Why Mandatory Program
Greenhouse Gas Reporting and Disclosure: Key Elements of a Prospective U.S. Program
Why a Mandatory Program?While GHG reporting could be either voluntary or mandatory, experience suggests that mandatory reporting will stimulate voluntary reductions across the economy — not just among the small group of corporate leaders who typically participate in voluntary programs.
Voluntary GHG reporting programs already in existence have helped facilitate and document significant emissions reductions by a number of entities. One important existing program is the Voluntary Reporting of Greenhouse Gases Program, managed by the Department of Energy under section 1605(b) of the Energy Policy Act of 1992. The 1605(b) program records the results of voluntary measures to reduce, avoid, or sequester carbon. During 2000, 222 U.S. companies and other organizations reported to the program that they had undertaken 1,882 projects to reduce or sequester greenhouse gases. (Of these, only 100 reported entity-wide emissions — as opposed to projects.3) These companies, however, are a small group compared to over 10,000 establishments nationwide that together generate about 80 percent of the CO2 emissions from the manufacturing sector (See Figure 2).
The 1605(b) program has been criticized for lacking rigorous reporting standards and verification requirements, allowing the double-counting of reductions, and failing to account for overall GHG emissions increases by entities registering reductions at the project level.4 Efforts to improve the 1605(b) program may remedy some of these weaknesses. However, even were such flaws remedied and baseline protection and other incentives provided, significant GHG reductions would not be assured because most emitters would still not participate. Experience suggests that only mandatory reporting can achieve the broad participation needed to stimulate voluntary reductions across the economy.
A case in point is the Toxics Release Inventory (TRI) program (See The Toxics Release Inventory: A Model Reporting Program.), a mandatory reporting and disclosure program long considered effective in stimulating voluntary reductions of chemical releases across a large segment of industry. Under the TRI, mandatory disclosure has prompted voluntary action by firms not typically predisposed to voluntary action. The top managers and non-environmental staff of large firms have often first learned of their releases through TRI disclosure — leading them to reduce the economic waste represented by the chemical releases. Vendors of pollution prevention technologies have used the TRI to find customers. State and local agencies have used the TRI to identify firms in need of technical assistance. And, finally, facilities not otherwise moved have been motivated to reduce emissions by the publicity associated with disclosure. All these mechanisms would likely operate under a mandatory GHG reporting program as well. In other words, mandatory reporting and disclosure is key to stimulating voluntary GHG emission reductions.
In addition, the information yielded by a mandatory reporting program – broader and more detailed than what is available now — would provide policy-makers a stronger foundation on which to develop a comprehensive climate change strategy.
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