Improving performance, reducing risk

Carbon Monitoring, Reporting & Verification (MRV)

The Verifier’s Perspective

Content

– MRV In the EU ETS, the role of the verifier

– MRV in the EU ETS, the role of

operators

– Lessons Learnt

LRQA’s experience with MRV – Our credentials

Assessment, Validation, Verification and Training against:

– Cap-and-trade schemes and offset mechanisms:

– UK ETS

– EU ETS (incl Aviation)

– California ARB

– Tokyo Metropolitan Government ETS

– Japanese Voluntary ETS

– Korean GHG & Energy Target

Management System

– Clean Development Mechanism

– Gold Standard

– VCS

– Climate Action Reserve

– Inventories & product footprints:

– 14064

– GHG Protocol

– California Climate Action Registry

– The Climate Registry

– PAS 2050

– Japanese Carbon Footprint of Products Scheme

LRQA’s experience with MRV – Our credentials

– Technical committees that improve and develop standards including ISO, IETA, WRI, WBCSD and the ETG

– Provided the verifiers perspective for the EU ETS Commission Decision on Monitoring and Reporting

– Part of the European Co-operation for Accreditation drafting accreditation requirements

for verifiers

– Represented UK on development of ISO 14064 standards for GHG validation, verification and monitoring

– Member of Japan Operational Entities Association (JOEA)

– One of only five strategic verification partners of the CDP (formerly the Carbon Disclosure Project)

– Vice President of the Association of DOE’s under the CDM – DIA

– On the Board of the International Emissions Trading Association (IETA)

Improving performance, reducing risk

MRV in the EU ETS

The Role of the Verifier

What is MRV?

– MRV is the process by which the GHG data is

– Monitored,

– Reported and

– Verified.

– Data Monitoring includes: data acquisition, analysis, processing, recording

and calculation – completed by the operator

– Reporting involves the final facts and figures as reported to the regulator by the operator

– Verification is the independent and accredited process of checking that

the data and information reported has been monitored and reported in accordance with the requirements and is materially correct

Verification

– An independent and accredited methodology to address the

reliability, credibility and accuracy of monitoring systems and the

reported data and information relating to emissions

– To provide trust that the report is a faithful representation and is

reliable for all users

– An effective and reliable tool upon which an operator can work to improve performance in M&R emissions

Independence

– Independent and impartial in carrying out the verification activities

– Verifiers can not also:

– Be operators

– Own operators

– Have any relations with operators that may affect their independence

and impartiality

– Trade allowances

– Conduct verification where this creates a conflict of interest, e.g.

where:

– Consultancy services or technical assistance for monitoring and

reporting have been provided

Requirements to Safeguard Independence

– Verifiers are required to

establish, document, implement

and maintain systems to ensure

continuous impartiality and

independence of:

– the verifier (the

organisation),

– other parts of the same legal

entity, and

– all personnel and contractors

involved in the verification

process.

Accreditation

– An attestation by a national accreditation body that a verifier meets the

requirements set to carry out the verification of an operator’s report in

accordance with the Regulation.

– Accredited by industrial sector

– Accredited against:

– EU Regulation 600/2012, on the verification and accreditation of

verifiers;

– ISO 14065; and

– The European Cooperation for Accreditation document - EA 6/03.

EA 6/03 – General Requirements

– Stipulates:

– Scope, role and depth of verification

– Organisational requirements (systems required) of the verification

body

– Stages of the verification process

– Reporting requirements

– Competence of verifiers, technical reviewers and management

EA 6/03 - Competence of Verifiers

– Technical Sector Competence

– Technical ability to manage the EU ETS verification work for the accredited sectors.

– Including: unique industry process parameters, testing techniques, measuring/monitoring arrangements, calculation methodologies and relevant legislative requirements etc.

