BILL REQ. #:  S-1720.1 

Read first time 02/24/2003.   Referred to Committee on Natural Resources, Energy & Water.

     AN ACT Relating to voluntary registration of greenhouse gas emissions; and adding a new chapter to Title 70 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that:
     (1) It is in the best interest of the state of Washington, the United States of America, and the earth as a whole, to encourage voluntary actions to achieve all economically beneficial reductions of greenhouse gas emissions from Washington sources.
     (2) Mandatory reductions of greenhouse gas emissions may eventually be imposed on Washington sources, and, consequently, the state has a responsibility to use its best efforts to ensure that organizations that voluntarily reduce their emissions receive appropriate consideration for reductions in emissions made before mandatory programs are implemented.
     (3) Past programs in the state that took early and responsible action to reduce pollution and to save energy have demonstrated political, economic, and technological leadership, have benefited the state, and have saved taxpayers, business owners, and homeowners significant amounts of money.
     (4) The state's tradition of environmental and energy leadership should be recognized by establishing a registry to provide documentation of reductions in greenhouse gas emissions that are voluntarily achieved by sources within the state.
     (5) Greenhouse gas emissions exchanges are being established with the ability to buy and sell the rights to emissions reduction credits. Washington sources will benefit as mature traders in these markets in the future by early participation.

NEW SECTION.  Sec. 2   The purposes of the Washington climate action registry are to:
     (1) Provide technical and educational resources to registrants wishing to record and trade emissions inventories;
     (2) Encourage voluntary actions to increase energy efficiency and reduce greenhouse gas emissions;
     (3) Publish basic definitions and protocols and publicize organizations qualified to provide technical assistance so participating organizations may record greenhouse gas emissions inventories in a consistent format that is supported by third-party verification;
     (4) Develop procedures for the registration of inventories that include the treatment of emissions released by or absorbed into fuels and fiber produced by biological systems or from or into the biological systems themselves;
     (5) Ensure that registrants receive the greatest possible consideration of their verified emissions inventories under any future federal regulatory regime relating to greenhouse gas emissions;
     (6) Recognize and publicize registrants and preserve and make available emissions inventories recorded by registrants;
     (7) Recruit broad participation in the process from all economic sectors and regions of the state; and
     (8) Establish a rigorous and transparent registry system that will increase the opportunities for Washington registry participants to trade greenhouse gas emissions reduction credits.

NEW SECTION.  Sec. 3   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Center" means the Washington climate and rural energy development center established in RCW 28B.30.642.
     (2) "Direct emissions" are emissions from sources, sinks, and activities that the entity owns or has direct or effective control over its operation, such as, but not limited to, on-site combustion and process equipment emissions and vehicles owned or operated by the entity.
     (3) "Emissions" means the net of release and absorption of greenhouse gases into or from the ambient air.
     (4) "Emissions inventory" means the report of emissions and normalized emissions for a calendar year.
     (5) "Entity" means a for-profit or a nonprofit corporation filing a separate federal income tax return, a city or county, each state government department and agency and all other instruments of state and local government, including municipal electric utilities and special districts of all types.
     (6) "Greenhouse gases" means those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at wavelengths within the spectrum of infrared radiation emitted by the Earth's surface, atmosphere, and clouds.
     (7) "Indirect emissions" are emissions caused by an entity's activities but controlled, directly or effectively, by another entity, such as, but not limited to, emissions created during the manufacture or transportation of energy or the generation and transmission of electricity acquired from another entity.
     (8) "Normalized emissions" means a ratio of emissions per unit time divided by a factor such as, but not limited to, revenues, expenditures, energy use, or production for the same time period and for the same scope as the emissions.
     (9) "Primary greenhouse gas" means carbon dioxide, hydrofluorocarbons, methane, nitrous oxide, perfluorocarbons, and sulfur hexafluoride.
     (10) "Public process" means the involvement of current and potential registrants, interested members of government, academic, scientific, and business communities, and the public in the development, evaluation, and adoption of protocols and other actions necessary to the implementation of this chapter.
     (11) "Registrant" means an entity that has filed with the registry the required identifying information, notified the center that it intends to record emissions inventories and has paid the necessary fees.
     (12) "Registry" means the Washington climate action registry established under section 4 of this act.
     (13) "Scope" means the sources, sinks, and activities creating emissions that are included in the emissions inventory of an entity.
     (14) "Secondary greenhouse gas" means those additional greenhouse gases designated by the center through a public process.
     (15) "Subsidiary" means an entity effectively under the control of a parent entity, including but not limited to, public and private nonprofit and for-profit corporations, whose board of directors or similar managing authority is composed of a majority of persons appointed by the legislative and/or executive authority of the parent entity. However, each department and independent agency of the state and each municipal electric utility shall not be considered a subsidiary of a parent entity for the purpose of section 7(6) of this act. "Subsidiary" includes entities that are joint ventures with other entities with emissions assigned to the parent entities according to mutual agreement or in the absence of an agreement in proportions determined by the protocols of the registry.

