Business Guide to GHG Emissions

Monitoring, Reporting and Verification

December 2003 Brochure 3/3

ANDRZEJ BŁACHOWICZ
ELLINA LEVINA

The authors wish to thank the following individuals for their contribution:
-Gareth Philips from SGS UK Ltd.,
-Krzysztof Olendrzyński, Iwona Kargulewicz & Bogusław Dębski from
the National Emission Centre (KCIE),

Prepared in cooperation with:

INSTITUTE FOR SUSTAINABLE DEVELOPMENT (InE)

Please check the previous 2 brochures:

1) Climate Change:http://www.ccap.org/pdf/2003--Poland--Business_Guide_to_CC--English.pdf
2) Emissions Trading: http://www.ccap.org/pdf/2003-July--Business_Guide_to_GHG_Trading--English.pdf
 This is the third of the series of three brochures on climate change for
Polish industry. The goal of these brochures is to deliver useful
information on various aspects of climate change to the CEOs, CFOs, and
environmental experts within companies. This brochure provides
information on the existing and upcoming GHG emissions monitoring and
reporting requirements for companies. The brochure also offers a
selection of useful definitions and publications where additional
information could be obtained.

TABLE OF CONTENT:

I. INTRODUCTION: IMPORTANCE OF EMISSIONS DATA QUALITY FOR A

SUCCESSFUL IMPLEMENTATION OF A TRADING REGIME ....................................... 3
a. Monitoring .............................................................................................................................. 4
b. Reporting................................................................................................................................. 5
c. Verification.............................................................................................................................. 5
II. EXISTING AND UPCOMING LEGAL OBLIGATIONS CONCERNING MRV........... 6
a. Role of the government and its agencies................................................................................. 6
b. Role of companies participating in trading ............................................................................ 7
c. Roadmap for companies – Timeline for the implementation of important requirements ....... 8
d. EU Decision on greenhouse gas monitoring and reporting ................................................... 8
III. DETERMINATION OF GHG EMISSIONS: KEY COMPONENTS .............................. 9
Activity Data ............................................................................................................................... 9
Emission Factors ........................................................................................................................ 9
Oxidation Factor....................................................................................................................... 10
IV. SECTOR-SPECIFIC CHALLENGES............................................................................... 11
Energy sector ............................................................................................................................ 11
Iron and Steel............................................................................................................................ 13
Cement ...................................................................................................................................... 14
V. CONCLUSIONS AND RECOMMENDATIONS............................................................... 16
RELEVANT PUBLICATIONS................................................................................................. 17

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I. INTRODUCTION: IMPORTANCE OF EMISSIONS DATA QUALITY FOR A
SUCCESSFUL IMPLEMENTATION OF A TRADING REGIME

A rigorous and consistent monitoring and reporting of GHG emissions is important for two key
reasons:
to ensure environmental integrity and credibility of the system (Allowing the inclusion of
emissions that are difficult to measure or the use of poor emissions determination
methods could lead to a violation of the trading system cap), and
to provide a sense of fairness among participants in the trading programme (If some firms
were under-estimating their emissions due to the use of poor methods, failure to account
for some activities, or other reasons, then they would not only gain advantage over their
competitors but also be perceived as cheating. This too would undermine the credibility
of the programme).

To ensure the accurate and verifiable monitoring and reporting of greenhouse gas emissions,
monitoring and reporting should be based on the following key principles:
Completeness. All process and combustion emissions from all sources belonging to activities
included in emissions trading schemes should be monitored and reported.
Consistency. Monitored and reported emissions should be comparable from year to year,
consistent monitoring methodologies should be used.
Transparency. Monitoring data, including assumptions, references, activity data, emission
factors, oxidation factors and conversion factors should be disclosed, and appropriate references
should be made to the calculation methods.
Accuracy. It should be ensured that the emission determination is systematically neither over nor
under true emissions, as far as can be judged, and that uncertainties are quantified and reduced as
far as practicable. Emissions should be determined using the appropriate monitoring
methodologies. All metering or other testing equipment fundamental to reported monitoring data
should be appropriately applied, maintained and calibrated (or verified).

Monitoring and reporting of GHG emissions is required by the UNFCCC, the Kyoto Protocol
and several EU Decisions and Directives. For the purposes of the Kyoto Protocol and the
UNFCCC, the emissions should be estimated using the 1996 Revised IPCC Guidelines and 2000
Good Practice Guidance, and reporting should be done using the so-called Common Reporting
Format (CRF).

