Internal Management of Carbon Dioxide Emissions
Source: FutureCamp GmbH, July 2007

Companies who are affected from the EU emission trading scheme (EU ETS) have to establish a permanent monitoring system in order to calculate their actual CO₂ emissions in a correct and transparent manner. The following text gives you an overview of this task.

By 31 December 2004, at the latest, the operator was supposed to have established a relevant monitoring and reporting system. The material basis of that system is provided by the guidelines for the monitoring and reporting on greenhouse gas emissions. Those guidelines were adopted as a decision by the European Commission on 29 January 2004 and, hence, are already and immediately binding for all member countries. They concretize the requirements of the EU emissions allowance trading directive (Directive 2003/87/EU) with regard to the routine monitoring of and reporting on greenhouse gas emissions.

Since only CO₂ emissions are of interest during the first trading period, the directive confines itself to that greenhouse gas.

The purpose of the guidelines is to make it easier for member countries and affected enterprises to implement the operative management of internal entitative data and to establish uniform, pan-European standards. According to the EU guidelines, the operators have to implement the following steps in detail:

The industrial enterprise determines the activity that is subject to emissions allowance trading, how the emissions are to be registered, and the levels concept for ascertaining the parameters to be applied in the determination of CO₂ emissions. The levels concept defines for each parameter the degree of accuracy per activity. For the sake of simplification, the guidelines for each levels concept attach one number per parameter (from 1 to 4). The choice of levels concept also depends on the level of the plant operator's overall annual emissions. As the rule goes: the higher the number of the levels concept and the higher the overall emissions, the higher the required degree of accuracy. The monitoring method must be documented in writing, coordinated with the competent authorities, and approved by the latter.

This is based on routine entitative internal data acquisition and preparation of all requisite parameters. In most cases, the operator will calculate the emissions on the basis of the data yield, because in practice, CO₂ emissions are rarely gauged for lack of continuous measuring systems. Annexes II-X of the guidelines describe the various methods of deriving activity data, emission factors and implementation factors for each industry.

An emissions report shows all data necessary for substantiating the past year's actual emissions must be submitted to the competent authorities by March 1 of each year, beginning in 2006. The guidelines describe in detail, which data are to be documented and substantiated, e.g., data concerning the facility, itself and all parameters used for calculating the CO₂ emissions. In their reports, operators may mark certain information they consider to constitute business / trade secrets - for example: activity data and the facilities' specific emissions.

In addition to the emission reports for the purposes of external reporting, airtight internal substantiation of the documents used for the determination of parameters and the monitoring method and for describing the competences and processes of CO₂ emission data management is also required. All emission reports must be retained for at least 10 years following their filing.

With a view to ensuring that the data are both correct and of high quality, explicit reference is made to the fact that already established assurance systems, e.g., eco-audits within the framework of environmental management systems according to EMAS or ISO 14001, may be employed to this end. Quality assurance and control measures include such activities as routine calibration, adjustment and inspection of relevant measuring equipment.

As an example, in Germany the annual emission reports are supposed to be examined by accredited environmental auditors and publicly appointed experts. The guidelines govern the contents and focal points of the auditing activities. This gives the facility operator the guarantee that the auditors will abide by uniform standards.

Levels concept: This term describes the various activity-specific methods to be employed in deriving the activity parameters (e.g., the manufacture of ceramics). They are explicated in Annexes II-XI of the guidelines.

Parameter: This is the generic term for company-specific activity data, emission factors, oxidation and conversion factors, as well as uncertainty factors, all of which have to be determined and documented for each facility.

Oxidation factor: This is the share of carbon that is not converted into CO₂ in the course of the combustion process.

Conversion factor: This is the share of carbon that is not converted into CO₂ in the course of chemical reaction but instead is, say, incorporated into the product.

Activity data: This contains the information about fuel consumption, starting materials and production output.

Process emissions: These are the greenhouse gas emissions that occur not as a result of combustion but of intentional or unintentional reactions between substances or through their conversion.

Combustion emissions: These are greenhouse gas emissions that arise as a result of exothermal reactions between a fuel and oxygen.