NEW SECTION.  Sec. 4   (1) The center shall establish and maintain the Washington climate action registry.
     (2) The center may contract with or otherwise agree to use personnel of a state or local agency, a university, or a nonprofit public corporation to operate the registry and to provide such additional services necessary for the center to meet its responsibilities under this chapter. Merit system regulations or standards for the employment of personnel may be waived for personnel hired under contract as provided for in this section.
     (3) The center shall adopt a schedule of fees for registry services adequate to cover the costs of operating the registry.

NEW SECTION.  Sec. 5   Participation in the registry is voluntary. Any entity operating in the state may register with the center, record its emissions inventory, and may use the services of the center.

NEW SECTION.  Sec. 6   (1) The center shall encourage entities from various sectors of the state's economy and from various geographic regions of the state to establish emissions inventories, establish greenhouse gas reduction targets, implement energy efficiency improvement and renewable energy programs to achieve those targets, and participate in the registry.
     (2) The center shall recognize, publicize, and promote registrants that do any of the following:
     (a) Commit to establish emissions inventories;
     (b) Record their annual emissions inventories with the center; or
     (c) Commit to set emissions or normalized emissions reduction targets.
     (3) The state commits to use its best efforts to ensure that entities that register emissions inventories that are verified in accordance with section 8 of this act receive appropriate consideration under any future international, federal, or state regulatory scheme relating to greenhouse gas emissions. However, the state cannot guarantee that any regulatory regime relating to greenhouse gas emissions will recognize the emissions inventories recorded in the registry.

NEW SECTION.  Sec. 7   (1) Emissions inventories recorded with the registry shall be:
     (a) Developed in a consistent manner across an economic sector;
     (b) Complete, including all materially significant emissions within the scope being reported;
     (c) Accurate; and
     (d) Verifiable.
     (2) The center shall:
     (a) Adopt through a public process protocols for defining the scope of emissions inventories, and for measuring, calculating, reporting, and verifying emissions, normalized emissions, and emission inventories, which may be different for different economic sectors;
     (b) Adopt through a public process a uniform format for reporting emissions inventories to facilitate their recognition in any future international, federal, or state regulatory regime;
     (c) Maintain a record of all emissions inventories submitted by active registrants that have been verified under section 8 of this act. Records or other information furnished to the registry, other than the total annual amount of emissions of each greenhouse gas by an entity, that would be likely to affect adversely the competitive position of a registrant if released to the public or to a competitor, and the registrant so certifies, shall be only for the confidential use of the center and the third-party organization or person conducting verification review of the inventory as required by section 8 of this act.
     (3) The procedures for monitoring, calculating, reporting, and verifying greenhouse gas emissions inventories established for the registry under this chapter shall be the only protocols used to define and report greenhouse gas emissions to the registry. In establishing the registry design, operations, and protocols the center shall review and consider the registry design, operations, and protocols established or recommended by other governments and organizations to enhance the credibility and acceptability of the information recorded in the registry.
     (4)(a) All registrants shall report emissions of carbon dioxide.
     (b) All registrants may report emissions of all primary greenhouse gases. After their third reporting year, a registrant shall include in its emissions inventory the emissions of all primary greenhouse gases. The registry shall include in its protocols factors for expressing emissions from various greenhouse gases in common terms.
     (c) After July 1, 2005, the registry may, through a public process, create or expand the list of secondary greenhouse gases and may require the inclusion of secondary greenhouse gases in emissions inventories.
     (5) Registrants shall report direct emissions and indirect emissions from acquired energy and electricity for the scope of their operations as provided in the protocols adopted by the center. Registrants may include additional indirect emissions that are verifiable. After July 1, 2005, the center may, through a public process, enlarge the scope of indirect emissions that are required to be included.
     (6)(a) The basic unit of participation in the registry shall be an entity. The center shall not record with the registry emissions inventories for subsidiaries, individual facilities, or projects, other than as a subset of an entity's entire emissions inventory reporting.
     (b) An entity's scope shall include all activities, sources, and sinks in the state and may include the remainder of the entity in the United States.
     (c) An entity may report verified emissions inventories for sequential multiple years after January 1, 1990, from facilities or activities outside the entity for which it claims ownership of the net change in emissions. It may separately report emissions inventories for subsidiaries, facilities, projects, or portions of the entity in other countries.
     (d) Where the scope of the registrant changes significantly during the year, the center may record with the registry for the year in which the scope change occurs an emissions inventory including only the scope of the prior year and shall add an explanatory note to the record.
     (e) Entities may initially report emissions inventories for subsidiaries or individual facilities located in the state if the parent entity commits, in writing to the center, to report a complete current annual emissions inventory for the entire portion of the entity within the state by its third annual report of its emissions inventory.
     (7)(a) Registrants shall record an emissions inventory for a calendar year. Registrants that have sufficiently complete data for prior years that can be verified may record emissions inventories for consecutive years before the first year for which they report, but not before January 1, 1990.
     (b) The center shall adopt, through a public process, schedules for the recording of verified emissions inventories for each year, procedures for delisting registrants that fail to record complete emissions inventories in future years or fail to report for the entire portion of the entity within the state by their third annual report, and fees to recover any costs necessary to reestablish registration.
     (8)(a) An explanatory note shall be added in the registry to prior years' data when there is a change in the procedures or protocols by which a registrant's emissions inventories are created or if there is a significant change in the scope included in the emissions inventory, such as, but not limited to, the outsourcing or transfer to other facilities of the entity of production previously included or the merger into the company of an entity not previously within the scope. Registrants may record emissions inventories with separately identified adjustments to report the magnitude of the change due to a change in scope. Registrants may record verified revised emissions inventories for prior years to conform with current protocols or current scope.
     (b) Registrants shall separately identify within their annual emissions inventories any rights or ownership to emissions or emissions credits for that year or between two years, that have been acquired from or transferred to:
     (i) Other entities located within or outside the state; or
     (ii) Within the registrant entity, including its subsidiaries, to or from locations outside the state that would not otherwise be included in the annual report to the registry.
     (c) Registrants shall identify and quantify any portion of the emissions inventory that is being reported to any other registry of greenhouse gas emissions, any differences between the reports and the name and address of the other registry.

