First Release of Federal GHG Inventory: Key Observations

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1 Introduction White Paper : Key Observations Daniel Waller & Evan Fago Project Performance Corporation and Eastern Research Group, Inc. June 2011 On October 5, 2009, President Obama signed Executive Order (EO) 13514, Federal Leadership in Environmental, Energy, and Economic Performance, which mandated a significant improvement in the federal government s sustainability. One of the key components of the EO is a requirement for federal agencies to adopt and track annual performance against two greenhouse gas (GHG) emission reduction targets for fiscal year (FY) 2020: one combined target for Scope 1 and 2 emissions, and a separate target for Scope 3 emissions both relative to a FY 2008 base year. Federal agencies submitted their respective baseline FY 2008 and FY 2010 GHG emission inventories to the White House Council on Environmental Quality (CEQ) in January In April 2011, CEQ released FY 2010 GHG emissions data for all federal agencies. The data indicate that the federal government s total Scope 1, 2, and selected Scope 3 GHG emissions are approximately 121 million metric tons of carbon dioxide equivalent (mtco 2 e). Figure 1: Total GHG Emissions of Federal Agencies Emitting More Than 1 Million mtco 2 e in FY Old Meadow Road, McLean, Virginia

2 The federal GHG inventory is dominated by a relatively small number of large agencies. Department of Defense (DoD) is the largest contributor to the federal inventory with total emissions of ~86,500,000 mtco 2 e (71% of the total). DoD combined with the next 10 largest emitting agencies (which each emitted more than 1 million mtco 2 e in FY 2010) account for 96% of all federal emissions. Figure 2: Total FY 2010 Federal GHG Emissions by Source Emissions from non-highway vehicles, aircraft, ships, and equipment are the largest single source of federal GHG emissions (40%), followed by emissions from purchased electricity consumption (27%), onsite fuel consumption (9%), and federal employee commuting (8%) Old Meadow Road, McLean, Virginia

3 Target Subject and Target Excluded Emissions The EO instructs all federal agencies to adopt a combined Scope 1 and 2 and a Scope 3 GHG emissions reduction target, but it also allows agencies to exempt specified sources of GHG emissions from their respective reduction targets. Potential exemptions include emissions from vehicles in combat support, tactical operations, law enforcement, emergency response, and space flight, as well as their support equipment. The head of any federal agency may also exclude the emissions from any activity that supports national security interests. Target Subject Emissions Of the federal government s approximately 121 million mtco 2 e of total GHG emissions in FY 2010, target subject emissions for FY 2010 were 66.4 million mtco 2 e. Eleven agencies reported target subject emissions greater than 1 million mtco 2 e, and an additional nine agencies reported emissions between 100,000 and 999,999 mtco 2 e. Collectively, these 20 agencies represent 99% of total target subject federal GHG emissions. Figure 3: FY 2010 Target Subject Emissions by Agency 1760 Old Meadow Road, McLean, Virginia

4 The federal agency reporting the lowest GHG emissions is the Advisory Council on Historic Preservation, which reported FY 2010 target subject emissions of 44 mtco2e all from employee commuting. The largest single source of target subject federal GHG emissions is from purchased electricity (45% or 31,500,000 mtco 2 e), followed by on-site fuel combustion (15% or 10,600,000 mtco 2 e). When emissions from purchased steam and hot water (4% or ~2,500,000 mtco 2 e) are included, the data suggest that ~64% of total target subject federal emissions (and 87% of target subject Scope 1 and 2 emissions) are associated with facility energy consumption and are therefore accessible through traditional energy conservation and efficiency measures, as well as onsite renewable energy applications. Figure 4: FY 2010 Target Subject Emissions by Source 1760 Old Meadow Road, McLean, Virginia

5 CEQ reports that the federal government has reduced total target subject emissions by 2.5 million mtco2e (3.6%) 1 in FY 2010 as compared to the FY 2008 baseline, which places the government on track to meet its 28% reduction target by FY Analysis of the proportion of each component to the whole again demonstrates the importance of emissions from purchased electricity for individual agencies. Eight out of the 10 largest emitters report that more than 40% of their total target subject emissions come from this category. Figure 5: Composition of FY 2010 Target Subject GHG Emissions for 10 Largest Emitting Agencies Most agency profiles look similar with emissions from facility operations representing the largest components. There are, however, a number of variations from this pattern, which will likely represent specific challenges to individual agencies: Both the U.S. Postal Service (USPS) and Department of the Interior (DOI) have a significant contribution (more than 15%) from vehicle emissions. To reduce this particular category of emissions, USPS and DOI will need to consider strategies for deploying high efficiency and/or alternative fuelled vehicles if mileage travelled cannot be reduced. Business travel contributes ~40% of Department of Homeland Security s (DHS s) emissions. Given existing federal GHG accounting protocols and challenges accessing granular data that characterizes the emissions associated with individual business trips (e.g., specific type of Old Meadow Road, McLean, Virginia

