WRI established its U.S. office in 1982. We work to improve water quality, increase awareness of local climate change impacts, and identify cost-effective emissions-reduction opportunities in the United States. Learn more about our work in the United States.
In January 2010, two WRI-recommended features were incorporated into the U.S. Environmental Protection Agency’s (USEPA) regulations for implementing the new Renewable Fuel Standard (RFS). These regulatory features will help minimize the negative impacts of biofuels by ensuring comprehensive accounting of their lifecycle greenhouse gas (GHG) emissions.
The 2007 expansion of the RFS program required the EPA to set lifecycle GHG threshold standards to ensure that biofuels being used to meet the RFS emit fewer greenhouse gases than the petroleum fuel they replace. The framework the EPA would develop to calculate the GHG emissions factors of biofuels was critical. A framework that was less than comprehensive could end up creating incentives for U.S. biofuels that would actually lead to more GHG emissions than the traditional fossil-based fuels they replace. Two accounting factors were particularly important:
How to account for carbon dioxide emissions that occur in the future. WRI recommended applying a zero discount rate over a shorter time horizon, rather than the more popular proposal of a two percent discount rate over a 100 year time horizon. Our recommendation was more consistent with prior research and would minimize the risk of artificially inflating the emissions reductions benefits of bio-fuels.
Whether or not to include the emissions associated with indirect land-use changes. For example, a shift from soybean to corn farming in Iowa to make ethanol can result in a ripple effect that drives land conversion for soya in the Brazilian Cerrado. This land conversion may result in significant emissions of carbon dioxide. The uncertainty of indirect land use impacts does not render them insignificant. WRI recommended that emissions associated with global indirect land-use changes be included in the framework, along with approaches for refining the estimates as the science improves.
EPA adopted both our recommendations. In particular, the adoption of an accounting methodology that accounts for the emissions associated with global indirect land use impacts of domestic policy sets a precedent that has significant implications well beyond the biofuels sector.
WRI was the pioneering voice on the zero discount rate. WRI’s Biofuels and the Time Value of Carbon was the first and, to the best of our knowledge, only publication to address the issue of how to choose a discount rate for physical carbon in the context of biofuels accounting. WRI’s Liz Marshall was selected as one of five professional peer reviewers for the time parameters portion of the RFS rule. WRI’s perspective on indirects, set forth in Biofuels, Carbon, and Land-use Change and Rules for Fuels, also provided the analytical foundation for advocacy NGOs during the course of this debate.
In January 2010, the U.S. Securities and Exchange Commission issued new guidance clarifying that publicly-traded companies need to disclose financially material impacts related to climate change. Material impacts may range from compliance costs related to emissions regulation, to the physical impacts of changing weather patterns on operations.
The SEC ruling creates more incentives for capital to flow to sustainable businesses, while also improving awareness of the importance of climate change among the financial community. Companies are expected to improve GHG emissions accounting and reporting - an important stepping stone to managing and reducing corporate carbon footprints. WRI plans to continue engagement with the SEC, companies, and other advocates to help develop more specific rules, methodologies, and guidance relating to environmental disclosure.
For the past decade, WRI’s Markets and Enterprise Program (MEP) has been working to analyze material impacts of climate change on companies. MEP’s publication, Coming Clean, was one of the first reports identifying the need for improved corporate disclosure and providing specific recommendations for the SEC that were grounded in detailed financial analysis. Since then, WRI has worked closely with the investment community, as well as businesses, to foster support for better financial analysis and climate change-related reporting.
Meanwhile, WRI’s GHG Protocol team has worked over the last six years to build the foundation, constituency and the accounting infrastructure for companies to engage in corporate emissions disclosure and prepare for exactly this type of requirement. The GHG Protocol’s Corporate Accounting and Reporting Standard in particular is an important precursor to the SEC requirements. The SEC guidance refers to three business programs – the Carbon Disclosure Project, The Climate Registry, and the Global Reporting Initiative - that illustrate increasing corporate disclosure of climate change impacts and risks. All three of the programs’ greenhouse gas emissions reporting components are based on the GHG Protocol’s Corporate Standard.
