verification report for: 1871for facilities: description of compliance or baseline report,...

Cargill High River Fluidized Bed Boiler Offset Project / Project # 9327-1871 February 2019

Verification Report for: Cargill High River Fluidized Bed Boiler Offset Project / Project # 9327-

1871

Proponent: Cargill Ltd.

Prepared by: Keystone Environmental Ltd.

Prepared for:

Cargill Ltd.

Version: Final

Date: February 28, 2019


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Table of Contents 1.0 Summary – Offset Project .................................................................................... 3 2.0 Introduction ....................................................................................................... 6

2.1 Objective ........................................................................................................... 8 2.2 Scope ................................................................................................................ 8 2.3 Level of Assurance ............................................................................................ 10 2.4 Criteria ............................................................................................................ 10 2.5 Materiality ........................................................................................................ 10

3.0 Methodology..................................................................................................... 10 3.1 Procedures ....................................................................................................... 11 3.2 Team .............................................................................................................. 14 3.3 Schedule .......................................................................................................... 15

4.0 Results ............................................................................................................ 15 4.1 Assessment of Internal Data Management and Controls .......................................... 16 4.2 Assessment of GHG Data and Information ............................................................ 17 4.3 Assessment against Criteria ................................................................................ 19 4.4 Evaluation of the GHG Assertion .......................................................................... 21 4.5 Summary of Findings ......................................................................................... 24 4.6 Opportunity for Improvement ............................................................................. 27

5.0 Closure ............................................................................................................ 27 5.1 Verification Statement ....................................................................................... 27 5.2 Limitation of Liability ......................................................................................... 27 5.3 Confirmations ................................................................................................... 28

6.0 References ....................................................................................................... 28 Appendix A: Final Verification Plan and Sampling Plan ........................................................... 29 Appendix B: Statement of Qualifications .............................................................................. 31 Appendix C: Findings and Issues ........................................................................................ 34 Appendix D: Statement of Verification ................................................................................ 38 Appendix E: Conflict of Interest Checklist ............................................................................ 41 Appendix F: Keystone Environmental Ltd. General Terms and Conditions for Services ................ 44

List of Tables Table 1: Verification Scope .................................................................................................. 9 Table 2: Risk Assessment .................................................................................................. 12 Table 3: Team Qualifications ............................................................................................. 14 Table 4: Schedule of Verification Activities ........................................................................... 15 Table 5: Offset Criteria Assessment .................................................................................... 20 Table 6: Summary of Findings ........................................................................................... 25 Table 7: Detailed Findings and Issues Log ........................................................................... 35

Instructions are in italics throughout and should not be deleted when report is complete. Some instructions are specific to the verification of facilities and for offset projects. The document is not restricted but do not alter the format, the layout, the headings or the overall ‘look and feel’ of the document. If it is more useful to paste information outside of the text box, use the empty line just below the text box to drop text or tables int. This should not change the headings or the formats. There are several dropdown boxes in the document that must be completed.

• Complete report in Verdana 10pt font (no italics). • After the report is complete, right click the table of contents and ‘update field’ which will

update page numbers in Table of Contents. • If an instruction only applies to facilities or only applies to offsets indicate ‘not applicable’. • Appendix F is available for additional tables, diagrams etc.


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1.0 Summary – Offset Project

Item Description

Project Title

Enter project title (must match the registry project title)

Cargill High River Fluidized Bed Boiler Offset Project

Project Description

Provide a brief description of the project and baseline conditions.

The Project consists of a fluidized bed boiler (FBB) fuelled by food processing plant waste to produce steam for process heating and electricity generation for internal plant use. The Project displaces a portion of the natural gas fuel combusted for process steam requirements and a portion of the grid-sourced electricity.

Project Location

Include the latitude and longitude for each unique location or installation. Include legal land location if applicable and other information identifying the unique location.

Latitude: 50°37'27.9"N

Longitude: 113°52'41.1"W

LSD: 12-19-19-28 W4M

The Project is located at the Cargill High River Beef Processing Plant in the northwest quarter of Section 19 (Township Road 19, and Range Road 28) and 5 km north of the town of High River, Alberta.

Project Start Date

Enter the project start date. November 1, 2012

Offset Start Date

Enter the start date for offset credit generation.

May 9, 2013

Date of Offset Project Plan: December 2014 (updated April 19, 2016)

Offset Crediting Period

Enter the offset crediting period, including the offset start date. Include day, month year.

May 9, 2013 to May 8, 2021

Reporting Period

Enter the reporting period being verified.

January 1 – December 31, 2018

GHG Assertion (Actual Emission Reductions/Sequestration Achieved)

Enter the actual emissions reductions / sequestration for the reporting period. Enter serial numbers if available.

Baseline : 41,836 tonnes CO2e in 2018

Project : 10,568 tonnes CO2e in 2018

Emission Reductions: 31,268 tonnes CO2e


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Protocol

Indicate the relevant protocol (if applicable)

Quantification Protocol for Energy Generation from the Combustion of Biomass Waste, version 2.0, April 2014

Ownership

Enter offset project owner.