6 aircraft, occupancy rates, exact distance traveled, and number of layovers), this agency will need to consider strategies for reducing its overall business travel in order to realize emission reductions in this source category. USPS and DHS have a significant employee commuting component (more than 28% of total target subject emissions). Employee commuting is typically a difficult area to address and opportunities for increased teleworking will likely be limited for these agencies given the nature of their missions, which leaves these agencies with a challenge in this sector. General Services Administration s (GSA s) total target subject emissions are dominated by those from facility energy use (93% of total). GSA is currently responsible for the emissions of many of its tenanted buildings and will need to partner with its tenants to access energy savings from these properties. Target Excluded Emissions In FY 2010, federal agencies utilized exemptions to collectively exclude approximately 56 million mtco 2 e (45%) from federal GHG emission reduction targets. The vast majority (85%) of target exempt GHG emissions in the federal government are associated with DoD s use of fuel in non-highway vehicles, aircraft, ships, and equipment. Other exclusions include ~4,350,000 mtco 2 e from facility energy use, 1,370,000 mtco 2 e of fugitive emissions, and ~496,000 mtco 2 e of scope 3 emissions. Figure 6: FY 2010 Target Subject and Target Excluded Emissions by Source Category 1760 Old Meadow Road, McLean, Virginia

7 Emission Reductions through Renewable Energy Use & Purchases White Paper The federal government is able to reduce its GHG impact through the purchase of renewable energy and renewable energy certificates (RECs). Twenty-four of the 52 reporting agencies used these strategies to reduce their net reportable emissions and, in total, the federal government reduced net GHG emissions by 2.5% (~1,700,000 mtco 2 e). This represents 68% of the 2,500,000 mtco 2 e reduction from the baseline year as reported by CEQ. Figure 7: Top 10 Agencies Reporting Emissions Reduction From Renewable Energy and RECs DoD receives the largest absolute reduction from renewable energy purchases at 415,000 mtco 2 e. Other agencies with notably large reductions from renewable energy and/or REC purchases in FY 2010 include Department of Energy (335,000 mtco 2 e) and GSA (277,000 mtco 2 e). Comparisons of renewable energy purchases against total Scope 2 emissions show that the Environmental Protection Agency reduced its Scope 2 emissions by 100%, the maximum allowable reduction using renewable energy purchases, which provides a reduction in overall agency Scope 1 and 2 emissions of 80%. Department of State reduced its combined Scope 1 and 2 emissions by 25% (~23,400 mtco 2 e), and GSA and the Department of the Treasury achieved reductions greater than 10% of their reported Scope 1 and 2 emissions Old Meadow Road, McLean, Virginia

8 Figure 8: Largest Agency Scope 1 & 2 Reductions Achieved By Renewable Energy & REC Purchases Scope 3 GHG Emissions The federal GHG inventory holds separate targets for Scopes 1 and 2 and Scope 3 (28% and 13% respectively). As such, it will be necessary for federal agencies to focus on reducing Scope 3 categories independently of measures to reduce Scope 1 and 2 emissions. Reducing Scope 2 emissions associated with purchased electricity will provide simultaneous reductions in Scope 3 emissions associated with the transmission and distribution (T&D) losses category, but assuming that the federal government reduces GHG emissions from electricity proportionately (i.e. by 28%), this will only deliver savings of ~600,000 mtco2e, approximately 25% of the Scope 3 reductions required. This will require policies and measures aimed at reducing emissions from other Scope 3 categories. CEQ is expected to require agencies to begin accounting and reducing additional Scope 3 categories in the near future. These include emissions from leased buildings and agencies supply chains. Depending on how agencies are directed to incorporate reductions of these new source categories into their existing Scope 3 targets, the new emission categories may give agencies more flexibility to meet their respective reduction targets. Employee commuting is the third largest source of target GHG emissions and the single largest source of Scope 3 GHG emissions. This sector, which is traditionally difficult to access for savings, will be an important sector for federal agencies to focus on in order to achieve their Scope 3 targets. Other savings seem likely to be achievable from the business air and ground travel sectors (collectively 25% of total Scope 3 GHGs) and from off-site solid waste disposal (7% of Scope 3 emissions) Old Meadow Road, McLean, Virginia

9 Figure 9: Scope 3 Target Subject Emissions by Source Significant variance is observed between federal agencies when emissions per capita from select emission categories are calculated. Figure 10 shows combined emissions from business air and ground travel for the 10 largest emitting federal agencies on a per capita basis. Some variation is to be expected in accordance with agency function; however, this analysis may provide insights to federal agencies as to areas where they can target interventions. Figure 10: Emissions per Person from Federal Employee Business Travel Employee commuting GHG emissions per capita is similarly variable with 50% variability within the 10 largest emitting agencies. This may be related to agency mission or structure; in this particular category, however, it may also be related to the different methodologies used to estimate GHG emissions from employee commuting or varying degrees of the underlying data quality Old Meadow Road, McLean, Virginia