Since 2007, both the Markets and Enterprise Program and the GHG Protocol Team have also been working through an international collaborative effort – the Climate Disclosure Standards Board (CDSB), which includes the Carbon Disclosure Project (CDP), The Climate Registry (TCR), CERES, and the World Economic Forum (WEF) to inform and guide SEC and other national financial accounting regulatory boards to address the issue of climate change reporting in the financial statements.
Extreme weather and climate events such as storms, floods, droughts and wildfires visibly impact not only our communities and livelihoods, but also our resources and related infrastructure. In its latest report, U.S. Energy Sector Vulnerabilities to Climate Change and Extreme Weather, the U.S. Department of Energy (DOE) warns that domestic energy supplies are likely to face more severe disruptions given rising temperatures that result in extreme weather events. The report accurately outlines the risks climate change poses to the energy sector in the United States and serves as a wake-up call on this critical issue, which I highlighted in my testimony before the Energy and Power Subcommittee of the House Energy and Commerce Committee earlier this year.
While manufacturing is a critical part of the U.S. economy, it’s struggled over the last several years—both financially and environmentally. Overall U.S. manufacturing employment has dropped by more than one-third since 2000. Meanwhile, U.S. industry—of which manufacturing is the largest component—still uses more energy than any other sector and serves as the largest source of U.S. and global greenhouse gas emissions.
The good news is that energy efficiency can help U.S. manufacturing increase profits, protect jobs, and lead the development of a low-carbon economy. The Midwest’s pulp and paper industry is a case in point: New WRI analysis finds that the pulp and paper sector—the third-largest energy user in U.S. manufacturing—could cost-effectively reduce its energy use in the Midwest by 25 percent through use of existing technologies. These improvements could save hundreds of thousands of jobs, lower costs, and help the United States achieve its goal of reducing emissions by 17 percent by 2020. As the White House moves to cut carbon dioxide pollution in America, energy efficiency improvements in Midwest pulp and paper mills are a tangible example of the win-win-win emissions-reduction opportunities in U.S. industry.
In 2010, the U.S. Congress passed, and President Obama ratified, a pioneering law that requires emissions targets and timetables for a U.S. government agency, and the development of a human rights policy for an export credit agency.
The legislation, a first of its kind, was incorporated into the 2010 Appropriations Bill and requires the U.S. Overseas Private Investment Corporation (OPIC) to take action on climate change and to develop - and publish - binding internal environmental and human rights guidelines.
They are also mandated to implement a revised climate change mitigation plan to phase down greenhouse gas (GHG) emissions associated with projects and sub-projects they finance by at least 30% in 10 years and 50% in 15 years over 2008 levels. This marks the first time that a U.S. government agency has set a target and timetable on its emissions reductions. In August 2010, under the leadership of new president Elizabeth Littlefield, OPIC took this mandate one step further, and adopted progressive environmental and human rights guidelines that have set the gold standard for financial institutions worldwide.
WRI played a key role in the outcome, engaging with Congress on the issue over three years, along with a wider coalition of NGOs. WRI served as a key resource for legislators in the U.S. Congress who drafted the legislation. The legal requirement builds on WRI’s earlier work to get OPIC to adopt a voluntary greenhouse gas initiative in 2007 to reduce its emissions by 20% over 10 years as well as a February 2010 landmark settlement of a 2002 lawsuit filed against OPIC by Friends of the Earth, Greenpeace and several U.S. cities affected by climate change, to which they alleged OPIC’s investments had made a substantial contribution.
The settlement required OPIC to establish a goal of reducing its emissions by 20% over the next 10 years, to conduct full environmental impact assessments for projects that emit significant amounts of carbon dioxide (CO2) and to publicly report its emissions from these projects annually. In August 2010, OPIC released their environmental and human rights guidelines, which strongly reflect the inputs and recommendations of WRI.
In October 2009, President Obama signed Executive Order (EO) 13514 on Leadership in Environmental, Energy, and Economic Performance, requiring the federal government to lead by example towards a clean energy economy and measure, report and reduce, direct and indirect greenhouse gas emissions. The EO also set an important precedent by mandating that a national government reduce GHG emissions from its own operations.