The IPCC guidelines are intended for reporting emissions by countries and are to a large extent
based on national energy statistics and aggregated production data, using specific emission
factors per unit fuel- or energy consumption or per unit production of goods. National
inventories and the IPCC guidelines are not explicitly designed to monitor and report the
emissions of legal entities (installations). Rather, IPCC encourages legal entities to develop
appropriate methodologies for companies and corporations.

However, since the IPCC inventory guidelines and the CRF have been accepted as the standard
for international GHG reporting, reporting on emissions by individual installations will need to
be organized in the same way to ensure consistency with national reports. The EU requirements

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for monitoring and reporting of GHG emissions at the level of installations, that are being
prepared right now, will likely be consistent with the IPCC international requirements.

a. Monitoring

The complete, transparent and accurate monitoring of greenhouse gas emissions requires a
choice in appropriate monitoring methodologies. This includes the choice between measurement
and calculation.

The operator may, with the approval of the competent authority, combine measurement and
calculation for different sources belonging to one installation.

Calculation of CO2 emissions is based on the following formula:

CO2-emissions = Activity data x Emission factor x Oxidation factor

The expressions within this formula are specified for combustion emissions and process
emissions as follows:

Combustion emissions:
Activity data should be based on fuel consumption. The quantity of fuel used should be
expressed in terms of energy content as TJ. The emission factor is expressed as tC/TJ . When
energy is consumed, not all of the carbon in the fuel oxidizes to CO2. Incomplete oxidation
occurs due to inefficiencies in the combustion process that leave some of the carbon unburned or
partly oxidized as soot or ash. Unoxidised carbon is taken into account in the oxidation factor
which should be expressed as a fraction. In case the oxidation factor is taken into account in the
emission factor, a separate oxidation factor should not be applied.

C emissions = Fuel consumption [TJ] x Emission factor [tC/TJ] x Oxidation factor

CO2 emissions = C emissions x 44/12

Process emissions:
Activity data should be based on material consumption or production output and expressed in t
or m3. The emission factor is expressed in [t CO2/ t or t CO2/ m3]. The process-related conversion
factor, which refers to the fraction of carbon contained in input materials converted to CO2 in the
process is expressed as a fraction. The conversion factor may be integrated into the emission
factor. The quantity of input material used should be expressed in terms of mass or volume [t or
m3]. The emission factor is expressed as tCO2/ t or m3. The resulting calculation formula is:

CO2 emissions = Activity data [t or m3] x Emission factor [t CO2/ t or m3] x Conversion
factor

Measurement

Greenhouse gas emissions can be determined using continuous emission measurement systems
(CEMS) from each source using standardized or accepted methods and corroborated by a
supporting calculation of emissions.

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The operator would have to develop and apply a monitoring protocol, which describes the points
of measurement, frequency of measurements, equipment used, calibration procedures and data
collection and storage procedures. The protocol should be subject to the approval of the
competent authority.

b. Reporting

In designing the trading regime’s reporting function, it must be kept in mind that the
environmental integrity and credibility of the regime requires that emissions have been
determined accurately in both fact and appearance. This means that a reporting format is needed
that provides information on how emissions were determined (transparency), allows for
comparison of reported emissions across facilities (comparability), and is consistent over time
(consistency).

Specific reporting requirements for installations, together with criteria for verification of the
reports, will be defined by the relevant EU and national documents.

It is likely, that EU and national reporting documents will require that fuels and resulting
emissions be reported using the IPCC standard fuel categories which are based on the definitions
of the International Energy Agency (http://www.iea.org/stats/defs/defs.htm). In some cases
Poland has published its own list of fuel categories including definitions and emission factors
consistent with the latest common reporting format submitted to the Secretariat of the UNFCCC.
In these cases, Poland-specific categories should be used.

