Scope and Purpose. 1. Energy in MJ by Source - Recommended Methodology

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1 Outdoor Industry Association Eco Working Group Eco Index Metric Methodologies: Energy & Greenhouse Gas (GHG) Emissions Working Draft - Version 1.0-5/1/09 Scope and Purpose The Eco Index is being developed by the Outdoor Industry Association (OIA) Eco Working Group (EWG). The Eco Index is an Outdoor Industry environmental assessment tool intended to be used by companies to incorporate environmental considerations into product design and to manage their supply chains in a way that supports their environmental goals. The Eco Index contains guidelines, indicators, and metrics. This document describes the two methodologies recommended by the Lenses Subgroup to estimate metrics for energy and GHG emissions. For the purposes of this Eco Index, metrics are units of measure of environmental footprint of a complete product or a material or process in the supply chain for that product. These metrics will be used to comparatively assess environmental impact and measure improvements. The index is meant to be applied on a finished retail product. The more refined a measurement can be made at each stage of the supply chain the more refined the resulting environmental impact assessment will be. It should be noted that these methodologies describe both the project scope as well as the scope for entities making measurements of their direct impacts. The entity scope includes a particular company s contribution to the products environmental footprint. This might include direct use of fuels or purchase of energy. The project or index scope is the sum of all these supply chain partners contributions to a metric, such as carbon or energy footprint. In order to meet this end goal of creating additive metrics each supply chain segment must record metrics in terms of the unit of product they produce whether it is yards of fabric or pairs of shoes. EWG Approved Metrics 1. Energy in MJ by source per unit of product Quantity and type of energy used 2. Kg of CO2e per unit of product Quantity of GHG emissions released effecting global climate change Recommended methodologies for these two approved metrics are described below. Additional information on the methodologies are provided in Attachments A and B. This document is a Working Draft that is under development by the Lenses Subgroup. It is being provided to the EWG for discussion and informational purposes. It is not yet ready for formal EWG review. 1. Energy in MJ by Source - Recommended Methodology Methodology: Global Reporting Initiative (GRI) - Environment Performance Indicators EN 3- Direct energy consumption by primary energy EN 4- Indirect energy consumption by primary source Website: F8D D4/0/G3_IP_Environment.pdf The Lenses Subgroup selected the GRI for its large global multi-stakeholder network that developed one of the worlds most widely used sustainability reporting framework. This framework sets out the principles and indicators that organizations can use to measure and report their economic,

2 Working Draft - V 1.0-5/1/09 Page 2 environmental, and social performance often using a facility or factory boundary. The key addition to the GRI guidelines within the OIA Index framework is the application of these metrics at the product level. Metrics may be taken at the facility level and divided by total production or preferably metrics are recorded at the line or item level. Obtaining more specific metrics at the factory level will allow better design information to be available to the end users of the index. Definitions Direct Energy (Scope 1): Forms of energy that enter the reporting organization s operational boundaries. It can be consumed either by the organization within its boundaries, or it can be exported to another user. Direct energy can appear in either primary (e.g., natural gas for heating) or intermediate (e.g., electricity for lighting) forms. It can be purchased, extracted (e.g., coal, natural gas, oil), harvested (e.g., biomass energy), collected (e.g., solar, wind), or brought into the reporting organization s boundaries by other means. Indirect Energy (Scope 2): Energy produced outside the reporting organization s organizational boundary that is consumed to supply energy for the organization s intermediate energy needs (e.g., electricity or heating and cooling). The most common example is fuel consumed outside the reporting organization s boundary in order to generate electricity to be used inside the organization s boundary. 2. Kg of CO2e per Unit of Product - Recommended Methodology Publicly Available Specification (PAS) Assessing the life cycle greenhouse gas emissions of goods and services Website: PAS 2050 was selected by the Lenses Subgroup as the chosen methodology to assess the metric Kg of CO2e per unit of product because the PAS is designed to account for the entire supply chain and provides methodology for the EWG to achieve its primary goal of assessing the impact by product. The product approach provides the basis for comparative assessment and selection. Additionally, PAS 2050 is the only international methodology available that is compliant with ISO and IPCC during the development of this metric to assess carbon footprint of a product. PAS was prepared by British Standards Institution (BSI) 1, and was co-sponsored by the Carbon Trust and the Department for Environment, Food and Rural Affairs (DEFRA). PAS is applicable to organizations assessing the GHG emissions of goods and services across their life cycle. Requirements are specified for identifying the system boundary, the sources of GHG emissions associated with goods and services that fall inside or outside the system boundary, the data requirements for carrying out the analysis, and the calculation of the results. As applied to the OIA Index some areas of indirect emissions (such as material inputs) will be provided by upstream suppliers participating in the program. This vision both reduces the workload on any given supply chain actor while increasing the accuracy of available information. The PAS standard references the inclusion of all prior carbon impacts at any given point in the supply chain, but it should be acknowledged that the expectation is that each supplier will simply pass these totals to the next in an additive fashion. 1 BSI British Standards is the UK's national standards organization that produces standards and information products that promote and share best practice. It serves the interests of a wide range of industry sectors as well as governments, consumers, employees and society overall, to make sure that British, European and international standards are useful, relevant and authoritative.