“Every year, the Federal Government consumes more energy than any other single organization or company in the United States,” said President Obama. “That energy goes towards lighting and heating government buildings, fueling vehicles and powering federal projects across the country and around the world. The government has a responsibility to use that energy wisely, to reduce consumption, improve efficiency, use renewable energy, like wind and solar, and cut costs.”
The collective emissions reduction targets established by the EO (a 28% total reduction in scope 1 (direct emissions) and scope 2 (indirect emissions associated with purchased electricity) below 2008 levels by 2020 and a 13% reduction in scope 3 (other indirect emissions)) will ensure significant reductions in the U.S., while demonstrating that ambitious reductions are achievable by other large U.S. entities and corporations. By including scope 2 and 3 emissions, the EO will also drive important shifts throughout the government’s vast supply chain.
To comply with the EO, agencies will conduct GHG inventories based on the GHG accounting principles articulated in the newly developed GHG Protocol for the US Public Sector, which outlines how government agencies in the U.S. – whether federal, state or local – should develop a GHG inventory. WRI coordinated a large stakeholder process to develop this protocol that included over 50 U.S. agencies, ensuring its relevance and utility to the government. This extensive engagement during the process also built capacity within the federal agencies for effective emissions measurement and management. The federal government also drew upon the principles in the draft of the GHG Protocol Corporate Value Chain (Scope 3) Standard in developing rules to account for Scope 3 emissions.
This has been a big week for U.S.-China collaboration on climate change. Yesterday the U.S.-China Climate Change Working Group (CCWG), which was established in April by the Joint Statement on Climate Change, presented their report on bilateral cooperation between the two countries. Not only does it lay out actions to reduce greenhouse gas emissions, a close reading sheds light on important themes for the future of U.S.-China collaboration on climate change.
The report centers on five separate “action initiatives.” to address key drivers of greenhouse gas emissions in both countries. The U.S. and China make up more than 40 percent of global CO2 emissions, so significant collaboration between the countries is absolutely essential to addressing the problem. The five areas that the report singles out include: vehicle emissions; smart grids; carbon capture, utilization and storage; greenhouse gas data collection and management; and building and industry energy efficiency.
Although the report is built around these five initiatives, four big themes can also be seen:
Large electricity consumers such as Apple or DuPont have limited options for directly purchasing green power. End-user consumers can’t easily contract with renewable power generators; they have to work through electric utilities who act as intermediaries. This gives utilities excessive market power as the only potential buyers in the green power market.
Based on a model proposed by WRI, Google set a new precedent in the green power market by committing to a long-term Power Purchase Agreement (PPA) with an Iowa wind farm. This is the largest, longest-term wind deal ever closed in the country between a renewable generator and an electricity end-user, and was only possible because of its creative deal structure.
WRI has been actively engaging Green Power Market Development (GPMDG) companies, including Google, for several years to overcome barriers in the power markets and regulations that make it difficult for non-utilities to sign PPAs. Long-term PPAs are essential for renewable power generators, because they are needed to secure financing—yet the traditional model used by utilities is not suitable for electricity consumers.
WRI provided analysis and connections to technical experts that helped Google better understand the benefits of entering into long-term purchase agreements with wind developers. These long-term agreements help the wind developer secure more attractive financing than traditional short term purchase agreements do, while providing important price stability to the end user (the price of wind does not fluctuate). These contracts can be complex to structure and raise many technical and financial questions. WRI’s research helped Google find a workable approach to these contracts that can now be replicated in the market place. This model could increase the amount of wind power the commercial and industrial sector purchase.
The model created by the groundbreaking Google deal will open the door for private electricity consumers to sign long-term PPAs, creating a whole new stream of credit-backing and access to financing for renewable power generators.
Wading through the vast sea of global greenhouse gas (GHG) emissions data can be a real challenge. To help simplify the process and make such data more accessible, today the World Resources Institute is launching the Climate Analysis Indicators Tool, or CAIT 2.0.
The free, online portal provides data on GHG emissions from 186 countries and all 50 U.S. states, as well as other climate data. CAIT 2.0 allows users to view, sort, visualize, and download data sets for comparative analysis. By providing comprehensive emissions data in an easy-to-use tool, users from government, business, academia, the media, and civil society can more effectively explore, understand, and communicate climate change issues.