The consistency between data reported under the upcoming EU Directive and data reported by
Poland under the UNFCCC, and other emission data reported for the European Pollutant
Emission Register (EPER) is desirable. To achieve this consistency, each activity should be
labeled applying the codes from the following two reporting schemes:
a) the Common Reporting Format for national greenhouse gas inventory systems as
approved by the respective bodies of the United Nations Framework Convention on
Climate Change;
b) the IPPC code of Annex A3 of the European Pollutant Emission Register-EPER (EC
decision 2000/479/EC).

c. Verification

The purpose of verification/validation is to ensure that facilities have accurately reported their
emissions. The IPCC “Good Practice Guidance and Management of Uncertainty” report’s
glossary provides the following definitions:

Validation refers to “the establishment of sound approach and foundation.” In the context of
emission inventories, validation involves checking to be sure that the inventory has been
compiled in line with reporting instructions and guidelines. The legal use of validation is to give
an official confirmation or approval of an act or product. In the context of Poland’s trading
program, validation refers to the process of ensuring that facilities have followed the governing
accounting rules and emissions determination protocols.

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Verification refers to “the collection of activities and procedures that can be followed during the
planning and development of an inventory, or after completion of an inventory, to help to
establish the reliability of the inventory for its intended applications.” Typically, methods
external to the inventory are used to verify the inventory, including comparisons with estimates
made by other bodies and comparisons with emission and uptake measurements determined from
atmospheric concentrations or concentration gradients of these gases.

Verification will be critical to ensuring that trading

Box 1. UK lessons
In the first several months of the UK
Emissions Trading Program (2002) several
companies could not receive allowances,
because their baseline emissions were not
verified. There were problems with setting
up data management systems, companies
and verifiers were discovering sources that
were incorrectly included or excluded from
the scheme.
The verifiers did not have enough capacity
to deal with all the problems at once.
The situation affected the market, since
the supply of allowances got slightly
reduced.
And although the verification of baseline
emissions in the UK system had to happen
only once and the UK system is so much
different from the EU trading scheme, it is
an important lesson.
helps Poland to meet its greenhouse gas limitation
goals. Validation will ensure both that reporting is
complete, transparent, and in conformity with
accepted standards, and that monitoring guidelines
have been applied correctly. Validation will give
trading system participants confidence in the
system.
Facilities should not leave it too late to embark on a
verification exercise. Verification early in 2005
would ensure that trading systems are working
appropriately and thereby reduce the risk of finding
out, too late, that essential information was not
being collected. Without a verified report, no
company can make transfers of allowances.

II. EXISTING AND UPCOMING LEGAL OBLIGATIONS CONCERNING MRV

a. Role of the government and its agencies

The government needs to implement a wide range of legislative documents with respect to MRV:

Table 1
Document’s Location Description
name
UNFCCC Art. 4 & 12 Parties to the Convention must submit their National
GHG Inventories on an annual basis, for the period:
base year-last but one year.
UNFCCC FCCC/CP/1999/7 Parties to the Convention must submit their annual
Reporting FCCC/CP/2002/7/A National Inventory Report, including methodologies
Guidelines dd.2 and the Common Reporting Format.
Kyoto Protocol Art. 3, 7, 8 This regulation will replace the one, given by the
UNFCCC, once the KP comes into force. Additional
requirements: Parties must include other information,
regarding their national inventory and registry
systems. Also, national system for emission

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 estimating must be ready by the end of 2007.
EU Decision on Art. 3 & 4 Decision is an in-depth implementation of the above
the monitoring given MRV provisions, included in the UNFCCC,
mechanism of COP decisions and the Kyoto Protocol. All data
GHG emission related to GHG emission must be reported by 15
(draft, January each year (X) for years X-2 or X-1. Data
2003/0029) related to removals must be reported biannually.
Each Member State (MS) is obliged to establish its
national inventory system by 31 December 2004.
EU Directive on Art. 14 & 15 MS must ensure that emissions from sources
GHG Emissions Annexes IV & V covered under the directive are monitored and
Trading reported in accordance with annex IV and the
(2003/87/EC) decision on Monitoring and Reporting guidelines
(once it is adopted).
Also MS must ensure that reports from installations
are verified by independent verifiers following the
criteria laid down in annex V.
EU Decision on Binding regulation including general rules of the MRV
guidelines for regime and activity-specific guidelines for different
GHG sectors. The government must, through competent
monitoring and authority, ensure that EU ETS participants observe
reporting these requirements.
(under
preparation)
EU EPER Art. 1 & Annex A1 MS must report CO2 emission from facilities emitting
decision more then 100 Gg per year.
(2000/479/EC) The first report from accession countries should be
submitted in 2006 (for 2004 emissions) and
subsequent reports should be sent every 3 years.

b. Role of companies participating in trading

There are many pieces of international, European and domestic legislation, containing MRV
obligations for companies. A table below provides you with an extensive selection:

Table 2
Document’s name Location Description
EU Directive on GHG Art. 14 Operator of each installation participating in the EU
Emissions Trading ETS must monitor its installations’ GHG emission and
(2003/87/EC) report it to a competent authority in accordance with all
the guidelines.
EU Decision on The operator must propose monitoring and
guidelines for GHG measurement methodologies, based on sector-specific
monitoring and guidelines and select a verifier of its report. By March
reporting (under 30 each year, the operator must submit the verified
preparation) emissions report for the previous year.
Environmental Art. On a quarterly basis, companies have to report their
Protection Law (EPL) 285,286,287 emissions (including CO2) for the purpose of paying
the emissions charges.

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 Additionally, amendments to the EPL from October
2003 create national and regional databases, where
companies will probably be reporting all necessary
data for different purposes (including participation in
emissions trading).
Decree of the Polish The decree obliges emitters to measure their emission
Minister of according to given methodologies. Depending on the
Environment on the capacity thresholds sources are obliged to monitor
requirements of their emission continuously or measure it on a regular
emissions basis. A proposed method for CO2 monitoring and
measurements measurement is absorption of IR radiation.
PL: w sprawie
wymagań w zakresie
prowadzenie
pomiarów wielkości
emisji
(Dz. U. 2003/110/1057)

c. Roadmap for companies – Timeline for the implementation of important requirements

Many requirements of the GHG monitoring, reporting and verification are uncertain now. Once
EC decision on Monitoring and Reporting guidelines is adopted, countries will issue their
domestic legislation concerning GHG emissions monitoring, reporting and verification.
According to the existing requirements, the following deadlines are already set:

27 November 2004 – All fuel combustion installations above 100 MWt must monitor their
emission continuously, although there are many special provisions for new sources (see Dz. U.
2003/110/1057);
1 January 2005 – All participants of the 2005-2007 phase must comply with MRV regulations,
especially with the EU Decision on guidelines for GHG monitoring and reporting;
Quarterly – All companies have to report their emission to marshals of the voivodships (in the
future reports will also go to the Chief Inspectorate for Environmental Protection (GIOŚ).
Present requirements concern emissions charges but could be expanded to emissions trading.

d. EU Decision on greenhouse gas monitoring and reporting

Guidelines for monitoring and reporting of GHG emissions, that will be issued in a form of EU
Decision, is currently being prepared by a consortium of companies: Ecofys-TÜV-KPMG-
FIELD, and a subject for a discussion and approval by the European Commission . The
guidelines should be adopted by the end of 2003.

The Decision will be accompanied by several annexes, including:

-general guidelines, including: definitions; monitoring and reporting principles; responsibilities
of all stakeholders, determination of GHG emissions and activity-specific data and factors, and
reporting format;
-specific sectoral guidelines for each activity: combustion installations; mineral oil refineries;
coke ovens; metal ore roasting and sintering installations; installation for the production of pig
iron and steel including continuous casting; installations for the production of cement clinker;

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installations for the production of lime; installations for the manufacture of glass; installations
for the manufacture of ceramic products; pulp and paper producing installations.

III. DETERMINATION OF GHG EMISSIONS: KEY COMPONENTS

To calculate GHG emissions from its activities, each installation included in the trading scheme
will have to make the following steps:

Identify GHG emission sources (will have to follow official EU and national requirements on
the sources included in the trading system);
Select calculation approach (appropriate guidelines are expected from the EU and the
national government);
Collect activity data and choose emission factors;
Apply calculation tools to estimate GHG emissions;
Report GHG emissions data.

Activity Data

Activity data represents information on material flow, consumption of fuel, input material or
production output expressed as energy content [TJ] determined as net calorific value for fuels
and mass or volume for input or output materials [t or m3].

In the case of CO2 emissions from energy combustion, “activity rate” refers to the fuel quantity
combusted. In general, installations will have two options for activity data: They can use either
supply records such as invoices and fuel purchase receipts or measured data, such as readings
from fuel flow meters. The advantage of using supply records is that doing so is normally
relatively simple; the disadvantage is that the quantity of fuel purchased often differs from the
quantity of fuel actually consumed. The advantage of using measured data is that these data
more accurately capture on-site fuel use; the disadvantage is the higher administrative cost of
collecting, reporting and verifying these data.