3 Working Draft - V 1.0-5/1/09 Page 3 Summary of PAS 2050 Categories PAS 2050 Notes Reporting Level Organizational Boundaries Emissions Sources for Reporting Includes Supply Chain? Unit of Emissions To Be Reported Stored Carbon Land Use Emissions Offsets Material Contribution to GHG Emissions Applicable Time Period Third Party Verification Functional Unit of Product Business to Consumer (cradle to grave) or Business to Business (cradle to gate) Life Cycle Emissions Yes All GHG emissions converted to CO2e Includes section on stored carbon accounting Accounts for land use change from life cycle inputs arising from agricultural products. Based location of agricultural product (see IPCC guidelines for factors) Offsets cannot be logged as reductions. Must be certified Must include all material emissions accounting for at least 95% of the GHG's associated with the products lifecycle Updated bi-annually Needed in order to claim compliance with PAS 2050 guidelines. Potential exists to "self verify" claims See PAS 2050, section 6.4 for specific boundaries for reporting. See PAS 2050, Annex A for complete listing of GHG's to be reported on and their CO2 conversion factors. See PAS 2050, Section 5.4 See PAS 2050, Section 5.5 See PAS 2050, Section 5.7 See PAS 2050, Section 6.3

4 Working Draft - V 1.0-5/1/09 Page 4 Attachment A GRI- Environment Performance Indicators EN 3 and EN 4 Version 3.0 EN3 - Direct Energy Consumption by Primary Energy Source 1. Relevance The ability of the reporting organization to use energy efficiently can be revealed by calculating the amount of energy it consumes. Energy consumption has a direct effect on operational costs and exposure to fluctuations in energy supply and prices. The environmental footprint of the organization is shaped in part by its choice of energy sources. Changes in the balance of these sources can indicate the organization s efforts to minimize its environmental impacts. Information on the consumption of primary energy sources supports an assessment of how the organization might be affected by emerging environmental regulations such as the Kyoto Protocol. The consumption of fossil fuels is a major source of greenhouse gas emissions, and energy consumption is directly linked to the organization s greenhouse gas emissions. Replacing fossil fuel energy sources with renewable ones is essential for combating climate change and other environmental impacts created by the extraction and processing of energy. Supporting renewable and efficient energy technology also reduces the reporting organization s current and future dependency on non- renewable energy sources, and its exposure to potential volatility in prices and supply. This Indicator measures the reporting organization s consumption of direct primary energy sources. The Indicator covers scope 1 of the WRI/WBCSD GHG Protocol. Indicator EN4 measures the consumption of primary energy sources to supply the reporting organization with intermediate energy such as electricity, heating and cooling, etc. 2. Compilation 2.1 Direct energy sources purchased Identify primary energy sources purchased by the reporting organization for its own consumption. This includes: Direct non-renewable energy sources including: Coal; Natural gas; and Fuel distilled from crude oil, including gasoline, diesel, liquefied petroleum gas (LPG), compressed natural gas (CNG), liquefied natural gas (LNG), butane, propane, ethane, etc. Direct renewable energy sources including: Biofuels; Ethanol; and Hydrogen. Note: Biomass is excluded from direct renewable energy sources for the purpose of reporting to the WRI/WBCSD GHG Protocol. For alignment with the WRI/WBCSD GHG Protocol, direct CO2 emissions from the combustion of biomass should be reported separately. 2.2 Direct energy sources produced Identify the amount of primary energy the reporting organization acquires by producing, extracting, harvesting, collecting, or converting it from other forms of energy in joules or multiples. This can include the same energy sources listed under Direct energy sources sold

