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Verifying GHG Reduction Plans - Auditing Roundtable

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					    Greenhouse Gases:
   A Big Picture View of
Inventories, Requirements,
       and Auditing

           Petie Davis
   Manager, EH&S Audit Services
          NSF International
   Auditing Roundtable Webinare
         November 20, 2007        1
    We Will Have a Whirlwind
    Tour of………….
• GHG Inventory Requirements
• First Steps in Developing a GHG Inventory
  – What is an inventory
  – Contents of a GHG Protocol/Plan
• What is a GHG Verification Audit?
  – How does it differ from MS/compliance audits?
  – Standards
  – Outlook for GHG audits and auditor
    requirements                                2
       NSF International

•   Independent Auditing Experts for > 60
    years
    – Conduct 30,000 product certification and
      management systems audits annually over
      all programs for 8,500 clients in 80
      countries
    – > 500 employees
•   Recognized GHG expertise
    – Involved in crafting international GHG
      standard (ISO 14064 and ISO 14065)

                                               3
      Approved GHG Verifier
• Our GHG verification program approved by:
  – California Climate Action Registry
    • General reporting
    • Power/electric utility reporting
    • Forestry
  – Chicago Climate Exchange
    • Forestry offset projects
• GHG services:
  – Gap analysis
  – Verify your inventory/reduction
  – Verify your claim of a GHG reduction   4
GHG Requirements
   in the U.S.

Many options to choose from


                              5
     What Criteria To Use for
     Inventories?
• Most companies in the US are using the World
  Resources (WRI) Greenhouse Gas Protocol as
  guidance for establishing their inventories
  – Very clear and informative (and free at
    www.ghgprotocol.org)
• ISO 14064:2006 Part 1: Greenhouse gases –
  Specification with guidance at the organization
  level for the quantification and reporting of
  greenhouse gas emissions and removals
  – Adopted as US ANSI standard in 2006. Still new to
    the marketplace
                                                    6
       What Criteria To Use?

• Has your organization joined a voluntary program or
  do they intend to?
  –   California Climate Action Registry
  –   Regional Greenhouse Gas Initiative (northeast states)
  –   US Department of Energy 1605b program
  –   Climate Leaders (EPA)
  –   Carbon Disclosure Project (international)
• These have specific requirements and reporting
  formats.

                                                       7
First Steps in Developing
     a GHG inventory
     What is a GHG inventory?
    Contents of a GHG Protocol


                                 8
     What Is An Inventory?

• An organization’s GHG sources, sinks,
  emissions and removals.
  – GHG
    • Gas that absorbs and re-emits infrared
      radiation
  – Source
    • Physical unit or process that emits GHGs
  – Sink
    • Physical unit or process that removes GHGs
      from atmosphere
                                                   9
        What Is An Inventory?

• An organization’s GHG sources, sinks,
  emissions and removals.

  – Emission
    • Release of GHGs from a source
  – Removal
    • Absorbing GHGs to a sink



                                          10
     What Is An Inventory?

• An inventory is like a financial balance
  sheet, except the values are expressed
  in tons of carbon dioxide equivalent
  [CO2-e] rather than in dollars
  – E.g., SF6 has 23,000 times more potent
    than CO2




                                             11
    To Develop An Inventory


• Identify and add up direct emissions (e.g.
  boilers on site) that come from the
  following sources….




                                          12
      GHG Sources

• Stationary fossil fuel combustion
  – (electricity generating plants and industrial
    boilers (mostly CO2)
• Mobile combustion
  – (automobiles, trucks, trains and planes) (mostly
    CO2)
• Industrial process emissions
  – (e.g. silicone wafer cleaning with SF6 in
    electronics manufacture)
• Fugitive emissions
  – (e.g. leaks of natural gas [CH4] from pipelines)
                                                       13
        Without Forgetting To
        Separately Add Up . . .
• Purchased ( or Energy Indirect)
  – Electricity
  – Steam
  – Chilled water
• Emissions from combustion of biomass
• Other indirect emissions, including, for
  example:
  – Emissions related to employee business travel
  – Supply chain emissions related to material
    inputs
  – Emissions from disposed waste
  – Emissions from outsourced activities, etc.    14
         And Finally,

• Without leaving anything important out
• And, by the way,
  – Calculating how mergers, acquisitions, and
    divestitures may affect your company’s
    baseline and
  – Tracking GHG’s removed from the
    atmosphere


                                                 15
         Critical Step: Develop A
         GHG Inventory Protocol

•    Organizations should document in a
     Protocol or Plan the choices they
     make for their inventory, beginning with
    1.   Criteria to be used
    2.   GHG gases tracked
    3.   Scope of the organization
    4.   Definition of the organizational boundaries