Emission Factors

Emission factors are based on the carbon content of fuels or input materials and expressed as
tC /TJ (combustion emissions) or tCO2/t or tCO2/m3 (process emissions).

Biomass is considered as CO2-neutral. An emission factor of 0 [t CO2/TJ or t or m3] should be

applied1. For fuels or materials containing both fossil and biomass carbon, a weighted emission
factor shall be applied, based on the proportion of the fossil carbon in the fuel’s overall carbon
content. This calculation shall be transparent and documented.

Emission factors can be determined following either one of two approaches: facility-specific
analysis and the use of pre-determined default values.

1
According to IPCC guidelines CO2 emission from biomass is calculated in the CRF report but not included in the
national total.

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 Facility-specific analysis.
This approach involves a mass balance analysis of the carbon content of the fuel (expressed
as mass of carbon per unit of fuel) and the amount of carbon per unit of fuel that is not
combusted and retained in the solid or gaseous waste (flue gas, slag, (fly) ash) produced by
the combustion process. The emission factor then is equal to:

Emission Factor = 44
12 × (C content fuel − C content flue gas , slag & ash )
The fraction 44/12 represents the relative weights of the element C (12) and the molecule
CO2 (44).

Both the fuel quantity and the carbon contents of the fuel and waste stream should be
measured or calculated in the same units (energy units such as joules, and “mass” units such
as kilograms, tones, and cubic meters). The net calorific value (NCV)2 of a fuel is the
conversion factor to be used when converting fuel mass units to energy units. A chemical
analysis of the fuel will, in most cases, directly yield the carbon mass per fuel mass (mass per
mass units). In these cases a conversion to energy units is not needed.

Pre-determined emission factors (default values)

In cases where the facility does not analyze the carbon content of its fuels, default emission
factors can be used to calculate CO2 emissions. The IPCC inventory guidelines (Reference
Manual, pages 1.23 and 1.24) provide default values on a country-by-country, fuel-by-fuel
basis. Poland could establish its own default values.

In principle, the use of default values will lead to greater inaccuracy than using emission factors
based on chemical analysis of fuels. Leading efforts to develop guidelines for corporate GHG
inventories, such as those by WRI/WBCSD, have recommended the use of facility-specific
emission factors and have discouraged the use of default values. It is important to recognize,
however, that a tradeoff exists between accuracy and cost and that at some point the cost of
additional accuracy is not justified. Therefore facility-specific emission factors will be needed in
some cases while default emission factors will be appropriate in others.

Oxidation Factor

If an emission factor does not reflect the fact that some of the carbon is not oxidized, then an
additional oxidation/conversion factor is used.

Combustion processes are not 100 percent efficient and some of the carbon contained in fossil
fuels is not released into the atmosphere but rather becomes soot, particulate matter and ash.
However, because, as fuel is relatively expensive, large combustion units are optimized to burn
all carbon and the percentage of carbon that is not oxidized in the atmosphere is low.

2
The difference between the net and the gross calorific value of a fuel is the heat of condensation of moisture in the
fuel during combustion. The net calorific value excludes this. The IEA assumes that net calorific values are 5 per
cent lower than gross calorific values for oil and coal, and 10 per cent lower for natural gas.

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Carbon dioxide emissions calculations will be more accurate if they take into account the fact
that not all of the carbon in fossil fuels is oxidized. The IPCC inventory guidelines recommend
that the following default oxidation factors be used for the purpose of estimating national CO2
emissions from fuel combustion:

for coal, 98 percent (meaning that it is assumed that two percent of the carbon is not burned);
for oil and oil products, 99 percent; and
for gas, 99.5 percent.

The guidelines note, however, that “the amount of unburnt carbon varies depending on several
factors, including type of fuel consumed, type of combustion technology, age of the equipment,
and operation and maintenance practices.” For example, the default oxidation factor for coal of
98 percent is a global average but that the percentage varies by type of coal and can be as low as
91 percent. The IPCC default oxidation factors for oil products and natural gas are most likely
sufficiently accurate.

It is important to note that care must be taken to ensure that unoxidised carbon is not double-
counted. If it is taken into account in the development of the emission factor, then the oxidation
factor should not be applied.

IV. SECTOR-SPECIFIC CHALLENGES

Energy sector

To calculate CO2 emissions from power and district heating plants a calculation formula for
combustion process, mentioned above (section I a), is applied. Activity data and emission factors
depend on the fuel used, and oxidation factors depend on fuel and the type of facility.