The Project is owned and operated by Cargill Ltd.

Project Activity

State how the project activity meets the eligibility requirements

The Project used bovine by-products as a biomass fuel source to the FBB displacing natural gas demands and electricity sourced from the commercial grid. Therefore, the Project directly avoided the release of non-biogenic CO2, CH4, and N2O into the atmosphere as a result of combustion processes. In the absence of the Project, the specified risk materials (SRMs) would have continued to be sent to a landfill for disposal where varying degrees of anaerobic decomposition may take place and result in the release of non-biogenic CH4.

The Project activity meets the eligibility criteria listed in the Quantification Protocol for Energy Generation from the Combustion of Biomass Waste as described in Section 2.2 of the Offset Project Report.

This project meets the requirements for offset eligibility as outlined in section 16 (1) of the Carbon Competitiveness Incentive Regulation. In particular: 1. The project occurs in Alberta: as outlined above; 2. The project results from actions not otherwise

required by law and beyond business as usual and sector common practices: Offsets being claimed under this project originate from a voluntary action. The project activity (i.e. displacement of fossil fuel and avoided landfill methane generation) occurs at a non- regulated facility and is not required by law. The protocol uses a government approved quantification protocol;

3. The project results from actions taken on or after January 1, 2002;

4. The project reductions/removals are real, demonstrable, quantifiable and verifiable: the project is creating real reductions that are not a result of shutdown, cessation of activity or drop in production levels. The emission reductions are demonstrable, quantifiable and verifiable as outlined in the project report;

5. The project has clearly established ownership: All GHG emission reductions generated by the Project from the implementation of the project at the project site (High River Beef Processing Plant


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in Alberta) are owned solely by Cargill Meat Solutions, a division of Cargill Ltd. Credits created from the specified reduction activity have not been created, recorded or registered in more than one trading registry for the same time period.

6. The project will be counted once for compliance purposes: The project credits will be registered with the Alberta Emissions Offset Registry (AEOR) which tracks the creation, sale and retirement of credits. Credits created from the specified reduction activity have not been, and will not be, created, recorded or registered in more than one trading registry for the same time period.

Project Contact

Enter contact name, company name, mailing address, phone number and email address.

Thomas D’Amato, Process Engineer

472 Ave & Hwy 2A North High River, AB T1V 1P4

(403) 652-4688 ext 216

Thomas_D'[email protected]

Verifier

Verifier name, verifier’s company name, address, phone number email etc.

Judy Tai, M.A.Sc., P.Eng.: Lead Verifier

Keystone Environmental Ltd. #320-4400 Dominion Street Burnaby, BC V5G 4G3

604-430-0671 [email protected]

Verification Team Members

Include verification team members, roles, training, training dates and qualifications.

Nelson Lee, M.A.Sc., P.Eng., GHG-V, Peer Reviewer, Green Sky Sustainability Consulting Inc.

ISO 14063 trained in 2006, over 10 years verification experience of Alberta offset projects

Kareena Gill, M.Eng., EIT., Team Member

Junior engineer with one year of verification experience of Alberta offset projects

Designated Signing Authority

Enter the designated signing authority for this verification.

Judy Tai, M.A.Sc., P.Eng.

ISO 14064-3 trained in 2010, 10 years of verification experience

Verification Strategy

Describe the verification strategy used for the verification, including rationale for the approach. Note, if a controls reliance is used, provide justification for how the project is able to support this approach.

The verification strategy used in this verification includes a combination of substantive procedures and test of controls approach. Keystone Environmental relies predominantly on substantive procedures during the verification, with a focus on raw data and evidence gathered during the sampling procedures. The verification strategy


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is established based on the result of the risk assessment process.

The following was conducted to substantiate the GHG emission for 2018:

Confirmation of the physical sources and sinks at the Facility during site visit on January 8, 2019.

Various processes and data management procedures were confirmed during the site visit and interviews.

Statistical, strategic, and systematic sampling (or a combination thereof) was conducted on primary documentation (i.e., third party documentation, invoices) to confirm the processes resulting in GHG emissions for 2018

2.0 Introduction Provide an introduction to the facility or project, the verification, and the background.

For Offset Project: summary of offset project baseline, changes to the baseline since project start date and summary of changes at the project since the offset project start date or baseline period.

For Facilities: Description of compliance or baseline report, facility/project boundary, facility identification information, GHG historical performance, summary of changes since the baseline or since the last compliance report.

Keystone Environmental Limited (Keystone Environmental) was retained by Blue Source Canada ULC (Blue Source) to verify greenhouse gas (GHG) emission reductions generated by the Cargill High River Fluidized Bed Boiler Offset Project (the Project) for the 2018 vintage year. The Project was verified at a reasonable level of assurance against the Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (version 2.0, April 2014). Blue Source prepared the offset project documentation and GHG Emission Reduction Assertion. Cargill Meat Solutions, a division of Cargill Ltd. (Cargill) is the project proponent and the owner of the project.