NEW SECTION.  Sec. 8   (1) Registrants shall hire, at their own expense, a third-party organization or person qualified under subsection (2) of this section to independently verify and attest to the accuracy of the emissions results reported to the registry each year.
     (2) The center shall, through a public process, develop a procedure for identifying and qualifying organizations or persons recognized by the registry as competent to verify an emissions inventory and able to provide an opinion as to its consistency, completeness, and accuracy that is independent and free from conflict of interest. The center may limit its recognition of the organization or person to specific areas of competency. The center shall reopen the qualification process periodically to enable new organizations and persons to be added to the list.
     (3) An organization or person approved under subsection (2) of this section shall:
     (a) Review a registrant's energy usage records and such other records as are necessary to verify its emissions inventory;
     (b) Determine that the protocols of the registry have been followed;
     (c) If necessary to establish or confirm emissions or normalization rates or quantities, require additional analyses, direct measurements, monitoring, or testing; and
     (d) After noting adjustments or otherwise accounting for any changes in the scope of the entity, summarize its review in a report to the appropriate executive or governing body of the registrant for the portion of the entity that is submitting the emissions inventory, and attesting to the accuracy of the reported emissions results, but noting any exceptions, omissions, limitations, or other qualifications to their representation of consistency, completeness, and accuracy.
     (4) The center shall periodically perform a review and evaluation of registrants' emissions inventories and documentation and the performance of verifiers on its list. It shall record any findings from the reviews and evaluations in writing with the registry and shall include the findings in its annual report to the governor and the legislature required under section 10 of this act.

NEW SECTION.  Sec. 9   (1) The center shall, through a public process, develop a procedure for identifying and qualifying third-party organizations or persons competent to provide technical assistance and advice in any or all of the areas of measuring, monitoring, and calculating greenhouse gas emissions, setting industry-specific emissions reduction targets, and developing and implementing energy efficiency improvement programs appropriate to various industries and economic sectors.
     (2) The center shall adopt a list of organizations or persons recognized by the center as competent to carry out the responsibilities described in subsection (1) of this section. The center may limit its recognition of the organization or person to specific areas of competency. The center shall reopen the qualification process periodically to enable new organizations and persons to be added to the list.

NEW SECTION.  Sec. 10   By July 1, 2005, and biennially thereafter, the center shall report to the governor and the appropriate committees of the legislature on the number of organizations participating in the registry, the percentage of the state's emissions represented by the participants in the registry, and the reductions in greenhouse gas emissions achieved by those participants.

NEW SECTION.  Sec. 11   Sections 1 through 10 of this act constitute a new chapter in Title 70 RCW.