OVERVIEW OF DRAFT STANDARD TO QUANTIFY CO 2

OVERVIEW OF DRAFT STANDARD TO QUANTIFY CO 2 EMISSION CREDITS-P 1595 By: Jim Mc. Connach, Castle Hill Engineering Services Presented at: IEEE SM 2002, Chicago CCWG Panel Session, July 23, 2002 IEEE SM 2002, Chicago, July 23, 2002

SUMMARY F Introduction to CCWG F Emission Trading Tool & Status F Overview of Standards Project 1595 F Scope & Purpose of P 1595 F Related Initiatives F Basic Principles F Methodology, Verification and Audit F Issues/Questions IEEE SM 2002, Chicago, July 23, 2002 1

IMPLEMENTING TECHNOLOGY TO LIMIT CLIMATE CHANGE - CCWG F Working Group of Energy Development & Power Generation Committee F Over 100 members & guests from across the industry and around the world F Goal: Sharing & exchange of knowledge on technology options, R&D, programs, standards and protocols to reduce GHGs - ie enhance the learning curve IEEE SM 2002, Chicago, July 23, 2002 2

CCWG SCOPE F Existing & emerging technologies F Main focus is the electricity sector F Transportation sector included to extent electricity can be substituted F Covers all aspects from fuel chain, thro’ production & delivery to end uses F Covers “cradle to grave” life cycles F Includes all six GHGs - focus is CO 2 IEEE SM 2002, Chicago, July 23, 2002 3

CCWG PRIMARY ACTIVITIES F Follow and report on technology options; R&D; programs; and standards F Organize conferences and panel sessions: - Seattle; New York; Chicago; Toronto F Publication of papers and feature articles F Develop Standards eg P 1595 F International liaison F Transfer of technology IEEE SM 2002, Chicago, July 23, 2002 4

CCWG TECHNOLOGY OPTIONS F Many options with wide ranging potential; effectiveness; and economics F Energy efficiency; renewables; & low emission Dist. Gen. are priority options F “Clean coal” technology inevitable F Carbon removal and sequestration F Fuel switching and fuel transformation F Nuclear option re-visited F Emerging technologies IEEE SM 2002, Chicago, July 23, 2002 5

EMISSION TRADING F An effective tool not an option F Facilitates faster and less costly achievement of GHG reduction goals F Involves treating GHG emission credits like any other commodity F Credits traded on international exchange F Need standard rules to quantify, verify and certify credits IEEE SM 2002, Chicago, July 23, 2002 6

EMISSION TRADING - STATUS F Number of national pilots & programs F UNFCCC - Kyoto Protocol contains three “flexibility mechanisms”: – Joint Implementation (JI) projects – Clean Development Mechanism (CDM) – Emissions Trading F All programs/mechanisms need standard rules for quantifying GHG reductions IEEE SM 2002, Chicago, July 23, 2002 7

IEEE-SA PROJECT 1595 F Approved by Standards Board Aug 2001 F Breaking new ground for IEEE-SA F Sponsored by the PES Energy Development & Power Generation Com. F Assigned to CCWG F Initial small Task Force formed to develop “strawman” draft for discussion F Four year project to 2005 IEEE SM 2002, Chicago, July 23, 2002 8

P 1595 - SCHEDULE F Spring 2002: “Strawman” 1 st draft developed by TF for SM 2002 discussion F July 2002: Panel discussion of 1 st draft F Fall 2002: Second draft reviewed by larger CCWG F July 2003: Discussion of final draft at Toronto General Meeting F Fall 2003: Target for 1 st round balloting IEEE SM 2002, Chicago, July 23, 2002 9

P 1595 - OUTLINE - 1 F Clause 1 - Introduction – Scope – Purpose – Background F Clause 2 - References – References to related initiatives, standards, protocols, & guidelines F Clause 3 - Definitions – Definitions specific to Standard P 1595 IEEE SM 2002, Chicago, July 23, 2002 10

P 1595 - OUTLINE - 2 F Clause 4 - Standard Rules – Basic Principles – Methodology – Measurement & Certification – Review & Audit Process F Annexes – Annex 1: Examples - Case Studies – Annex 2: List of Reduction Technologies – Annex 3: Bibliography IEEE SM 2002, Chicago, July 23, 2002 11

SCOPE Six GHGs in full energy cycle and full life cycle of electricity processes & services F Energy Cycle Includes: – Fuel extraction, processing & delivery – Power conversion – Emission controls – Carbon removal and sequestration – Transmission & Distribution (delivery) – End uses including transportation sector F Life cycle is “cradle to grave” F IEEE SM 2002, Chicago, July 23, 2002 12