1. Summary of Offset Project Baseline

The baseline condition for this project is the use of natural gas and grid-source electricity at Cargill High River beef processing plant (the Facility) to produce steam for process heating and electricity generation of internal use. The baseline condition also includes the specified risk material (SRMs) being sent to a licensed landfill generating methane gas.

A dynamic baseline is used as specified in the Quantification Protocol (Version 2.0).

2. Project Conditions

Cargill Meat Solutions (Cargill) has implemented a fluidized bed boiler (FBB), fuelled by biomass sourced from within the Cargill High River Beef Processing Plant. Biomass for the FBB includes, but is not be limited to compostable plant wastes, meat, pen manure, paunch, dissolved air flotation grit, tri-canter solids, and specified risk materials (SRM). As a result, the FBB displaces a portion of the natural gas used as fuel for process steam requirements and fossil fuel generated electricity through on-site cogeneration at the Cargill High River Beef


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Processing Plant. The opportunity for generating carbon offsets arises from direct reductions of GHG emissions by displacing fossil fuel usage with biomass and diverting methane gas from landfill.

3. Project Variance

Changes to the original Offset Project Plan, variance from the SGER, and variance from the Protocol were made for the 2018 credit period.

i) During the 2018 reporting period the turbine in the fluidized bed boiler was down for maintenance between October 28, 2018 to January 21, 2019. During that time period no electricity was generated thus reducing emissions in source B6.

ii) In June and July of 2018, less electricity than usual was produced because of a lower number of cattle processed in the summer months than in rest of the year. Therefore, there is less raw material available for the fluidized bed boiler to incinerate and emissions in source B6 are reduced.

iii) While the protocol was updated since June 2018 in alignment with the carbon levy requirement under the CCIR, the project is allowed to use the existing protocol for the 2018 vintage year. The project will be required to follow the new Protocol in 2019 and to account for levied and non-levied emission reductions from fuel types impacted by the carbon levy, and levied emissions will be excluded from the greenhouse gas reduction assertion.

The following changes to the offset project were made in previous reporting periods and remain valid to the current reporting period.

iv) The project experienced minor communication errors with the low-pressure steam meter (tag FT-5000) for 12% of total time, between the meter and SCADA system. These errors were removed from the summation, and metered volume was assumed to be zero for that day. This is a more conservative approach than the method listed in the OPP.

v) Two additional source emissions were added to the quantification methodology captured under the source P12 – Facility Operations. These source emissions are the combustion emissions associated with the weekly testing of the emergency diesel generator and the electricity consumption emissions of two screw pumps located in the basement of the main facility used to pump the paunch to the FBB loading area. The diesel generator model is DS500, and while no specifications could be found on the engine, a genset package for SDS500 by engine manufacturer MTU Onsite Energy was used to approximate the fuel consumption at 100% power rating of 91 l/hr. The two screw pumps have a power rating of 50 hp and are assumed to run 100% of the year, data provided by Thomas D’Amato, Process Engineer. This approach is conservative.

vi) The fuel consumption to transport the biomass from site to landfill in the baseline is not directly measured or reconciled based upon storage volume. As source emission B1 was an upstream emission that was not directly controlled by the Proponent, measured data is unavailable. As such, the baseline source emission B1 is calculated by reconciling the trailer capacity, the measured mass of biomass, trip distance and fuel efficiency of trucks.


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vii) A biogas pipeline was tied into the FBB overbed burner to increase the capacity of the plant to combust the biogas generation from the on-site wastewater treatment plant. The FBB began to receive biogas on May 14, 2016 mainly on weekends, experiencing a slow ramp up. Combustion emissions and natural gas offset from the biogas usage are quantified in source P15 of the FBB offset project. The avoided venting emissions from the biogas were quantified in the methane generation waste water offset project, prior to crediting period completion.

viii) Dewatered activated sludge is no longer used in the FBB as the energy content is too low. This change has no impact on the project.

ix) In 2017, energy associated with the boiler feed water input was included in the quantification of sources B18 and P15. There is also a new data collection file used for the Project data sources, titled FBB P&L Tracking Spreadsheet. This file is updated weekly by personnel at the FBB, from the raw data files. No other changes were made to the data collection process, record keeping, or emission factors during this reporting period.

x) Onsite project energy requirements include diesel, natural gas, biogas and a small amount of propane. Natural and biogas are supplementary fuel for the combustor when the biomass inventory is low or during start up. Diesel is used for diesel truck transporting biomass and the emergency generator.

4. Verification Acceptance

Verification acceptance was conducted during the proposal process, prior to signing the verification contract. Keystone Environmental completed an internal conflict of interest checklist to evaluate threats or conflicts to the independence of the verification team to the client. A copy of the signed Statement of Qualification for the verification team is included in Appendix B of this report. A copy of the signed Conflict of Interest Checklist is included in Appendix E of this report.

