EU ETS –Monitoring and Reporting Regulation No 601/2012

EPA Workshop 27 September 2012

Annette Prendergast

Content

Introduction

Operator Requirements

Information Sources and Guidance Documents

Content of the Monitoring and Reporting Regulation

Monitoring and Reporting Regulation in Detail -What's

New?

Introduction

Commission Regulation (EU) No 601/2012 of 21 June

2012 on the monitoring and reporting of greenhouse gas

emissions pursuant to Directive 2003/87/EC of the

European Parliament and of the Council (MRR) applies

from the 01 January 2013.

The MRR replaces the Monitoring and Reporting

Guidelines (MRG). Developed to enhance EU-wide

harmonisation of approaches.

Compared to the MRG the MRR clarifies areas of

confusion, includes requirements to encourage greater

consistency, efficiency and fairness, includes

simplifications to improve cost-effectiveness, reduces

duplication and clearly identifies responsibilities.

Operator Requirements

All Operators will be required to monitor and report

greenhouse gas emissions from permitted activities in

accordance with the MRR from 01 January 2013.

The submission of the 2012 AIER and the close out of

compliance for 2012 will be based on MRG and the

current operating system.

New EPA online system for GHG permitting, enforcement

of permits, monitoring and reporting of GHG emissions,

separate from Registry.

All Operators required to apply on-line for an updated

combined GHG permit and monitoring plan which

complies with MRR and Phase III requirements in

October/November.

Operator Requirements continued

All Operators should become familiar with the

requirements of the MRR, Guidance documents and

updates required to monitoring plan (MP).

A detailed review of current monitoring methodology

undertaken to identify changes to comply with MRR

On-site records updated particularly in relation to source

stream metering, sampling and analysis of source streams

Update uncertainty assessment and ensure evidence

available for each source stream and emission source

demonstrate compliance with uncertainty thresholds.

Update risk assessment to take account of MRR

Operator Requirements continued

Operator responsible for on-site procedures, update to

comply with MRR, where required. Summary included in

Monitoring Plan (MP).

New procedures required , where appropriate, for:

sampling and analysis,

calculation factors,

revision of appropriateness of sampling plan,

procedure to estimate stocks at beginning/end year,

procedure to keep track of measurement instruments,

procedure for regular evaluation of MP appropriateness,

procedure to regularly check for information on planned or

effective changes to the capacity, activity level and operation

of the installation & ensure the data is submitted to EPA by

31 December each year.

Information Sources

MRR link

MRR Guidance Documents

The EU Commission are developing the following guidance

documents (GD).

GD 1 General Guidance for installations

GD 3 Biomass issues in the EU ETS

GD 4 Guidance on Uncertainty Assessment

GD 5 Guidance on sampling and analysis

GD 6 Data Flow activities and control system.

MRR Chapters

I General Provisions

II Monitoring Plan

III Monitoring of Emissions of Stationary Installations

IV Monitoring of Emissions and Tonne-kilometre Data

Aviation

V Data Management and Control

VI Reporting Requirements

VII Information Technology

VIII Final Provisions

MRR Annexes

I Minimum content of the Monitoring Plan

II Tier thresholds/requirements for calculation-based

methodologies for installations

III Monitoring methodologies aviation

IV Activity specific monitoring methodologies installations

V Minimum tier requirements calculated based methodologies

VI Reference values calculation factors

VII Minimum frequency of analysis

VIII Measurement based methodologies

IX Minimum data and information to be retained

X Minimum content of annual reports

Monitoring Approaches MRR

All types of combinations of monitoring approaches now

allowed provided Operator demonstrates neither double

counting nor data gaps in emissions occur.

The following methodologies are available:

Calculation based approach standard methodology

Calculation based approach mass balance

Measurement based approaches

Methodology not based on tier (fall-back methodology)

Combinations of approaches.

Measurement based approaches CEMS

Provisions for measurement based methodologies have

been significantly updated.

CEMS now on equal footing with calculation based

approach.

Tiers use maximum permissible uncertainties for annual

average hourly emissions.

Tier 1 Tier 2 Tier 3 Tier 4

CO2

emission

sources

+/- 10% +/- 7.5% +/- 5% +/- 2.5%

CEMS

For major emission sources either emitting > 5,000t

CO2/year or more than 10% of total annual emissions ,

the highest tier is applied. For smaller emission sources

next lowest tier applied. Where unreasonable costs

demonstrated or not technically feasible, lower tier

(minimum of 1) may be applied.

The measurement based method corroborated using

calculation, but no tiers specified.

Biomass to be determined by calculation and subtracted

from total continuously monitored emissions.

Installations with low emissions simplified

Average emissions less than 25,000 t CO2(e)

Apply minimum of tier 1 activity data and calculation

factors (emission factor, NCV) unless higher accuracy

achievable without additional effort (no justification

regarding unreasonable cost required).

Not required to submit uncertainty assessment or risk

assessment as part of monitoring plan.