5 Working Draft - V 1.0-5/1/09 Page 5 Identify the amount of primary energy exported outside the reporting boundary in joules or multiples. 2.4 Calculate total energy consumption in joules or multiples such as gigajoules (one billion joules or 109 joules) using the following equation: Total direct energy consumption = direct primary energy purchased + direct primary energy produceddirect primary energy sold Refer to the following table to convert volumes of primary sources to gigajoules: Coal GJ Crude GJ Gasoline GJ Natural GJ Electricity GJ Oil Gas tonne 26,00 barrel 6,22 gallon 0,125 therm 0,1055 kilowatthour 0,0036 (metric) ton (short) 23,59 tonne (metric) 44,8 0 tonne (metric) 44, cubic 1,1046 megawatthour 3,6000 ton (long) 26,42 ton (short) ton (long) 40,6 4 45,5 2 feet Diesel 1000 cubic meters gallon 0,138 MMBtu 1,055 tonne (metric) Fuel Oil 43,33 gallon 0,144 39,01 gigawatthour 3600,0 tonne (metric) 40, Report total direct energy consumption in joules or multiples by renewable primary source. 2.6 Report total direct energy consumption in joules or multiples by non-renewable primary source. 3. Definitions Renewable resources- Resources capable of being replenished within a short time through ecological cycles (as opposed to resources such as minerals, metals, oil, gas, coal that do not renew in short time periods). 4. Documentation Information can be obtained from invoices, measured (or calculated) heat/fuel accounting, estimations, defaults, etc. Amounts of joules can be taken directly or converted from invoices or delivery notes. Information about the combination of primary sources used to generate intermediate energy can be obtained from suppliers. 5. References The Greenhouse Gas Protocol (GHG) Initiative - A corporate accounting and reporting standard (Revised Edition, 2004) of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). EN4 - Indirect Energy Consumption by Primary Source 1. Relevance

6 Working Draft - V 1.0-5/1/09 Page 6 The amount and primary source of energy the reporting organization uses indirectly through the purchase of electricity, heat, or steam, can indicate efforts by the organization to manage environmental impacts and reduce its contribution to climate change. The particular effect indirect energy usage has on climate change depends on the type of primary energy used to generate intermediate energy. Intermediate energy refers to forms of energy that are produced by converting primary energy into other forms. For most organizations, electricity will be the only significant form of intermediate energy. For a small percentage of organizations, other intermediate energy products might also be important, such as steam or water provided from a district heating plant or chilled water plant, or refined fuels such as synthetic fuels, biofuels, etc. This Indicator measures the energy required to produce and deliver purchased electricity and any other intermediate energy products (such as district heat) that involve significant energy consumption upstream from the organization s reporting boundary. This information also enables calculations of indirect greenhouse gas emissions. It covers Scope 2 of the WRI/WBCSD GHG Protocol. 2. Compilation 2.1 Identify the amount of intermediate energy purchased and consumed from sources external to the reporting organization in joules or multiples, such as gigajoules (one billion joules, or 109 joules). This includes: Intermediate energy purchased and consumed from non-renewable energy sources as listed under EN3, including: o Electricity; o Heating and Cooling; o Steam; o Nuclear energy; and o Other forms of imported energy. Intermediate energy purchased and consumed from renewable energy sources including: o Solar; o Wind; o Geothermal; o Hydro energy; o Biomass based intermediate energy; and o Hydrogen based intermediate energy. 2.2 Identify the amount of primary fuels consumed to produce intermediate energy based on the total amount of energy purchased from external suppliers (EN3- Energy Purchased). To estimate the fuels consumed to produce purchased energy, use either: Fuel consumption data acquired from the electricity provider if these data are available; Default data for electricity and heat; or Estimations where default figures are not available. 2.3 Using data from 2.1, report: The total amount of indirect energy used by indirect non-renewable sources and indirect renewable sources in terms of intermediate energy; and The corresponding primary energy consumed in its production. Note: The sum of primary energy sources (expressed in joules) used to generate intermediate energy will, depending on the primary source used, significantly exceed the amount of intermediate energy purchased (in joules) due to grid and efficiency losses when converting and transporting energy.

7 Working Draft - V 1.0-5/1/09 Page 7 3. Definitions None. 4. Documentation Suppliers of energy and related services are the most important informational source for this Indicator. Other information can be obtained from invoices, measured (or calculated) heat/fuel accounting, estimations, defaults, etc. Besides default data drawn from the International Energy Agency (IEA), information can be obtained from the annual reports submitted by governments to the United Nations Framework Convention on Climate Change (UNFCC). These reports will detail country energy use and associated emissions for country specific defaults, etc. 5. References International Energy Agency s (IAE) annual publication of Energy Balances for OECD and non- OECD countries. The Greenhouse Gas Protocol (GHG) Initiative - A corporate accounting and reporting standard (Revised Edition, 2004) of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Kyoto Protocol, 1997.