2.1 Objective Describe the objective of the verification (should include expressing an opinion).

The objective of the verification is to provide an independent opinion to a reasonable level of assurance to the Alberta Climate Change Office (ACCO) that the GHG Emission Reduction Assertion, as stated in the Offset Project Report, is correct and presented fairly in accordance with the Carbon Competitiveness Incentive Regulation (CCIR) and the Alberta offset system program criteria.

2.2 Scope Define the scope in terms of: geographical, organizational, activities and processes, sources, sinks, categories and greenhouse gases included (considering the completeness of the inventory), GHG assertion time period.

For offset verifications: include the serial range (i.e. XXXX-XXXX-XXX-XXX-XXX-XXX to XXXX-XXXX-XXX-XXX-XXX-XXX) if assigned (i.e. in the case of government verification a serial range will be available, otherwise not applicable).


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For Facilities: ensure all specified gases and source categories are evaluated. Include list of negligible emission sources and justification for Emission Performance Credits (EPCs). Include listing of end products.

The scope of the verification is the GHG Emission Reduction Assertion presented in the Offset Project Report “Cargill High River Fluidized Bed Boiler Offset Project,” dated February 28, 2019 for the period of January 1, 2018 to December 31, 2018. The verification is conducted to a reasonable level of assurance, with a materiality threshold of 5%.

Table 1: Verification Scope

Item Cargill Meat Processing Plant

Physical Boundary



LSD: 12-19-19-28 W4M

The Project is located at the Cargill High River Beef Processing Plant in the northwest quarter of Section 19 (Township Road 19, and Range Road 28) and 5 km north of the town of High River, Alberta.

Project Proponent Cargill Ltd.

Activities and Processes Meat processing, biomass combustion, thermal energy and electricity generation, on site transportation.

Types of Greenhouse Gases Reduced

Carbon Dioxide (CO2) Methane (CH4) Nitrous Oxide (N2O)

Source Categories

Biomass combustion source On-site transportation sources

Biogass combustion

Natural gas combustion

Relevant GHG Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O)

Offset Project Period January 1, 2018 to December 31, 2018

Key Dates First Year Commercial Operation: 2012 Site Visit: January 10, 2019 Report Date: February 28, 2019

Emission Reduction Credits Claimed

31,268 tonnes CO2e CO2:19,045 tonnes CO2e CH4: 14,266 tonnes CO2e N2O: -440 tonnes CO2e CO2e: -1,603 tonnes CO2e


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2.3 Level of Assurance

The verification was conducted to a reasonable level of assurance.

Choose type of verification from the dropdown box above.

Provide explanation on level of assurance.

The verification was conducted to a reasonable level of assurance, satisfying requirements in CCIR.

2.4 Criteria Outline the program criteria used and relevant supporting documentation (acts, regulations, protocols, standards, guidance documents, project documentation etc).

The verification was conducted in accordance with the requirements of the following criteria:

• Alberta’s Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7;

• Carbon Competitiveness Incentive Regulation (CCIR), 2017;

• Standard for Greenhouse Gas Emission Offset Project Developers (Version 2.0, July 2018);

• Standard for Validation, Verification and Audit (Version 3.0, December 2018);

• Quantification Protocol for Energy Generation From the Combustion of Biomass Waste v2.0 (AESRD, April 2014)

• ISO 14064 Greenhouse gases – Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions (1st Edition, 2006)

2.5 Materiality Define the materiality of the verification.

Quantitative misstatements are evaluated individually and in aggregate to determine the percentage of the discrepancies relative to the reported Annual Emission. These discrepancies are deemed to be material, if they exceed the materiality threshold of 5%.

3.0 Methodology Statement that the verification is performed according to ISO 14064-3.

The verification is conducted in accordance with Canadian Standards Association (CAN/CSA) – ISO 14064-3-06 – GHGs – Part 3: Specification with Guidance for the Validation and Verification of GHG Assertions (Adopted ISO 14064-3:2006, First Edition, 2006).

Summary of the assessments/tests/reviews/evaluations that were conducted during the verification.

The verification strategy used in this verification includes a combination of substantive procedures and test of controls approach. Keystone Environmental relies predominantly on substantive procedures during the verification, with a focus on raw data and evidence gathered during the sampling procedures. Controls reliance is used rarely, and only in supporting the substantive approach as described above. The verification strategy is established based on the result of the risk assessment process.

The following was conducted to substantiate the GHG emission for 2018:


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• Confirmation of the physical sources and sinks at the Facility during the site visit on January 8, 2019.

• Various processes and data management procedures were confirmed during site visit and interviews.

• An Office visit at Blue Source Canada was conducted on January 7, 2019 to gain understanding of the data management and record keeping procedures.