Activity Data Emission Factors Oxidation Factor

Coal Coal is delivered to power and
heating plants in three ways: 1)
directly by the mining company,
2) by wholesalers, and 3) by
importers. While oil- or gas-
fired power plants use precise
measuring devices to measure
the actual mass of fuel entering
the combustion chambers, coal
power plants use scales that are
less precise. Moreover, these
scales do not measure the
amount of coal mass entering the
combustion chambers, but rather
measure the coal mass delivered
by the supplier to the power
plant’s coal handling facility.
It is more accurate to use either The IPCC
specific defaults or facility- default of 98
derived emission factors for percent should
CO2 from coal combustion. be used. This
will provide less
The IPCC reference manual efficient plants
provides carbon emission with an incentive
factors for coal and identifies to become more
three types of coal used for efficient, and
power generation: bituminous there is no risk of
coal, sub-bituminous coal, and underreporting
lignite. Typically, coal emissions, but
suppliers will specify the rather of over
chemical analysis of the reporting.
delivered coal to the end user.
Larger users, such as power
plants, have own laboratories

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 where they check on the coal
In estimating coal consumption, quality, and confirm the coal’s
whether based on delivery heating value and other
invoices or scale measurements, characteristics. Smaller power
it is important that facilities plants, heating plants, and
adjust their calendar year industrial consumers may not
deliveries by adding beginning have this capability, but
inventories and subtracting instead rely on visual
unused current-year stock. inspection of the coal to
These adjustments can be ascertain its quality. Chemical
significant, since a power plant analysis of delivered coal will
may store in own coal yard be most important in cases
anywhere from 30 days to 60 where different mined coals
days worth of consumption. have been blended to produce
the delivered coal.
Oil The various oil-derived products Oil-fired power plants should Oil-fired power
are sold per unit of mass. have a choice between IPCC plants should
Depending on the end user, one defaults and values determined have a choice
to several suppliers may be at the facility. between IPCC
involved in delivering the defaults and
refined products to the power values
plant/heating plant. The fuels determined at the
may be sold directly by the facility.
refineries, by wholesalers, or by
refined product importers.
Boiler operators would typically
have several suppliers,
particularly regarding heavy fuel
oil, where the end-users would
need to consider the sulfur
content of the fuel for
environmental compliance
purposes.
As with coal-fired plants, oil-
fired power plants could use
either CEMs or a calculation
approach. In applying the latter
approach, the quantity of fuel
consumed may be determined by
based on the records of both
buyers and sellers. As with coal,
however, oil-fired plants have
storage facilities in which they
may store fuel supply weeks’ to
months’ worth of consumption.
Thus, facilities will have to
account for stock changes during

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 the reporting period. In addition,
any oil products delivered to the
plant but not combusted in the
boilers covered under the
program, e.g. oil used for space
heating, should be subtracted
from the total delivered amount
to arrive at the actual combusted
fuel amount.
Gas The consumption of natural gas Use of default values by power Use of default
is the easiest among the fossil and heating plants should be values by power
fuels to determine because allowed, though of course, and heating
consumption is measured by development of more specific plants for the
precise metering equipment at values should be also oxidation factor
the point of the sale. The encouraged. The accuracy of should be
amount of gas thus sold may be reported CO2 emissions from allowed,
obtained through the records of natural gas consumption might although facility
either the power/heating plants be improved by the specific
or sellers (gas main operators). development of a producer oxidation factors
Some natural gas, however small specific natural gas emission will increase
an amount, may be used at factors. accuracy of
power and heating plants for calculations.
reasons other than power/heat
generation. For example, the
power plant may use some of the
gas for heating of the power
plant administrative buildings.
In other cases, especially with
industrial auto-producers, some
gas may be used in technological
processes or re-sold to other end
users, for example, within an
industrial park or zone. This
consumption would need to be
subtracted when determining the
amount of gas consumption
covered by the trading program.

Iron and Steel

The production of primary steel from iron ore is both energy and carbon intensive. IPCC good
practice guidelines (for national GHG inventories) for iron and steel making recommend that
emission estimates be developed at the plant level because plants can differ substantially in their
technologies, and they rely on a mass balance approach for estimating the process emissions
associated with pig iron production and steel production.