Exempted from reporting on improvements recommended

by the Verifier but must take them into consideration.

Can determine amount of fuel/material using invoices and

stock changes without uncertainty assessment.

Simplified evidence regarding competence where non

accredited laboratory used.

Source Streams Classification –New Art.19.(3)

Source streams still applicable to calculation methods.

New methodology to classify source streams as

combinations of calculation and measurement methods

now allowed.

Determine total of all monitored emissions by adding up

emissions determined from calculation or mass balance

for each source stream, emissions from each CEMS

emission source and fall back emissions as relevant at the

installation.

Sort source streams and emission sources from CEMS in

descending order to categorise source streams into major,

minor and de-minimis .

Change to De-minimis threshold Art.19.3(b)

de-minimis source streams are now classified separately

and are no longer part of minor source streams.

de-minimis source streams are source streams

corresponding to less than 1000 tonnes fossil CO2 per

year or to less than 2% up to maximum of 20,000 t CO2

whichever is highest.

Maximum combined for minor and de-minimis is now

12% or 12,0000 t CO2/ annum.

Unreasonable costs (Art.18)

Costs considered unreasonable where cost exceeds benefit.

Minimum threshold €2000/y or €500/y (low emissions).

Benefit calculated by multiplying improvement factor with

price of €20 per allowance and costs to include lifetime

depreciation.

Improvement factor can be difference between uncertainty

currently achieved and uncertainty of tier which would be

achieved multiplied by average annual emissions over 3 most

recent years for that source stream.

For improvements such as switch from default factors to

analysis, shortening calibration and maintenance etc

improvement factor 1% of average annual emissions of

source stream over 3 most recent years.

Selecting the correct Tier (Art.26) Calculation Approach

The Operator should apply the highest tier defined for

each parameter.

Source stream Category A Category B Category C

Major Annex V Highest Highest

Major, but technically

not feasible or

unreasonable costs

up to 2 tiers lower with

a minimum of tier 1

up to 2 tiers lower with

a minimum of tier 1

1 tier lower with a

minimum of tier 1

Major, but still

technically not

feasible or

unreasonable costs;

improvement plan

(max. 3 year

transition)

Minimum tier 1 Minimum tier 1 Minimum tier 1

Minor highest tier technically feasible and without unreasonable costs (minimum

tier 1)

De-minimis Conservative estimation, unless a defined tier is achievable without

additional effort

Selecting the correct tier (Art.26 and Art.36)

For oxidation and conversion factors, the operator may

apply tier 1 (100%) in all cases.

Where Agency allows use of EF t CO2/t or /cubic meter

due to justification on unreasonable cost or where at

least equivalent accuracy can be achieved using

such a factor the NCV may be determined using a

lower tier.

Calculation Approach quantity of fuel or /material (Art.27,Art.28,29)

Based on continual metering or deliveries and stock takes.

Where technically not feasible or unreasonable costs to

determine stocks by direct measurement estimation

method may be used e.g. documented procedures and

audited financial statements.

If stocks cannot be determined midnight 31 December

next most appropriate date chosen but data must be

reconciled for calendar year.

For fuel/materials metering Operator chooses his own

instruments or supplier instruments.

Preference in MRR for own instruments.

Quantity of Fuel or Material Art.(27, 28, 29)

If Operator choses supplier instruments must provide

evidence accompanied by simplified uncertainty

assessment that those instruments allow compliance with

at least the same tier, give more reliable results and are

less prone to control risks than his own instruments.

Where invoices are used to determine fuel or material

quantity Operator must confirm that trade partners are

independent.

Uncertainty

Article 12(1) MRR requires Operator to submit the

following where relevant with the Monitoring Plan.

Evidence (manufacturers specifications and calculations)

for compliance with uncertainty thresholds for activity data.

Evidence for compliance with uncertainty required for

calculation factors if 1/3 activity data uncertainty rule

applied to sample frequency.

Evidence for compliance with uncertainty requirements for

measurement based methods if applied

Uncertainty assessment for total emissions where Fall

Back methodology applied.

Uncertainty (Art.28) Measurement Instrument Operator Control

Art. 47(4) exempts operators with low emissions from

submitting uncertainty assessment, including the

uncertainty for determining stock changes.

For Operator measurement instruments uncertainty

assessment conducted to ensure uncertainty threshold of

relevant tier met. Submit to EPA with each new or

changed MP.

Once per year and after each calibration, calibration

results multiplied by conservative adjustment factor to

determine uncertainty in service and compared to

uncertainty threshold.

Uncertainty of Operator Instruments

Assessment includes specified uncertainty of instrument,

calibration uncertainty and any additional uncertainty

associated with instrument use in practice.

Stock change uncertainty included where storage facility

capable of containing at least 5% of annual quantity

fuel/material.

Simplify assessment use, where available, maximum

permissible error in service (MPES) (where instrument

installed in appropriate environment) or where lower

calibration uncertainty multiplied by conservative

adjustment factor.

Where instrument subject to legal metrological control can

use legally specified MPES without further evidence.

