A conflicting conundrum

Nick Marshall, global product manager at BSI Management Systems, explains the problems of verifying emissions for the upcoming European trading scheme

The recent publication of certain Member States’ National Allocation Plans (NAPs) for the EU emissions trading scheme has highlighted many issues for operators of large CO2-emitting
installations within the Union. None more so than the mandatory requirement to have annual emissions verified by an independent, accredited third-party organisation.

This process has long been championed as the best way of ensuring transparency in emissions trading markets. The UK government has gone one step further to ensure this transparency, requiring verification of the baseline data that forms the basis of NAP allocations. This has established two separate regulatory regimes for UK operators and a limited timeframe for the dust to settle and the work to begin.

It is important to remember that baseline verifications, while mandated by the government, are not mandated in the EU Emissions Trading Directive, but will have an impact upon the allowances to be allocated to the installations. Therefore, operators are not expected to comply with the full regulations on monitoring, reporting and verification (MR&V) as drafted by the EU thus far.

They will be thankful for this, as applying the strict EU MR&V Guidelines to historical data going back as far as 1998 is no mean feat. And to make life even more difficult, the deadline for achieving the verification of the baseline data of the 1,000-plus installations covered by the NAP is the end of August 2004. DEFRA is therefore aiming for verifiers to take a ‘light touch’ approach to these verification projects.

This has resulted in a great deal of confusion and differing interpretations of what light touch means, but more details are emerging as to DEFRA’s intentions. These now appear more consistent with the desire for greater accuracy in reporting for the major CO2 emitters – those that produce more than 500,000t of CO2 annually.

Focusing the magnifying glass

It has become increasingly obvious that regulators across the EU are focusing the magnifying glass on the largest emitters. The tiers of accuracy highlighted in the MR&V Guidelines are a clear representation of this, as the highest accuracy is being sought from the largest installations.

This has been equally true of the baseline verifications in the UK. A likely split will occur between those installations with a CO2 emissions profile greater than 500kt/year, those between 50 and 500kt and those below the 50kt level, with the most stringent requirement being imposed upon the first group. In terms of material reporting of the national emissions inventory, this would seem to make sense.
The UK’s baseline verifications will aim to provide DEFRA with the confidence that the reported emissions data submissions, which formed the basis of the NAP calculations, are in fact accurate and free from error, and that, within a sector, one installation is not receiving a disproportionate allocation by over-reporting emissions.

It is still not clear which other Member States will require baselines to be verified. Germany intends to utilise independent verifications and Ireland will be employing the Environmental Protection Agency to undertake verifications, but the government of the Netherlands appears happy that its own checking and previous audits are sufficient.

Another burden on installations

The use of third party verifiers is a burden on installations, although most sectors are supportive and moves have been made to reduce the impact on operators and enable verification to occur within the allotted timeframe.

A common approach to minimise the cost of verification is through ‘grouping’ installations and allowing the verifier to sample individual sites within that group according to a strict risk analysis procedure. For example, a large power company may have one or two very large power plants, with a series of back-up generators all less than 50kt. If data is collected in an efficient data management system and a common environmental management system has been rolled out across the group, the verifier may be confident that individual sites’ data is accurate without the need for a site visit. In this respect, the smaller sites may not require an onsite verification and can be sampled by reviewing the evidence packs and data held at company HQ, owing to their relatively immaterial impact on the emissions total.

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