8 Working Draft - V 1.0-5/1/09 Page 8 Attachment B Scope of PAS 2050 Specification Website: System Boundary The following summarizes the rules which define the system boundary for the PAS 2050 assessment of the life cycle GHG emissions of products. See PAS 2050, section 6.4 for additional details on specific boundaries for reporting. Raw Materials - Calculations carried out in accordance with this PAS shall include all emissions within the system boundary that are likely to make a material contribution to the life cycle GHG emissions of the product. Energy - The GHG emissions associated with the provision and use of energy, including the generation of electricity and heat and emissions from transport fuels, shall include the GHG emissions falling within the system boundary of the energy supply system. Upstream emissions (e.g. the mining and transport of fuel to the electricity generator; the growing and processing of biomass for use as a fuel) shall be included in the system boundary of the energy supply system. Capital goods the GHG emissions that arose from the production of capital goods that form part of the life cycle of the product that shall be allocated to the life cycle of the product. Manufacturing and service delivery Lighting, heating, cooling and ventilation of premises Transport Storage Use Phase Recycling and reuse Final disposal GHG Emissions Considered The assessment of GHG emissions in this PAS shall include emissions arising from (BS ISO :2006): Carbon dioxide (CO2) Methane (CH4) Nitrous oxide (N2O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF6) Sources of GHG Releases The estimate of GHG emissions shall include emissions throughout the life cycle of the product (see Clause 6 for a description of system boundary) arising from processes, inputs and outputs in the life cycle of a product, such as, but not limited to: Consumption of energy that results in releases of GHGs associated with it Consumption of energy carriers that were themselves created using processes that have GHG emissions associated with them, e.g. electricity Chemical reactions, refrigerant loss and other fugitive releases Releases resulting from land use change Releases arising from livestock and other agricultural processes Releases arising from waste

9 Working Draft - V 1.0-5/1/09 Page 9 Functional Unit Calculations of the GHG emissions for the use phase of products shall be carried out and reported per functional unit, and shall be determined in terms of the mass of CO2e per functional unit. NOTE For services, or for goods delivering a service (e.g., a light bulb delivering the service of supplying light), the functional unit would present the mass of CO2e per unit of service provided. Threshold for Inclusion in the Assessment of GHG Emissions For GHG emissions arising from the life cycle of a product, the assessment of GHG emissions shall include: All sources of emissions anticipated to make a material contribution (more than 1%) to the life cycle GHG emissions of the functional unit At least 95% of the anticipated life cycle GHG emissions of the functional unit Where a single source of GHG emissions accounts for more than 50% of the likely life cycle GHG emissions of a product, the 95% threshold rule shall apply to the remaining GHG emissions associated with the anticipated life cycle GHG emissions the product For GHG emissions arising from the use phase of a product, the assessment of GHG emissions shall include: o All sources of emissions likely to make a material contribution (more than 1%) to the emissions of the use phase o At least 95% of the likely life cycle emissions of the use phase Data The data recorded in relation to a product shall include all GHG emissions occurring within the system boundary of that product. 1. Data Quality Rules When identifying primary activity data and secondary data for use in GHG emissions assessment, preference shall be given as follows: 1) For time-related coverage: age of data and the minimum length of time over which data are collected, data that are time-specific to the product being assessed shall be preferred; 2) For geographical specificity: geographical area from which data is collected (e.g. district, country, region), data that are geographically-specific to the product being assessed shall be preferred; 3) For technology coverage: whether the data relates to a specific technology or a mix of technologies, data that are technology-specific to the product being assessed shall be preferred; 4) For accuracy of the information (e.g. data, models and assumptions), data that are most accurate shall be preferred; 5) For precision: measure of the variability of the data values for each data expressed (e.g. variance), data that are more precise (i.e. has the lowest statistical variance) shall be preferred. In addition, consideration shall be given to the following: a. Completeness: the percentage of data that are measured, and the degree to which the data represents the population of interest (is the sample size large enough, is the periodicity of measurement sufficient, etc.); b. Consistency: qualitative assessment of whether the selection of data is carried out uniformly in the various components of the analysis; c. Reproducibility: qualitative assessment of the extent to which information about the

