Verification (Internal/1 st party) 15

ISO 14064 -1 Benefits Enables organizations to: 1. understand quantify the GHG emissions for which they are responsible 2. focus on major GHG sources (priorities/risk) 3. prepare a verifiable, credible GHG emissions report 4. be compared with other organizations that use the same standard 16

What is a GHG project? n GHG Project: activity or activities that alter the conditions identified in the baseline scenario which cause GHG emission reductions or removal enhancements. Requires the determination/justification of a baseline (reference case, hypothetical scenario) 17

ISO 14064 - Part 2: Projects Scope, Definitions, Principles 6. Selecting GHG sources, sinks and reservoirs for regular monitoring and quantification 7. Quantifying greenhouse gases 8. Managing data quality 9. Monitoring the GHG project Introduction to GHG projects Requirements for GHG projects 1. 2. 3. 4. 5. General requirements Describing the project Identifying GHG sources, sinks and reservoirs for the project Determining the baseline scenario Identifying GHG sources, sinks and reservoirs for the baseline scenario 10. Documenting the GHG project 11. Validating or verifying the GHG project (should) 12. Reporting the GHG project (should/shall) 18

ISO 14064 -2 Benefits n design project documentation to quantify, monitor and report GHG emission reductions and removal enhancements and manage GHG projects 19

ISO 14064 - Part 3 Establishes common principles/requirements for validation and verification n Competence, COI, ethical conduct n Validation/verification process n Level of assurance (scope, objectives, criteria, materiality) n Audit Methodology (plan, sampling, etc. ) n Assessment criteria (systems, data, program criteria, etc. ) n Validation/verification statement n Recordkeeping 20

ISO 14064 -3 Benefits Validation and verification establishes credibility and trust. n ISO 14064 designed effectively for the needs of intended users, in accordance with specific level of assurance, criteria, scope, and goals/objectives 21

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