• Statistical, strategic, and systematic sampling (or a combination thereof) was conducted on primary documentation (i.e., third party documentation, invoices) to confirm the processes resulting in GHG emission reduction for 2018.

3.1 Procedures Description of how the verification was conducted including: description of the nature, scale and complexity of the verification activity, confidence and completeness of the responsible party’s GHG information and assertion, assessment of GHG information system and its controls, assessment of GHG data and information, assessment of GHG information system and controls, assessment against criteria, evaluation of the GHG assertion.

Describe steps of the verification including planning, assessment, site visit, off-site verification, and report preparation.

Describe how the risk based approach was implemented in the sampling plan. Identify categories of risk including inherent risk, and detection risk (organization and verifier). Include the Verification Plan with the Sampling Plan in Appendix A. Paste the risk assessment table in this section.

Procedures used in this verification include inspection, observation, inquiry, confirmation, recalculation, and analytics test.

The verification was completed between the initial engagement on December 20, 2018 and the issuance of the Verification Report on February 28, 2019. The verification procedures are described in details in the Verification Plan, including details of site visit, and Sampling Plan in Appendix A. Risk assessment is included in Table 2.

The verification was conducted based on two main components : the site visit and desktop review of the relevant information and source data.

Description of the nature, scale and complexity of the verification activity The nature of the verification activity was to identify sources and sinks of GHG emissions for the Facility. The operation was a single facility. Sources of emissions were stationary combustion, mobile equipment combustion, emergency diesel generator, biomass combustion, biogas combustion and were straight forward to be identified during the site visit. Other components included in the verification were electricity usage and generation. Quantification of GHG emissions from fossil fuels (natural gas and diesel) were based on internal meter for natural gas and biogas, truck fuel efficiency, truck distance travelled and emergency generator run time manual record for diesel. The biomass combusted was based on weigh scale tickets.

Emissions Data and Reporting Procedures

• Assess baseline conditions and emissions sources. • Interview relevant management and staff responsible for data collection and reporting. • Review quantification methodology. • Review relevant documents and records on a sample basis.


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• Review calculations and methodologies used to calculate net emission. • Assess the use of emission factors and conversions, where applicable. • Test and re-calculate information related to the data on a sample basis. • Assess the types of information collected for accuracy, consistency, completeness,

relevance, and transparency. • Assess the individual data collected for accuracy, consistency, completeness, relevance,

and transparency.

Data Management and Control Procedures

• Assess the organization of management systems and controls. • Assess the types of information collected and corresponding methods of collection. • Review the back-up procedures of management systems and controls.

Assessment against Criteria

• Review eligibility requirements. • Review emission and conversion factors applied followed AEP requirements.

Evaluation of the GHG assertion

• Compare sources and sinks inspected through site visit to the GHG identified in the calculator and report.

• Review raw data, including metering data, source data and third-party records. • Recalculate GHG assertions.

Table 2: Risk Assessment

Item Risk

Identification

Level of Risk (high,

med, low)

Type of Risk

(inherent, control,

detection)Considerations for

Procedures

1 General Statement

Sources and sinks considered; medium All

Review against content of report. Confirm during site visit. Review raw data records to ensure data is complete and available. Discuss with client to ensure mutual understanding. Revise content if necessary (e.g., elaborate).

Eligibility criteria low inherent Indicate questions, weaknesses, edits required by client.

Project boundaries; low inherent Discuss with client and verify

through site visit.

2 Fuel Consumption

Electricity consumption and low control Review metered readings for

usage. Review to ensure data


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Item Risk

Identification

Level of Risk (high,

med, low)

Type of Risk

(inherent, control,

detection)Considerations for

Proceduresgeneration is complete and available.

Biomass consumption medium

Inherent, control,

detection

Review weigh scale tickets to ensure the data is complete and available.

Natural gas consumption medium

Inherent, control,

detection

Data collection is automatic with internal meter. Review downloaded data against data used in calculator. Check calibration record

Biogas consumption medium

Inherent, control,

detection

Data collection is automatic with internal meter. Review downloaded data against data used in calculator. Check calibration record.

Diesel consumption low control

Review calculation method and specification. Review to ensure assumption used is reasonable and representative.

3 Production Data Steam production medium

Inherent, control,

detection

Data collection is automaticwith internal meter. Review data collected and compare data used in calculator. Check data accuracy and completeness. Check calibration record.

4

Data Management/

Record Keeping

Data sources and collection medium inherent,

control

Data collection direct to process operations. Interview personnel on data collection and transcription procedures.

5 QAQC Procedures

QA/QC as well as storage of records low control Interview with personnel.

6 Emission Factors

Choice/calculation of emission factors low control Review updated emission

factors publication.

Definitions: inherent

risk: Is the susceptibility of an assertion to misstatements assuming that there are no internal related controls.

control risk: Is the risk that the responsible party’s internal controls do not detect, prevent or correct a material misstatement in the greenhouse gas assertion.

detection risk:

Is the risks that the verification procedures will not detect a misstatement that exists in a greenhouse gas assertion that could be material to the assertion.