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In installations for the production of pig iron and steel including continuous casting, CO2-
emissions result from the following sources:
raw materials (calcination of limestone and/or dolomite)
conventional fuels (natural gas and coke)
reducing agents (coke, coal, plastics, etc.)
process gases (coke oven gas/COG, blast furnace gas/BFG and basis oxygen furnace
gas/BOFG)
consumption of graphite electrodes
other fuels

Because carbon plays the dual role of a fuel and a reducing agent, it is important not to double-
count the carbon from the combustion of coke, if this is already accounted for elsewhere. Coke
and other fuels used as reducing agent in iron and steel production should be accounted for as
process emissions from iron and steel production and not as fuels used in the stationary
combustion sector.

Required data can be obtained from direct metering of iron and steel production, reducing
agent/carbonate flux consumption and carbon by-product formation or from corresponding
financial records. During iron and steel production, the largest CO2 emission source occurs as
the reducing agent (coal or coke) is consumed during iron production. The consumption of
reducing agent accounts for approximately 90 percent of total process related CO2 emissions.

The most important piece of information required to determine iron and steel sector GHG
emissions is the mass of reducing agent consumed. There are default CO2 emission factors for
each emission source from the IPCC Good Practices Guidelines. Companies and facilities have
the option to override these defaults if they have more specific emission factors available.

Once the EU GHG monitoring requirements at the level of installations are ready, there will be
clear guidelines for companies on how to estimate their emissions based on the type of activity.

Cement

In cement plants, CO2 emissions result from the following sources:

calcination of limestone in the raw materials
conventional fossil kiln fuels
alternative fossil-based kiln fuels (= fossil AFR, fossil wastes)
biomass kiln fuels (biomass wastes)
non-kiln fuels

Generally, companies are encouraged to measure the required parameters at plant level. Where
plant- or company-specific data is not available, the recommended, international default factors
should be used. Other default factors (e.g., national) may be preferred to the international
defaults if deemed reliable and more appropriate.

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The cement industry is an energy-intensive industry consisting of three main process stages: (1)
raw material preparation, (2) pyro-processing or clinker production, and (3) finish grinding. The
clinker production stage is the most energy-intensive, accounting for up to 90 percent of the total
energy use. It is during this stage that the majority of carbon dioxide (CO2) is emitted.
Approximately 60 percent of CO2 emissions during cement production are not related to
combustion but generated as a by-product of lime production,3 while 40 percent are produced as
a product of fossil fuel and waste combustion.

Combustion processes involving different types of fuels (e.g. coal, petcoke, fuel oil, natural gas
and the broad range of waste fuels) as well as combustion of the organic content of (alternative)
raw materials that take place at installations for the production of cement clinker should be
monitored and reported in accordance with the guidelines on combustion processes (see section
on GHG emissions from power sector above).

Process CO2 emissions occur during the production of clinker when limestone, which is mainly
calcium carbonate (CaCO3), is heated to produce lime with CO2 as a by-product (IPCC, 1997).
Process CO2 emissions include CO2 from carbonates during calcination in the kiln and CO2 from
calcination of cement kiln dust (CKD). Emissions from clinker production and from cement kiln
dust can be calculated separately and added up to the emission total.
CO2 from clinker production could be calculated by applying emission factor (t of CO2 per t. of
clinker produced) to the annual clinker production.

CO2 from discarded bypass dust or cement kiln dust (CKD) should be calculated based on
discarded amounts of dust and the emission factor for clinker, corrected for partial calcination of
CKD.

The IPCC has outlined a two-tiered approach for estimating CO2 process emissions from cement
production in the IPCC Good Practice Guidance and Uncertainty Management in National
Greenhouse Gas Inventories. The Tier 2 method is preferred because it produces estimates with
more certainty than the Tier 1 method; however, it requires more data.

The Tier 2 method for CO2 estimation is as follows:

CO2 Emissions= Clinker Emission Factor * Clinker Production * CKD Correction Factor

Where,
Clinker Emission Factor (t CO2/t clinker) is the amount of CO2 emitted for each tone of clinker
produced

Clinker production (t clinker). The amount of clinker produced at each plant should be collected
from individual plants. Plants generally weigh clinker to within one to two percent (IPCC,
2000).

CKD (%). Clinker Kiln Dust (CKD) is non-calcined to fully calcined dust produced in the kiln
and is produced in all cement kilns to some extent. CKD production, composition, or disposition
3
Calcium carbonate (CaCO3) is heated to produce lime (CaO) and CO2 as a by-product.

