November 3, 2010

Greenhouse Gas Mandatory Reporting Rule

Proposed Rule
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Additional details
Agency
Environmental Protection Agency
Regulatory Identification Number
2060-AO79
Agency Name
Environmental Protection Agency
Rule Publication Date
04/10/2009
Comment Closing Date
06/11/2009

RULE SUMMARY

EPA is proposing a regulation to require reporting of greenhouse gas emissions from all sectors of the economy. The rule would apply to fossil fuel suppliers and industrial gas suppliers, as well as to direct greenhouse gas emitters. The proposed rule does not require control of greenhouse gases, rather it requires only that sources above certain threshold levels monitor and report emissions.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
"The RIA is accessible through a simple Google search. Also, the RIA is available on regulations.gov through a keyword and RIN search. Lastly, the RIA can also be found on the EPA site: (RIA) (EPA– HQ–OAR–2008–0318–002): http://www.epa.gov/climatechange/emissions/archived/ghgrulemaking.html"
5/5
2. How verifiable are the data used in the analysis?
No data were presented on benefits, just on costs and emissions. (No citations are given for the extensive cost analyses that were completed). These were estimated by categories and facilities and mostly based on what seem like reasonable assumptions.
2/5
3. How verifiable are the models and assumptions used in the analysis?
The extensive analysis cited some publications and analyses justifying its assumptions or models but not all aspects are bolstered by citations. The models and assumptions used appear to be reasonable but not easily verified by a third party.
3/5
4. Was the analysis comprehensible to an informed layperson?
The results are often clear but organization is cumbersome and the heavy use of technical jargon is difficult to follow. The cost analysis presented was straight forward. The qualitative benefits discussion was weak.
2/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
1/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The regulation's ultimate goal is to reduce climate change by providing information to the public, but that is not likely to affect the quality of life without further government action.
1/5
Does the analysis identify how these outcomes are to be measured?
There is no discussion, or perhaps way to determine, if climate change will ultimately be reduced by this regulation. The "Model Facility Development" sections of most source categories explain how different industries/ facilities contribue GHG and some explain potential ways to reduce emissions, but most emphasis is cost analysis.
1/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
EPA's hope is that this is a first step and further regulation (cap and trade or carbon tax) will be enacted. It is taken as a given that reduced carbon emissions will result and that global warming will be reduced.
1/5
Does the analysis present credible empirical support for the theory?
See above.
0/5
Does the analysis adequately assess uncertainty about the outcomes?
There is no discussion of uncertainty.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
2/5
Does the analysis identify a market failure or other systemic problem?
There is mention of inadequate information problems about GHG emissions by facility and that GHGs are a classic externality, but the regulation does not reduce GHGs. Interestingly the proposed rule has a "Evaluation of Existing GHG Reporting Programs" section and a "Sumary of Existing Federal, State and Regional Emission Reporting Programs." Discussion of how the proposed rule is an improvement or necessary supplement to these programs would improve this section of the RIA.
3/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
It is pretty much assumed that the lack of complete bottom up facility information is a problem.
2/5
Does the analysis present credible empirical support for the theory?
See above. EPA could improve this analysis by adding more discussion of factors that would change GHG emissions for different facilities to make the problem more or less systemic.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
Uncertainty is not analyzed.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
The analysis examines various thresholds and requirements for specific amounts and quality of information.
5/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
The alternatives examined are all command and control, but the fact that ten different options including four reporting thresholds are analyzed is a plus. The options considered are detailed but narrow in scope because they are varients of reporting options, not broad based alternatives, to required reporting standards.
3/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The amount of information reported is carefully analyzed. When options are discussed costs are addressed (i.e. Subpart Q- Iron and Steel Production pp 67-68).
5/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The analysis assumes the baseline is the world in 2006 and does not assume any market induced changes or additional state regulation would occur in the future.
1/5
8. How well does the analysis assess costs and benefits?
3/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
The RIA does a good job of presenting incremental and marginal analysis of the reporting thresholds. The whole analysis is divided into subparts, breaking down costs on an annual basis. Detailed charts are utilized to summarize cost information.
5/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The cost analysis appears to be quite complete.
5/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis examines price effects by emissions category and facility size and finds them to be quite small.
4/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The analysis speculates how the public might react to the reported GHG information and points out that the price changes from compliance costs would be small.
2/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
The RIA has almost 100 pages of detailed estimates by facility, but EPA does not appear to think the costs are uncertain or, if they are, that the uncertainty is not significant.
2/5
Does the analysis identify the alternative that maximizes net benefits?
No, because benefits are not monetized.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Cost-effectiveness analysis is done for the four reporting emission thresholds.
5/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
It examines costs by facility size and category but not detailed incidence. Annual Sampling Costs used in the analysis are asessed for each industrial source category. It is difficult to locate cumulative cost estimates.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
The qualitative benefits analysis has some discussion of who might benefit from the information.
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The RIA states that the agency considered a range of factors in developing the regulation including the costs and benefits ,and it appears that the options chosen was based on the data developed. And the analysis states that EPA believes that the benefits are substantial compared to the costs.
4/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
From the incremental analysis, it appears the agency made the right choice but, without monetizing benefits, its impossible to know for sure.
3/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
The agency proposes to verify compliance with its reporting requirements, which include the collection, management, and dissemination of GHG data by 13,205 emitters.
4/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The agency does not propose any plan to track the regulation's performance, especially the hoped for desired outcome of reducing climate change.
1/5
 
Total 34 / 60