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3.2 Team List verification team members including peer reviewer(s).

Describe the qualifications and training of the team members and peer reviewer(s) including dates of training and certifications.

For Offsets: fill in the sample Statement of Qualification provided and included in Appendix B.

For Facilities: include the Statement of Qualifications from the facility compliance form in Appendix B.

To conform to the principle of independence in the ISO 14064-3 standard, a Conflict of Interest assessment was conducted to identify potential threats that may influence the objectivity of the findings and conclusion of the verification prior to conducting the work. As indicated in the Conflict of Interest Checklist, real or perceived conflict of interest that may threaten impartiality was not identified. The Conflict of Interest Checklist is included in Attachment E.

The Verification Team meets the requirements in Part 1 for the Standard for Validation, Verification and Audit. The Verification Team is competent to perform the verification of the GHG project as outlined in the Statement of Qualification attached in Attachment B. The following is a summary of the Verification Team members and their roles:

• Judy Tai, P.Eng. – Ms. Tai’s role as the Lead Verifier and Designated Signing Authority was to guide the verification team, lead the on-Site verification, correspond with client representative, and track project progress.

• Nelson Lee, MASc., P.Eng. – Mr. Lee’s role as Peer Reviewer was to provide independent internal peer review of the verification work.

• Kareena Gill, M.Eng., E.I.T. – Ms. Gill’s role was to support the Lead Verifier, primarily in research and calculations checks.

List verification team members including designated signing authority and peer reviewer, roles, ISO 14064-3 training, training dates and qualifications.

Describe the qualifications and training of the team members and peer reviewer(s) including dates of training and certifications.

For Offsets: fill in the sample Statement of Qualification provided and included in Appendix B.

For Facilities: include the Statement of Qualifications from the facility compliance form in Appendix B. Note:Training dates not required for 2017 compliance verification.

Table 3: Team Qualifications

Name: Judy Tai, M.A.Sc., P.Eng. Qualification: Master’s Degree in Chemical Engineering,

Professional Engineer in BC, AB. ISO 14064 Part 3 trained (2010).

Role: Lead Verifier/Designated Signing Authority Experience: Ms. Tai is a GHG Lead Verifier and Environmental Auditor with over

13 years of engineering/ environmental experience. She has completed over 20 GHG Offset project verifications that adhered to ISO 14064; part 3, both reasonable and limited level of assurance. Her role as the Lead Verifier in this project will include guiding the team, managing the on-site verification, and liaising with clients. She is the point of contact of this project.


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Name: Nelson Lee, MASc., P.Eng. Qualification: Master’s Degree in Chemical Engineering,

Professional Engineer in BC & AB. ISO 14064 Part 3 trained (2006)

Role: GHG Peer Reviewer Experience: Nelson has 10 years of experience as a GHG Verifier in Alberta. He also has

25 years of experience in environment, health and safety management in the waste management, oil & gas, chemicals and other manufacturing sectors. Nelson has conducted over 150 GHG report and offset project verifications and validations. He is a professional engineer in the provinces of BC and AB.

Name: Kareena Gill, M.Eng., EIT Qualification: Master of Engineering in Chemical Engineering,

Engineer in Training BC Role: Team Member

Experience: Ms. Gill is a Master of Engineering graduate in Chemical Engineering. She is a junior engineer and has assisted in Alberta GHG Verification, Alberta Approval Reporting and NPRI Reporting projects for wood product facilities in BC and Alberta. She assists the Lead Verifier in this project to check the appropriateness of the calculation methodologies, emission factors and conduct sensitivity analysis.

3.3 Schedule Provide a list or table of verification activities and dates. Indicate when the verification was completed.

The schedule for the verification is presented in Table 4.

Table 4: Schedule of Verification Activities

Task Completion Date Verification Initiation & Planning December 20, 2018

Site Visit January 8, 2019 Verification Review January 31, 2019

Verification Completion February 26, 2019

Final Verification Documents February 28, 2019

4.0 Results Add introduction to results section here, if desired.

The 2017 GHG assertion followed the same methodology of the previous quantification approach. Assessment of the GHG information management system and controls, assessment of the GHG data, review against criteria and recalculation of the emissions are presented below.


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4.1 Assessment of Internal Data Management and Controls Provide a summary the information system(s) and its controls for sources of potential errors. Include information on the selection and management of data, process for collecting and consolidating data, data accuracy systems, design and maintenance of the GHG system, the systems and processes that support the GHG information system and results from previous assessments if applicable.

The data control process employed for the Project consists of automated data capture, manual data collection and reference data.

Automated data capture included steam mass flow, natural gas consumption, biogas consumption, electricity generation and electricity consumption from grid. These data were gathered and stored in the data management program, the Proficy historian. They were downloaded for use in GHG calculations.