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are a function of plant technologies and can vary over time. In general, the amount of CKD
produced can be estimated as equivalent to about 1.5-2 percent of the weight of clinker
production.

Another option for monitoring process emissions is to monitor the kiln flue exhaust gas with a
continuous emissions monitor (CEMs system). The use of CEMs may be reasonable in this
sector because both process CO2 emissions and emissions from energy combustion are emitted
through a single stack.

In deciding upon how to monitor CO2 emissions from cement plants, the trade off between
comprehensive accounting and cost-effectiveness must be considered. The IPPC recommends
continuous measurements for the following parameters: exhaust gas volume, oxygen (O2),
nitrogen oxides (NOx), sulfur dioxide (SO2), and carbon monoxide (CO) (IPPC, 2000).

One factor when considering whether to use CEMs to monitor cement plant CO2 emissions for
the trading system is an accounting one. Under the UFCCC, governments must report CO2
emissions from fossil fuel combustion and from industrial processes separately. If a CEM were
used to measure emissions, CO2 energy-related and process emissions would be reported in
aggregate. Given the reliability of the calculation approach and the fact that it consistent with
UNFCCC protocols, use of this approach may be warranted.

V. CONCLUSIONS AND RECOMMENDATIONS

A rigorous and consistent GHG emissions monitoring and reporting is one of the key factors that
will determine the success of international and domestic GHG emissions trading schemes. To
ensure integrity and credibility of the GHG emissions trading, participating companies should
report their emissions in a manner that is complete, consistent, transparent and accurate (see
chapter I for more details).

The EU emissions trading regime is coming into force starting from January 1, 2005, and
facilities in accession countries should be aware that they need to apply for a permit to emit
GHGs before the end of April 2004 when the National Allocation Plans are expected to be
finalized. It is possible that this date could be delayed, but no one should rely on this. In order to
apply for a permit, facilities need to detail how they propose to monitor their emissions to the
level of accuracy detailed in the upcoming Monitoring and Reporting Guidelines (EC decision
on that is expected soon). Facility operators should ensure that:

(a) they can implement the monitoring regime that they describe on their application form.
Failure to implement the permitted methodology will mean the verifier cannot verify
compliance with the rules of the scheme (even if they use another suitable or better
method);
(b) the monitoring methodology described does deliver the required level of accuracy.

An accurate installation-level inventory will also allow companies to identify ways to enhance
their productivity and energy efficiency, and to account for all GHG emission reductions that
could either be applied toward a company GHG cap or could be sold on the international market.

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An accurate source-level GHG inventory that is available at an earlier stage could also assist
companies in their negotiations with the government regarding allocations of GHG emissions
under the National Allocation Plan.

Also, companies should realize the importance of verification process. Trading participants
should ensure that they have undergone the initial verification well in advance of January 2006,
when over 10,000 other facilities across the EU will also be seeking verification.

To prepare for the imminent participation in the EU GHG emissions trading, Polish companies
might find it useful to review as soon as possible the availability and quality of the data at their
facilities that will be crucial for conducting a rigorous GHG monitoring and reporting.

RELEVANT PUBLICATIONS

 Cap and Trade Program, training materials, CCAP/EPA, 2002

 Developing a CO2 Emissions Trading Design for Slovakia, CCAP 2002
(http://www.ccap.org/pdf/SlovakiaCO2tradingFinal.pdf)
Greenhouse Gas Emissions 2001 Inventory for Poland, KCIE 2003
(http://www.ios.edu.pl/kcie/englishGHG2001.htm)
 International Rules for GHG ET, UNCTAD 1999
 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: vol. 1. Reporting
Instruction, vol. 2 Workbook, vol. 3. Reference Manual
 Study on the monitoring and measurement of GHG emissions at the plant level in the context
of the Kyoto Mechanisms, CCAP/TNO/FIELD 2001
 Tools of the Trade. A Guide to Designing and Operating a Cap and Trade Program for
Pollution Control, US EPA 2003 (http://www.epa.gov/airmarkets/international/tools.pdf)
 GHG Protocol Initiative, WRI/WBCSD (http://www.ghgprotocol.org)

Center for Clean Air Policy

Suite 940
750 First Street, NE
Washington, DC 20002 USA
202.408.9260
www.ccap.org

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