Energy and Environment Monitor
EPA has issued a draft (but not yet formally proposed) greenhouse gas (GHG) reporting rule. The draft, if proposed and finalized, would require not only burners of fossil fuels to report GHG emissions but would also require coal producers and natural gas suppliers to report emissions that would occur when their produced coal or gas is burned and is projected to produce 25,000 metric tons of CO2. There is no apparent threshold for methane emissions reporting for the coal industry. The draft rule would also require reports of methane emissions from developing underground coal mines that are subject to quarterly or more frequent sampling by MSHA of ventilation systems. As proposed, the GHG reporting rules may also double-count carbon emissions from coal by imposing the reporting requirements on both coal producers and coal exporters.
Subpart FF would require underground coal mines to account for emissions of methane from both the mining process itself and degasification efforts, but would not apply to abandoned or surface mines. Subpart KK would require all coal mining operations (together with coal exporters, importers and operators of waste coal recovery operations) to calculate emissions of CO2 which would result from the combustion of the coal. The details of the rules, however, show clear potential for double counting.
By way of example, §98.2(a) and Subpart KK §98.371, the GHG emissions reporting requirements, apply to any supplier that meets the requirements of §98.2(a)(4). Section 98.2(a)(4) lists the products, including coal, for which suppliers must report. Subpart KK, §98.372 requires importers and exporters to report the GHG emissions that would result from the complete combustion of coal supplied. At least three issues arise immediately from the inclusion of coal exporters and mines in the category.
First, there is no explanation as to why exporters are delineated as a separate category in addition to coal mines. If mining operations are required to report all CO2 emissions based upon the theoretical combustion of all coal produced, then it is far from clear what emissions should remain for either a burner or an exporter of the same that coal to report. Nevertheless, there is no offset that one category (coal mines) can take from the other (exporters).
The second problem with the proposed rule at Subpart KK is how the CO2 is to be measured. It assumes that the coal is combusted for producing steam to generate electricity. In fact, most coal exported from the United States is metallurgical coal used in making coke that in turn supports basic steelmaking in blast furnaces. Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. In the coking process, volatile constituents of the coal, such as water, gas, and coal-tar, are burned off by baking in an airless furnace or oven. Coke, the resulting product, is often used as a reducing agent in smelting iron ore in a blast furnace. The coking process does not result in the complete combustion of the carbon; in fact, the point of the exercise is to preserve the carbonaceous matter while getting rid of the impurities. This distinction is recognized at Subpart Q of the proposed rule which requires domestic iron and steel producing facilities to report their emissions from coking, but under a calculation that differs from the one required for coal combustion (the preamble to Subpart Q discusses five different options for measuring emissions resulting from iron and steel production). If exporters of coking coal are required to report the GHG emission, it only makes sense to require the emissions to be calculated based, hypothetically, on the intended use of the coal as a feedstock and not as a fuel.
The third problem appears in the double counting of CO2 emissions from domestic uses of coking coal. Under Subpart KK the coal operator is required to calculate emissions upon mining. At Subpart I, the steel mill is required to calculate the CO2 emissions a second time when the coal is used in a coke oven. It would seem that this method of calculating GHG emissions would allow for the emissions from a batch of coking coal to be counted twice.
In order to accurately measure GHG emissions, the final rules should distinguish coking coal from steam coal used to generate electricity. Additionally, the rules should accommodate downstream uses of coal by the ultimate consumer to report emissions and avoid duplicating emissions-counting. Requiring two parties to report emissions for the same coal creates redundancies and creates an inaccurate CO2 accounting system upon which to base any future U.S. cap-and-trade system.
This article was co-authored by Chris Hunter and Blair Gardner, Jackson Kelly PLLC. For more information on the authors see (Hunter) here and (Gardner) here.