Manual entry data included biomass mass from weigh scale tickets, diesel usage for the emergency generator, ash disposal invoices and third party laboratory analysis reports.

Referenced data included manufacture specification, published values, and equipment specifications.

These data were compiled into a spreadsheet by the maintenance administrator and reviewed by the process engineer/senior staff for QA/QC.

Reporting Elements Data Source Internal Controls

Biomass Weigh scale tickets from truck delivery, manual transcription to spreadsheet

Each truck load of biomass was weighted at the truck scale and ticketed with net weight. The ticket was manually recorded in a log sheet and eventually input into a spreadsheet by maintenance administrator on a daily basis. Process engineer/senior staff conducted QA/QC on the data on a weekly basis. Weigh scale meter was calibrated annually. Keystone Environmental reviewed the original tickets on a sample basis against the input values in the GHG calculator.

Diesel Calculation based on reference data

Diesel consumption in project condition for the biomass delivery was calculated based on round trip distance, number of trips, and fuel efficiency. Number of trips were based on numbers of biomass delivered which was recorded by truck tickets . Data was reviewed by maintenance administrator and process engineer for reasonableness. Keystone Environment reviewed and re-calculate the number of trips based on truck tickets to ensure accuracy.


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Reporting Elements Data Source Internal Controls

Propane Calculation based on reference data

A forklift was observed carrying tails to the weigh scale . Emission from this source was not included in the GHG Calculator. Estimation of propane usage was conducted by Blue Source using the maximum number of propane tanks used per day, distance travel to FBB and fuel efficiency. The results indicated that the emission from propane is less than 0.1% of the total emission reduction. Keystone re-calculated the quantification method and verified the propane emission is considered negligible.

Electricity Internal meters

Electricity consumption and generation were metered by internal meters. Daily readings were manually recorded off the meters and input into a spreadsheet. Maintenance administrator and senior staff conducted the QA/QC on the readings. Keystone Environmental reviewed the spreadsheet against the values used in the GHG calculator.

Steam Production Automated data

Low pressure steam production was measured by a steam totalizer. Steam production was tracked through the internal data gathering system Proficy Historian. Data was recorded every 4 minutes and totalized on a daily basis as data output. The process engineer reviewed the data for QA/QC. Blue Source calculated the heat generation and equivalent natural gas displaced. Keystone Environmental reviewed the daily team mass spreadsheet against the values used in the GHG calculator.

4.2 Assessment of GHG Data and Information Provide a summary of the information found during the verification of the GHG data and a summary of the GHG Assertion that was assessed.

For Facilities: Confirm that the quantification methodologies that were used in the compliance report are the same as those reported in the BEIA.

For Offset Projects: Confirm that the quantification methodologies that were used by the project proponent are the same as those described in the project plan. Indicate which quantification methodologies were used by the project proponent.

A


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Emission Sources GHG Data

Baseline - Transport of Biomass (B1)

The fuel consumption to transport the biomass from site to landfill in the baseline condition is calculated based on the truck capacity, the weight of the biomass recorded by weight scale, trip distance and the truck fuel efficiency. Keystone Environmental checked the original weigh scale tickets on a sample basis, confirmed the trip distance, checked the truck capacity and fuel efficiency through reference data, and confirmed emission factors applied. Minor discrepancies were identified and detailed in the finding section.

Baseline – Fuel Extraction and Processing (B4) Baseline - Displaced On-site Heat Generation (B18)

Equivalent natural gas usage was calculated based on low pressure steam production, low pressure enthalpy, higher heating value of natural gas and boiler efficiency. Keystone reviewed the monthly steam flow rate from Proficy Historian output, enthalpy calculation, natural gas HHV provided by natural gas supplier, natural gas emission factor from gas analysis report, and boiler efficiency from equipment specification. Minor discrepancies were identified and detailed in the finding section.

Baseline – Displaced Off Site Electricity Generation (B6)

Electricity displaced was calculated based on the net electricity exported to Grid. Daily readings of production were manually recorded off the meters and input into a spreadsheet. Keystone Environmental reviewed data entries to the GHG calculator against the manual records on a sample basis. Minor discrepancies were identified and detailed in the finding section.

Baseline –

Biomass Disposal (B15

The disposal emissions in the baseline condition were calculated based on amount of biomass delivered and the first order decay methane quantification model in the ESRD Carbon Offset Emission Factors Handbook. The Keystone Environmental checked reference values applied to the quantification model. The parameters of the quantification of avoided landfill methane emissions were checked and tested. The annual average precipitation at the nearest weather station was confirmed.

Project – Fuel extraction and processing (P4) Project – Facility operations (P12)

The emission (P12) from facility operations included electricity consumption from grid, process equipment electricity usage, and diesel consumption in biomass transport and emergency generator third party. Keystone Environmental checked and tested the electricity metered data, equipment load values, emergency generator runtime hours. The emission (P4) for fuel extraction and processing was based on natural gas and diesel consumption. Natural gas was used for the start-up of the burner. Keystone Environmental checked and tested the natural gas monthly volume flow rate from the Proficy Historian against the amount used in the GHG calculator. Minor discrepancies were identified and detailed in the finding section.