Uncertainty (Art.29) Third Party Control of Measurement

Where instrument subject to legal metrological control can

use legally specified MPES for the commercial transaction

without further evidence.

Where those requirements do not meet tier requirements

Operator shall obtain evidence on the applicable

uncertainty from the third party responsible for the

measurement instrument (this could include a detailed

uncertainty assessment).

Detailed Guidance note on Uncertainty Assessment being

drafted and will include calculated examples.

Biomass-Sustainability Criteria

Definition of Biomass in MRR now aligned with definition in RES Directive (Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives

2001/77/EC and 2003/30/EC)

As Biomass emissions are “zero rated” in EU ETS this constitutes a “support scheme” within the meaning of RES Directive and must be justified by means of application of Sustainability Criteria

Sustainability Criteria must be applied to bioliquids but as yet it is not applicable to solid biomass or biogas (other than for transport)

Biomass-Sustainability Criteria

Implication

The burden of proof concerning a bioliquid meeting the

requisite sustainability criteria remains with the EU ETS

Operator. Where such status cannot be confirmed to the

satisfaction of the competent authority, the bioliquid will

have to be treated as a fossil source stream and not zero-

rated.

The Verifier will also assess during verification if evidence

for meeting the sustainability criteria is sufficient.

Biomass-Source Streams

Article 38 of MRR

Operator may determine activity data of biomass without using tiers and providing analytical evidence regarding biomass content where the source stream is exclusively biomass and not contaminated with any other fuel or material.

The Emission Factor of biomass is zero. The EF of a mixed fuel or material shall be calculated & reported as the preliminary emission factor multiplied by the fossil fraction of the fuel or material.

Where biomass fraction of mixed fuel or material is equal or higher than 97% or where it qualifies as a de-minimis source stream, The CA may allow the operator to apply no –tier methodologies.

Biomass – Mixed Fuels and Materials

Art.39 of MRR sets out hierarchical approach for determining

Biomass fraction of Mixed Fuel/Material:

Determination by Analyses on the basis of relevant standard.

(only if approved by CA)

When analyses not technically feasible or would incur

unreasonable costs, operator can use standard emissions

factors and biomass fraction values for mixed fuels and

estimation methods where available and to be published by

Commission.

In absence of standard factor the Operator shall either

assume absence of biomass share (conservative

assumption of whole material as fossil) or

submit an estimation method to CA for approval e.g.

mass balance

Data flow and Control (Art. 57, Art.58)

Operator must establish, document, implement and maintain data flow

activities for monitoring and reporting of emissions.

The Operator must establish an effective control system consisting of:

A risk assessment, and

Control activities for mitigating risks identified

In carrying out a risk assessment each data flow activity is analysed for

risks to misstatements ( errors, omissions, misrepresentations) and

potential reasons for misstatements. Measures are identified to reduce

risks.

Measures identified are implemented and the risk assessment re-

evaluated until risks reduced to low level to enable production of AIER

free from, as a minimum, material misstatements, or error free.

Control activities included as written procedures and referenced in MP.

Results of risk assessment submitted as attachment to MP.

Monitoring Plan (MP) Updates Art.14, Art.15,Art.16

Operator regularly checks validity of MP and whether it can be

improved.

Operator modifies plan in situations detailed Art. 14.2 (e.g. new

emissions, incorrect data, verifier recommendations)

Any proposals to modify MP submitted to EPA.

Significant modifications as specified in Art.15 (e.g. changes to

emission sources, tier level source streams) subject to EPA

approval.

Prior to approval monitoring may be carried out using changes

which are not significant or where original plan leads to

incomplete data.

Operator required to keep detailed records of all modifications to

the MP.

The Improvement Principle Art.69

Improvement report to be submitted by 30 June, every 4

years for category A Installation every 2 years for category

B installation and every year for Category C installation

where:

Highest tier as per Art. 26.1(calculation) Art. 41.1. (CEMS)

not applied.

Fall-Back methodology applied

Report to include justification based on unreasonable

costs or not technically feasible. Where these no longer

apply proposals and timeframe for implementing

appropriate measures to be included in report.

The Improvement Principle Art. 69

Where verification report lists outstanding non

conformance or recommendations for improvement an

improvement report required by 30 June by all Operators

except small emitters. The report should detail how and

when improvements implemented and non conformance

rectified.

Where improvements do not lead to improved monitoring

methodology Operator justification required.

Where improvements incur unreasonable costs evidence

of the unreasonable nature to be provided.

Determination of Emissions by the CA Art. 70

The CA shall make a conservative estimate of emissions

where:

No verified AIER submitted by 31 March deadline

The verified report is in non-compliance with MRR

The emissions report has not been verified in accordance

with AVR.

Where the Verifier states outstanding non-material

misstatements not corrected by the Operator, the CA

makes a conservative estimate of emissions where

appropriate. The CA requires Operator to correct the

AIER and arrange for re-verification.

Thank-you for your attention.

Annette Prendergast