The Icing on The Cake
Greenhouse Gas Inventories for the Mining Industry
By Zack Gorstein, Senior Analyst at Remote Energy Solutions
Active, aggressive energy management at mine sites has never been more important. As energy costs become higher and more volatile, and as future climate regulations threaten to boost energy prices even higher, energy reduction strategies can provide incredible value to mines. Process efficiencies, retrofits, and behavioral modifications can greatly reduce energy costs, usually at low or no cost. On-site renewable energy deployments – which leverage a mine’s standing infrastructure, existing permits and transmission access – can slash energy demand and even create new revenue streams through the sale of excess power to the grid.
Such energy opportunities tend to be excellent investments in and of themselves. But there is an additional benefit gained by accounting for these strategies when a mine employs a greenhouse gas (GHG) inventory. By creating a greenhouse gas inventory and an accompanying inventory management plan, a mine can leverage its energy reductions in the following ways.
- Understand carbon risk
- Prepare for future compliance
- Acquire early action credits
- Demonstrate environmental stewardship
- Influence policymaking
Each of these benefits will be discussed below in more detail. Yet, even if none of these benefits have any appeal to the reader, a greenhouse gas inventory still offers new insights into energy spending and usage, creating value through shedding light on new ways to cut energy costs. One environmental manager at a Western gold mine stated:“[A greenhouse gas inventory] gave us tremendous insights into our energy usage that we wouldn’t have had otherwise; It allows us to better manage our energy;”
For all these reasons, a greenhouse gas inventory can maximize the benefits of energy efficiency and renewable energy deployments at mine sites and truly be the "icing on the cake” of a mine’s energy management.
Understand your carbon risk. Although cap-and-trade legislation is currently stalled in the U.S. Senate, and the EP!’s new regulations affect stationary combustion sources – which for the most part are not mines – there are still numerous liabilities on the horizon. For instance, the Western Climate Initiative (WCI) will begin implementation of its cap and trade program in January of 2012. As seen in the chart below, California, Washington, New Mexico, Arizona, Utah, and Montana are participants in WCI while Nevada, Idaho, Wyoming and Colorado are observers in the program.
Like the EPA Tailoring rule set to go into effect January 2, 2011, the WCI program will regulate stationary combustion sources; thus, most mines are not liable for emissions from the power they purchase. Moreover, mobile fleets are currently not liable under WCI either. Instead, the distributors of fuel will be required to report. However, the language on mobile fleets is preliminary. It is quite possible that mines – as on-site users of fuel – will be required to report emissions generated from their fleets, either by the WCI program or by future state and / or regional rules. A greenhouse gas inventory for emissions will allow managers to clearly understand and appreciate their site’s monetary liability for the greenhouse gases they emit, based on different carbon pricing scenarios.
Prepare for future compliance. Part and parcel with helping a mine to understand its risk, a greenhouse gas inventory will prepare mine sites for compliance obligations. The Climate Registry, the predominant voluntary greenhouse gas inventory platform for North America, has greatly influenced all EPA climate regulations thus far as well as the WCI Cap and Trade program discussed in the previous section. Many western states or state departments are founding members of the Climate Registry, including the State of Colorado, the Washington Departments of Ecology and Transportation, the Idaho Department of Environmental Quality, the
Nevada Division of Environmental Protection, and nine California Departments; In addition, state mandatory programs such as Nevada’s are hosting their own mandatory programs with the Climate Registry. In other words, the voluntary inventory that a mine initiates today will result in a seamless transition to mandatory protocols and could even produce early action credits, to be discussed in the following section.
Acquire early action credits. Documenting any emissions reductions, whether from energy efficiency, renewable energy, or an integration of the two, could result in early action credits in any future market-based scheme. Although it is too early to say with any certainty whether federal rules will include retroactive crediting, there is substantial evidence in existing or soon-to-be implemented programs. For example, the Western Climate Initiative has a mechanism in place to document and allocate early reduction credits for entities that reduce their emissions before 2012. Those entities that have proactively inventoried their emissions, creating a solid verification and auditing trail, will enjoy this privilege to “bank” carbon credits against future liabilities; Mines can use this approach to fully leverage any energy management strategies conducted in the present towards future regulatory regimes.
Demonstrate environmental stewardship and influence policymaking. A greenhouse gas inventory is an excellent tool in community relations and stakeholder interactions. It provides tangible and powerful evidence not only of commitment to the environment, but also of the innovation and creativity used to minimize emissions while still maximizing productivity. As well, the seals of the Climate Registry – given based on emissions reductions – could greatly enhance a mine’s image; Finally, because the Climate Registry is a powerful shaper of climate policy in the United States, membership in the organization provides a chance to voice opinions and influence policies that would be most beneficial to a site, an organization, and the mining industry as a whole. Indeed, the act of creating an inventory would allow a mine to understand where its climate vulnerabilities are, which can then be mitigated with energy strategies as well as accounted for or even protected through positive policy creation.
It is clear, based on the benefits above that the relatively simple process of creating a greenhouse gas inventory is far worth the effort. Especially if a mine is taking any steps whatsoever to reduce energy costs or boost efficiencies, a greenhouse gas inventory is nothing short of essential.
Zack Gorstein is Senior Analyst at Remote Energy Solutions, a company that specializes in energy efficiency and renewable energy strategies for the mining industry. He works to bring low-cost, high-payback energy solutions to clients in all aspects of their operations.