PURPOSE F Establish internationally accepted rules to quantify, verify and certify CO 2 emission reduction credits F Provide assurance of amount, quality and value of emission credits independent of technology, time frame or source country F Facilitates emission credits trading IEEE SM 2002, Chicago, July 23, 2002 13

RELATED INITIATIVES F Related Standards, Protocols & Guidelines – – – ISO: GHG Protocol TF & Life Cycle Analysis Std UNFCCC/IPCC: CO 2 Equivalents; CDM Rules DOE - FEMP: M&V Guidelines DOE - IPMVP: International M&V Protocol - EE LBNL- M&V Guidelines for EE Projects WRI-WBCSD- GHG Protocol (TBD) IEA: Practical Baseline Recommendations TEAM: SMART Reports California CC Registry: Baseline protocol Pembina Institute: LCVA of Wind Turbine IEC, World Bank and Others ? ? ? IEEE SM 2002, Chicago, July 23, 2002 14

REFERENCE WEB-SITES IPCC F IETA F PEW Center, USA F DOE-FEMP F Pembina F IEA F LBNL F WRI F WBCSD F CCC Registry F www. ipcc. ch www. ieta. org www. pewclimate. org www. eren. doe. gov/femp/ www. pembina. org www. iea. org www. lbnl. gov www. wri. org www. wbcsd. ch www. climateregistry. org IEEE SM 2002, Chicago, July 23, 2002 15

BASIC PRINCIPLES - 1 For Credits to qualify, reductions must: F Be Real; Surplus; Quantifiable; Verifiable; and Unique F Be consistent with accepted practices F Pass the “fungibility” test F Pass verification and certification rules F Contribute to sustainable development F Be well documented and auditable F Comply with all laws, regulations & rules F Other? ? ? IEEE SM 2002, Chicago, July 23, 2002 16

BASIC PRINCIPLES - 2 Method & Measurement approach must: F Be consistent with best practice F Be based on Life Cycle Assessment - LCA F Be credible, transparent & accurate F Reflect local conditions & initiatives F Be practical & cost effective F Incorporate pros & cons F Allow for learning curve F Be well documented & include verification plan F Other? ? ? IEEE SM 2002, Chicago, July 23, 2002 17

METHOD - KEY STEPS Key steps - specifics for each technology – 1. Scoping to establish system boundaries, functions, material elements, inputs & outputs – 2. Establish benchmark or baseline conditions – 3. Evaluate project over full life-cycle including all material elements, inputs and outputs – 4. Comparison to get emission credit result – 5. Perform verification checks – 6. Fully document baseline, project & results – 7. Random review & audit of selected projects IEEE SM 2002, Chicago, July 23, 2002 18

MEASUREMENT & VERIFICATION Units are metric tonnes of CO 2 equivalent F Metered values preferred where cost effective F Estimation techniques must follow industry accepted rules and methodology F Estimated values to be spot checked by metering where cost effective F Determine statistically significant results F Metering equipment must be certified F Full and accurate M&V report F Other? ? F IEEE SM 2002, Chicago, July 23, 2002 19

REVIEW & AUDIT Key Features of Review & Audit Process: F Random selection of projects for audit F Advance notification of audit projects F Done by certified independent auditor F Consistent with local conditions & rules F Audit report open to public scrutiny F Other? ? ? IEEE SM 2002, Chicago, July 23, 2002 20

ISSUES/QUESTIONS -1 F Methodology – Balancing LCA vs cost effectiveness – Compatibility with local rules F Materiality Criteria – Level of accuracy desired – Materiality threshold eg 1% to 10% of total F Grading of Credits – Grading according to source, quality, certainty and time frame of technology option? IEEE SM 2002, Chicago, July 23, 2002 21

ISSUES/QUESTIONS -2 F Templates – Use of Standard templates F Coordination with others – ISO; WRI; WBCSD; DOE; IPCC; IEA etc – Liaison/awareness to avoid re-inventing wheel F Need more Case Studies – References? Volunteers? F Other ? ? IEEE SM 2002, Chicago, July 23, 2002 22

PROJECT PARTICIPATION F Open to all, even non IEEE members F Member (active) & Guest (observer) categories F Contact jsmcconnach@ieee. org to join TF or WG IEEE SM 2002, Chicago, July 23, 2002 23