Goal Setting

Technical Resources

Tools for Inventorying and Reporting Emissions

EPA individually evaluates each proposed GHG reduction goal as described in the Goal Setting Fact Sheet (PDF) (2 pp, 211K, About PDF).
Climate Leaders Partners GHG reduction goals.
Partners achieved their GHG reduction goals.

In order to address the unique set of emissions sources and reduction opportunities that every company has, EPA offers its partners flexibility in goal setting within a specified timeline. Once Partners have completed an initial base year greenhouse gas (GHG) inventory, EPA works closely with them to set an individualized GHG reduction goal. This goal must be:

Corporate-wide (including at least all U.S. operations).
Based on the most recent base year for which data are available.
Achieved over five to 10 years.
Expressed as an absolute GHG reduction or as a decrease in GHG intensity.
Aggressive compared to the projected GHG performance for the Partner’s sector.

The goal setting timeline differs for significant emitters and low emitters. Significant emitters are expected to complete base year reporting within one year of joining the program and work with EPA in the subsequent year to establish a GHG emission reduction goal within two years of joining the program. Low emitters should submit base year reporting within six months of joining the program so a reduction goal can be set within one year.

All Partners include direct emissions from stationary and mobile fuel consumption, process emissions, fugitive emissions, and indirect emissions from electricity use in their goal. In addition, Climate Leaders Partners can expand their inventory boundaries to include any of the following optional activities in their reduction goal:

Employee commuting
Business travel
Product transport
International operations
Offset investments (e.g., sequestration, landfill methane)
Renewable energy

Goal Evaluation Considerations

Partners represent a diverse group of companies, including utilities, manufacturers, and service-oriented businesses. What EPA considers an aggressive goal might vary for different sectors and for different companies for a variety of reasons:

Sector Factors: Historically, GHG intensity tends to decrease over time in most sectors as equipment is replaced with newer, more efficient technologies. This trend can be rapid in sectors where capital stock turns over quickly, and much slower in traditional manufacturing sectors. The rate of intensity improvement can also be affected by the growth rate of the sector.
Company Factors: Partners within the same sector can have different GHG emissions sources and a wide range of reduction opportunities. In addition, some Partners have undertaken GHG reduction activities prior to joining Climate Leaders. These actions are taken into consideration when evaluating a Partner’s proposed goal.

Goal Evaluation Methodology

EPA individually evaluates each proposed GHG reduction goal through the following process:

The goal is evaluated against a projected benchmark GHG emissions improvement rate for the Partner’s sector. In cases where a Partner operates in multiple sectors, a weighted average is used. The sector benchmark is a combination of projected average energy intensity improvement and any projected process-related emissions intensity changes. EPA expects every goal to be significantly better than the projected benchmark performance for the Partner’s sector.

EPA also considers a Partner’s current emissions intensity when evaluating its GHG reduction goal. By comparing the Partner’s current performance to its sector, EPA recognizes that many companies have already made significant reductions in their GHG emissions or GHG intensity. Companies that are currently very efficient for their sector will not be expected to commit to a reduction goal that is as aggressive as companies that are less efficient than their sector average.

The Goal Proposal Template (MS Word) (3 pp, 206K) is a guide to setting a greenhouse gas reduction goal and submitting it for EPA approval.

Defining Projected Sector Benchmarks for GHG Emissions Performance

The first step in evaluating a Partner’s goal is to create a benchmark for comparison. EPA currently uses the following models to help develop an appropriate benchmark:

For commercial and industrial companies, EPA uses both the U.S. Department of Energy’s National Energy Modeling System and the Bureau of Labor Statistics’ forecast input/output tables for the U.S. economy to project benchmark energy intensity improvement by sector. In cases where emissions from industrial processes are a significant source of a Partner’s GHG inventory (such as cement or semiconductor manufacturing), EPA performs additional analysis based on sector-specific sources of process-related emissions data and projections. These data are then combined with the projected energy intensity improvement to develop a benchmark GHG emissions improvement rate for the Partner’s sector.
To project GHG emissions from electric generators, EPA uses the Integrated Planning Model (IPM) developed by ICF International Inc.

Determining the Type of Goal

EPA allows goals to be expressed as an absolute GHG emissions reduction or as a decrease in GHG intensity. Absolute GHG reduction goals compare total GHG emissions in the goal year to those in a base year. GHG intensity goals allow a company to account for increases or decreases in production over time. The ratio of GHG emissions to an appropriate normalizing factor becomes the Partner’s key performance indicator for measuring GHG intensity. Normalizing factors are typically measured in physical units (e.g., tons of steel) or economic units (e.g., value of shipments). Due to the large variability in economic metrics, Climate Leaders generally prefers metrics based on physical values, which track year-to-year changes in emissions intensity more accurately. For companies that produce a wide diversity of products, however, using an economic metric might be more appropriate. EPA offers technical assistance to help Partners choose a suitable key performance indicator.

Setting a "Carbon Neutral" Goal

In addition to absolute and intensity-based GHG reduction goals, EPA allows goals to be expressed as a commitment to be "carbon neutral" at the corporate level, which is a commitment to achieve and maintain net zero GHG emissions in a company's operations (rather than, e.g., products or events). Credible carbon neutral goals should include the following components:

1.) Develop a robust GHG inventory and inventory management plan in accordance with Climate Leaders guidance. In addition to calculating core U.S.-based corporate-wide direct and indirect emissions, Partners announcing a carbon neutral goal should expand their GHG inventory boundary to include at least one optional emissions source, such as employee commuting, employee business travel, product transport, or international operations.

2.) Achieve internal GHG reductions. Partners announcing a carbon neutral goal should commit to implementing internal GHG reduction measures, such as energy efficiency projects, onsite renewable energy, or process/fugitive emissions reductions that are aggressive compared to the expected GHG performance for the Partner’s sector. This commitment should be expressed as an internal GHG reduction goal and will be considered as part of the overall Climate Leaders goal evaluation process.

3.) Purchase green power, renewable energy certificates (RECs), and/or offsets. Purchasing Green Power/RECs is a credible strategy for Partners to reduce the emissions associated with their electricity use. Project-based reductions may then be used to offset the remaining emissions from direct, other indirect, and optional emissions sources. Partners should purchase green power, RECs, or offsets for the portion of the inventory that is not reduced through internal projects. The Partner's procedures and controls for procuring credible, high-quality green power, RECs, and offsets should be documented in the Partner's Inventory Management Plan.

In addition, a carbon neutral goal should meet the same basic criteria as all Climate Leaders goals (based on a recent base year, forward-looking, and aggressive for its sector) and will undergo the same rigorous individualized evaluation process.

EPA Offsets Guidance
Comparing Absolute and Intensity Targets

Reporting and Goal Tracking

Climate Leaders Partners report annual data on GHG emissions and external purchases and projects to EPA in order to document progress towards their reduction goal. Partners with a global goal report domestic and international emissions separately as well as reporting a global total. This system allows EPA to ensure that Partners are demonstrating leadership through achieving a portion of their GHG reductions in the United States.

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