10 Working Draft - V 1.0-5/1/09 Page 10 method and data values would allow an independent practitioner to reproduce the results reported in the study; d. Data sources, with reference to the primary or secondary nature of the data. Note 1 - Adapted from BS EN ISO 14044:2006, Note 2 - Assessment of GHG emissions should use data that will reduce bias and uncertainty as far as practicable by using the best quality data achievable. Determination of the best quality data could be supported by a data scoring framework that allows the different attributes of data quality to be combined. 2. Primary Activity Data Primary activity data shall be collected from those processes owned, operated or controlled by the organization implementing this PAS. The primary activity data requirement shall not apply to downstream emission sources. Where the organization implementing this PAS does not contribute 10% or more to the upstream GHG emissions of the product or input prior to its provision to another organization or the end-user, the primary activity data requirement shall apply to the emissions arising from those processes owned, operated or controlled by the first upstream supplier that does contribute 10% or more to the upstream GHG emissions of the product or input. Primary activity data shall be collected for individual processes or for premises where processes are occurring and shall be representative of the process for which it is collected. Allocation between coproducts, where required, shall be carried out in accordance with 8.1. The requirement to obtain primary activity data shall not apply where implementing the requirement would necessitate the physical measurement of the GHG emissions (e.g. measuring CH4emissions from livestock or N2O emissions from fertilizer application). Note 1 - Where an organization imposes conditions on the supply of products to it, such as a retailer specifying the quality of the product supplied to it or the manner of its packaging, this is evidence of control over the processes upstream of the organization implementing the PAS. In this situation, the requirement for primary activity data applies to the processes upstream of the organization implementing this PAS. Note 2 - Obtaining primary data for operations that are not under the control of the organization implementing the PAS (i.e. upstream emissions) will enhance the ability of the organization to differentiate the GHG assessment of its products from other products. Note 3 - Examples of primary activity data would be the measurement of energy use or material use in a process, or fuel use in transport. Note 4 - To be representative, primary activity data should reflect the conditions normally encountered in the process that are specific to the product being assessed. For example, if refrigerated storage of a product is required, the primary activity data associated with this refrigeration (e.g. quantity of energy used, and quantity of refrigerant escaped) should reflect the long-term operation of the refrigeration and not those associated with a period of typically higher (e.g. August) or lower (e.g. January) energy consumption or refrigerant release. Note 5 - Emissions from livestock, their manure and soils are treated as secondary data (see 7.4). 3. Secondary Data

11 Working Draft - V 1.0-5/1/09 Page 11 Secondary data shall be used for inputs where primary activity data is not required. a. Use of partial GHG assessment information as secondary data. Where data verified as being compliant with this PAS is available for inputs to the life cycle of the product being assessed (i.e. partial GHG emission information, see 6.2), preference shall be given to the use of this data over other secondary data. b. Other secondary data Where secondary data in accordance with 7.4.1is not available, the data quality rules (see 7.2) shall be used to select the most relevant source of secondary data. Determination of the source of the secondary data (see 7.2 (i)) shall recognize that secondary data arising from peer review publications, together with data from other competent sources (e.g. national government, activity data associated with this refrigeration (e.g. quantity of energy used, and quantity of refrigerant escaped) should reflect the long-term operation of the refrigeration and not those associated with a period of typically higher (e.g. August) or lower (e.g. January) energy consumption or refrigerant release. official United Nations publications, and publications by United Nationssupported organizations), are preferred over secondary data from other sources. Note - It is intended that a reference to the ILCD as a source of secondary data will be considered in a future revision of this PAS following final agreement of the structure and scope of the ILCD. 4. Changes in the Life Cycle of a Product See 5. Variability in Emissions Arising from the Product Life Cycle See 6. Data Sampling See 7. Non CO² Emissions Data for Livestock and Soils See 8. Emissions Data for Fuel, Electricity and Heat See PAS 2050 Normative References The following referenced documents are indispensable for the application of this PAS. For dated references, only the edition cited applies. For undated references, the latest edition of the referenced document (including any amendments) applies. BS EN ISO 14040:2006, Environmental management Life cycle assessment Principles and framework BS EN ISO 14044:2006, Environmental management Life cycle assessment Requirements and guidelines BS EN ISO/IEC 17000:2004, Conformity assessment Vocabulary and general principles BS EN ISO/IEC 17021:2006, Conformity assessment Requirements for bodies providing audit and certification of management systems BS EN ISO/IEC :2004, Conformity assessment Supplier s declaration of conformity Part 1: General requirements BS ISO :2006, Greenhouse gases Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals

12 Working Draft - V 1.0-5/1/09 Page 12 ISO 14025:2006, Environmental labels and declarations - Type III environmental declarations - Principles and procedures IPCC, Guidelines for National Greenhouse Gas Inventories. National Greenhouse Gas Inventories Programme, Intergovernmental Panel on Climate Change IPCC (2007), Climate Change: the physical science basis. Chapter 2: Changes in atmospheric constituents and in radiative forcing, Intergovernmental Panel on Climate Change Office of the Renewable Fuels Agency (2008), Carbon and sustainability reporting with the Renewable Transport Fuels Obligation Technical Guidance (Part 2), Department for Transport, London