– Generic Competence

– EUETS Regulations for M&R, V&A

– National Legislation

– Data and Information Auditing

– Verification Process

Verification Body Systems

– To ensure our accreditations and

the quality assurance of our

services, we maintain:

– Our quality management

system (forms, procedures,

processes, records)

– Technical reviews

– Internal audits (offices)

– Witnessed visits (verifiers in

the field)

– Update briefings and

refresher training of staff

(verifiers, technical reviewers, managers,

administrators)

Improving performance, reducing risk

MRV in the EU ETS

The Role of the Operator

MRV - Operator requirements

– Apply for a permit & monitoring plan

– Monitor their emissions data in accordance with the Regulations and their monitoring plan

– Submit a verified annual emission report to the Regulator by 31 March each year

– Using the standard template

– Provide the verifier with access to all required information

– Retain their relevant records for a minimum of 10 years

EU ETS MRV Process

Importance of operations

Operations is the centre of gravity for monitoring and

reporting

&

the platform for successful verification

Operational Challenges

– Focussing on the data gathering

and compilation process, in addition to the report

– Ensuring their management

systems are up-to-date to keep

up with changes to reporting requirements & staff turnover

– Ensuring their management

systems cover their software and

understand the calculations and formula contained within

– Ensuring records are retained to

facilitate verification

The Verifier : Operator Relationship

Myth

– The verifier works alone

– The verifier reports all issues

identified at the end of the

process

– Errors found will lead to a ‘not

verified’ opinion

Fact

– The verifier will work with the

operator to verify the data and

reports

– Issues identified are reported as

soon as they are identified

– The verifier will identify errors &

the operator must correct them where possible

Improving performance, reducing risk

MRV in the EU ETS

Lessons Learnt

Lessons Learnt

Overview Observations

– Emissions trading:

– Is an effective mechanism to reduce GHG emissions

– Enables industry and operators to decide on the most cost effective means of emissions reduction for them

– Provides a financial incentive to do better

– Is dependent on accurate monitoring and reporting, and data quality

– Credibility and confidence in the integrity and fairness of the scheme is enhanced by the independent verification process

Lessons Learnt

Scheme Design & Implementation

– Started off small and grew to incorporate more sectors and gases,

based on experience

– Importance of accurately setting an overall emissions cap and

allocating emission allowances

– Importance of effective approval of permits and monitoring plans

– The benefits of electronic, standard application, permitting and reporting systems

– Importance of effective, competent and independent verification

and accreditation

Lessons Learnt

Consultation & Communication

– Strong coordination/communications

between Government, Regulators,

Verifiers, Accreditors and Industry:

– Emissions Trading Group

– European Co-operation for

Accreditation

– Public consultations on guidance documents

– Workshops to introduce new requirements/documents

– Regulator road-shows

– Helpdesks / websites for queries and guidance.

Lessons Learnt

Good Guidance Documents

– Good guidance enables good

MRV and resulting data that can

be trusted

– Guidance is needed to address the following areas:

– Sectoral scope for inclusion

– Monitoring requirements

– Reporting requirements

– Verification requirements

– Accreditation requirements for verifiers

Lessons Learnt

Operator Preparation

– Smooth MRV processes require:

– Preparedness

– Familiarisation and understanding of the requirements and guidance documents

– The identification of responsible people/teams

– Attendance at training events, workshops, road shows

– Liaison with others in the industry, to share experiences and knowledge

– Establishment of MRV as part of your business management systems

– Engagement with a verifier early – in order to identify and remedy any gaps/issues prior to deadlines

– Consideration of split verification over the year (quarterly or 6 monthly)

Lessons Learnt

Typical Issues Identified at Verification

– Missing sources & fuels (e.g.

back-up power generation,

back-up fuels)

– Inconsistent/incorrect calculation methods

– Greater metering uncertainty

than required

– Calculation mistakes (e.g.

conversion errors, incorrect emission factors)

– Typing errors (e.g. during

manual transposition)

Improving performance, reducing risk

Refreshments and Q&A

Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates.

Copyright © Lloyd’s Register Quality Assurance Limited 2013. A member of the Lloyd’s Register group.

Improving performance, reducing risk

Madlen King

Global Head of Climate Change & Sustainability

E madlen.king@lrqa.com

@madlenking