                                                   16
     GHG Inventory Protocol

5. Contains or refers to necessary policies,
   procedures, and authorities
6. Identifies GHG inventory responsibilities of
   personnel throughout the organization
7. Documents key information concerning:
  – Sources, sinks and their quantification methods
  – Aggregation, consolidation and reporting of
    information



                                                      17
 What is a GHG
Verification Audit
  How does it differ from a
management systems audit?
 From a compliance audit?

                              18
      What Is Verification?


• Verification is systematic, independent, and
  documented process for evaluating a GHG
  assertion against stated criteria

  – Assertion: is your factual and objective GHG
    declaration
  – Inventory must be established. Verifiers does
    not quantify your GHGs for you.

                                              19
      What Is Verification?

• Differences from typical ISO or
  compliance audit
  – Terminology is difference
     • Verification not registration/certification
  – No surveillances
  – Always looks back a previous year



                                                     20
         What Is Verification?

• Output is different
  – No certificate
  – We issue a “GHG statement”
  – Similar to an opinion letter issued by financial
    accounts firms
• Methodology is risk-based
  – Focus on those processes and information
    most likely to contain material misstatements
     • “Material” means that the error could affect the
       assertion and influence the intended users’
       decisions
                                                     21
      Applicable Standards

• NSF conducts its work in accordance with
  international standards, e.g.
  – ISO 14064:2006, Part 3,
    • Greenhouse gases – Specification with
      guidance for the validation and verification of
      greenhouse gas assertions
  – ISO 14065:2007
    • Greenhouse gases – Requirements for
      greenhouse gas validation and verification
      bodies for use in accreditation and other forms
      of recognition
                                                   22
      GHG Audit Overview

• GHG verifiers audit:
  – Your assertion. GHG protocol,
    spreadsheets, tables
  – The systems and procedures used to gather,
    collect, aggregate and consolidate
    information
  – The information itself
  – Audit corporate location and sample of
    plants/locations
                                           23
       Verification Audit Will..

A. Evaluate GHG sources for completeness
  •   Description of organizational boundaries
  •   Included emissions sources
      1. Direct emissions from
      2. Stationary/ Mobile/ Process/Fugitive
      3. Purchased electricity, steam, chilled water
      4. Emission from combustion of biomass
      4. Indirect emissions (e.g., business travel)
      5. Affect of mergers, acquisitions, divestitures
          on GHG baseline
                                                    24
        Verification Audit Will..

A. Evaluate GHG sources for completeness
   (cont)
     • GHG gases emitted (CO2, CH4, N2O, HFCs,
       PFCs, and SF6)
     • Reporting method (control vs. equity share)
     • Quantified estimates in CO2-e for each gas
     • GHG emission reductions and/or removal
       enhancements
                                               25
        Verification Audit Will..

B. Assess management system reliability
    • Review MS as part of the overall control
      environment
       • Are policies in place to assure compliance
         with regulations? With accurate reporting?
       • Are adequate records maintained?
       • Are people responsible for collecting
         information well trained?

                                                  26
      Verification Audit Will..

C. Check conformity with program rules
    • Rules may come from regulatory body or
      international standards
D. Verify GHG information
    • Will user’s expectations be met?
    • Reported emissions should not vary by >
      5%
E. Crosscheck using other quantification
   methodologies
                                           27
Outlook on GHG Auditing

        Skills necessary
      12-18 month outlook


                            28
      Requirements to Audit

• No nationally or internationally accepted
  requirements
  – ISO will start work on ISO 14066 in Jan 08
    on GHG auditor qualifications
• Lack of standard requirements presents
  challenges and opportunities
  – Willingness for self-study is critical


                                                 29
         Requirements to Audit

• Team composition is different from MS or
  compliance audit
  – Various disciplines/expertise are needed
     •   Information Management systems
     •   Operations/Sector knowledge
     •   Engineering principles
     •   Accounting/Auditing
     •   GHG program /registry requirements
• We currently look for outstanding MS auditors
  with GHG consulting or air compliance
  experience, sector knowledge
• Many verifiers are using very junior auditors 30
         Outlook for Auditing

• Companies will need help with their
  inventories (sometimes called their
  carbon footprint).
  – You may have opportunities to audit your
    company’s GHG inventory
• Third-party action is largely in CA. NSF
  is looking for auditors
  – E-mail me your resume if interested
• GHG offset market is growing.
                                               31
   For Information,
   Please Contact

S. Petie Davis
EH&S Audit Services Mgr.
NSF-ISR
789 N. Dixboro Road
Ann Arbor, MI 48105
(734) 827-6810
davis@nsf-isr.org

    Thank you!             32

				
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