10 Agency Use of GHG Inventory Data Figure 11: Emissions per Person from Employee Commuting The possession of comprehensive and accurate GHG inventory data is a critical milestone in any organization s journey to improve its sustainability. Agencies can use this data to identify the largest contributors to their respective inventories and develop policies and measures to reduce the emissions. Normalizing emissions against agency characteristics (number of employees, budget, floor area, etc.) can also help agencies identify best practices within their facilities and work to understand these and proliferate them throughout the agency. Cost Effective Attainment of Targets The development of strategic approaches for project identification and appraisal will allow decision makers to invest in the most promising projects throughout the agency with a full and detailed knowledge of the lifetime costs and benefits of each project. 2 In addition, agencies need to understand where individual actions will contribute to multiple goals. Building energy efficiency, for example, will help agencies meet both the energy intensity improvement goal from EO 13423, as well as GHG reduction goals required by EO On-site renewable energy applications have the potential to reduce GHG emissions, meet the federal renewable energy goals, and contribute to reduced Scope 3 emissions from T&D losses. A full understanding of where these synergies lie will allow agencies to maximize the benefit of investment and ensure optimal solutions to the EO and related sustainability requirements. Lastly, each agency needs to understand how funding will be brought to bear to provide for these investments. Many agencies have been successful in driving private sector investment through energy savings performance 2 Discussion on methods for establishing costs and benefits of GHG reduction projects and EO specific requirements is contained at Old Meadow Road, McLean, Virginia

11 contracts and utility energy service contracts. Success in engaging the private sector for investment allows appropriations to be spent elsewhere, making federal dollars available to fund projects that may be less attractive to the private sector, but still necessary to meet the aggressive targets that have been established. About Project Performance Corporation and Eastern Research Group, part of the AEA group: Project Performance Corporation (PPC) is a management consulting firm offering world leading expertise in environmental and IT and management solutions for government, non-profit, and private sector decision makers. At PPC, we solve a wide variety of problems for clients by helping them improve the way their organizations function. From leading-edge solutions for optimizing the use of information and institutional knowledge, to highly effective solutions to address energy usage and climate change, we specialize in delivering effective, reliable answers to the most complex challenges. At the heart of it all are our people innovative thinkers well versed in business processes and drivers, and an unequalled focus on delivering quality products and services. Eastern Research Group, Inc. (ERG) is a multifaceted environmental services company with more than 350 environmental professionals and an extensive history of federal government service. With service areas covering building energy and water efficiency, green buildings, clean energy, solid waste management, mobile source emissions, and climate change mitigation and adaptation as well as a growing service area related to federal sustainability ERG offers broad areas of expertise and proven experience to help federal agencies meet and exceed their sustainability objectives. From compiling and refining GHG emission inventories to developing comprehensive GHG emission reduction strategies, ERG provides unparalleled support helping clients benchmark environmental performance and identify and implement cost-effective measures that lead to a greener footprint and reduced operating costs. About the Authors Daniel Waller has more than 10 years of experience helping organizations improve their environmental performance. He has designed and implemented carbon management plans for more than 50 organizations in the health, manufacturing, industrial, retail, and fast food sectors. Services designed and implemented include organizational and product carbon footprints, corporate policy and strategy, culture change and sustainable energy project identification and prioritization. Recently, Mr. Waller has provided support to the U.S. Department of Energy (DOE), including helping the department set a GHG reduction target and developing their Strategic Sustainability Performance Plan as required under Executive Order and assisting industrial businesses meet energy intensity targets through the Department s Save Energy Now LEADER program for U.S. industrial companies. Evan Fago is a senior manager at ERG with nine years of experience providing technical sustainability support to federal agencies in the arena of GHG emissions accounting and mitigation, energy efficiency, and renewable energy planning and purchasing. Over the past three years, Mr. Fago has managed ERG s development, documentation, and reporting support for EPA s internal GHG emissions inventory. In spring 2010, Mr. Fago helped draft three chapters of the Department of Justice's (DOJ's) Strategic Sustainability Performance Plan (SSPP) related to DOJ s strategies for reducing Scope 1, 2, and 3 GHG emissions, and also helped DOJ calculate its base year FY 2008 Scope 3 GHG emissions. For more information contact: Daniel Waller Knowledge Leader Carbon Management Project Performance Corporation 1760 Old Meadow Rd., McLean, Virginia p: e: daniel.waller@ppc.com 1760 Old Meadow Road, McLean, Virginia