Project – Combustion of biomass and fossil fuels (P15)

The fuels that were used in the combustion of biomass and fossil fuels were biomass, natural gas and biogas. The flow rates of these fuel were automatically recorded and totalized in the Proficy Historian. Keystone environmental checked and tested monthly flow rates in the GHG calculator against the data output from the Proficy Historian.


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Emission Sources GHG Data

Minor discrepancies were identified and detailed in the finding section.

The quantification methodologies used for the Offset Project is consistent with its Offset Project Plan and the quantification protocol except for the variances mentioned in Section 2.

4.3 Assessment against Criteria Provide a description of how eligibility criteria is met or not met.

For Offset Project: Complete Table 1 to indicate if the GHG Assertion conforms to the Regulation and Standard for Greenhouse Gas Emission Offset Project Developers eligibility criteria.

For Facilities: Delete Table 1 and Indicate if verification criteria are met or not met and explain.


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Table 5: Offset Criteria Assessment

Offset Eligibility Criteria

Assessment

Reduction or sequestration occurs in Alberta

Conducted site visit and confirmed the project location is in Alberta

Result from actions not required by Law at the time the action is taken

Project activities are not required by law.

Result from Actions taken on or after January 1, 2002 and occur on or after January 1, 2002

Project started in 2012

Reduction or sequestrations is real and demonstrable

Conducted site visit and confirmed the existence of the project.

Quantifiable and measureable

Activity data was measured and recorded. Emission reduction were quantified according to the approved protocol.

Verified by a third party verifier that meets the requirements in Part 1 for the Standard for Validation, Verification and Audit.

Verifier meets the requirements in Part 1 for the Standard for Validation, Verification and Audit.


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4.4 Evaluation of the GHG Assertion The verification assessment is that the GHG Assertion meets the requirements of the Carbon Competitiveness Incentive Regulation

Provide an assessment of the evidence collected during the verification. Determine if the data and information available support the GHG assertion. Provide a conclusion on whether the assertion meets the materiality requirements and the level of assurance agreed to at the beginning of the verification process.

The following evidence was collected during the verification. These included supporting documents and records, provided by the Facility and reviewed to assess the supporting data. Select areas of data flow from the custom calculator was retraced back to the source measurement, or estimation:

• Monthly extended gas analysis by Core Lab for January to December 2018 • FBB P&L tracking spreadsheet for 2018 • FBB raw material receiving records for 2018 • Electricity usage for January to December 2018 • Calibration records for steam meter, biogas meter, natural gas meter, biomass weigh scale

and electricity meters • Natural gas composition analysis from ATCO • Electricity usage spreadsheet • Biomass weight scale tickets (selected dates) • Daily Utility Meter Reading manual records (selected dates) • Blue Source Document Retention Policy v 1.4 • Toyota Forklift specification • Steam, Nat Gas, Biogas Data 2018 spreadsheet • Fluidized Bed Boiler specification • Process Flow Specification • Ash disposal spreadsheet. • Ash disposal invoices 2018

Data was then extracted to independently compute the emission reductions to corroborate the Facility’s GHG calculations. Keystone Environmental’s GHG calculation was compared to the reported emissions to identify any discrepancy, if present, resulting from compilation error of source data. Assessment of the emission data integrity was conducted by reviewing the calibration records for the equipment, third party invoices and raw data.

Desktop review of the calculation spreadsheets was performed to exam the following information to assess consistency between the Project GHG calculation and the Approved Quantification Protocol.

• Emission factors applied • Entry of data used for the calculation • Mathematical formula used in the spreadsheets • Assumptions made based on historic data


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Finally, the final data reports were reviewed to assess whether discrepancies were present in the reported GHG emissions to ensure that the data is consistent with the GHG calculation reviewed.

The emissions factors used in this verification are as follows:

Table 6: Emission Factors

Type CO2 CH4 N2O CO2e

Natural Gas Combustion (kg/m3)

2.048 0.000037 0.000033

CO2: Calculated from Natural gas composition analysis

CH4 & N2O: AESRD Carbon Offset Emission Factor Handbook 2015

Natural gas Extraction & Processing (kg/m3)

0.133 0.0026 0.000007 AESRD Carbon Offset Emission Factor Handbook 2015

Diesel Production (kg/L) 0.138 0.0109 0.000004 AESRD Carbon Offset Emission

Factor Handbook 2015

Diesel Combustion (Kg/L)

2.663 0.000133 0.0004 AESRD Carbon Offset Emission Factor Handbook 2015

Electricity Consumption (t CO2e/MWh)

0.64 - - AESRD Carbon Offset Emission Factor Handbook 2015

Electricity Generation (t CO2e/MWh)

0.59 - - AESRD Carbon Offset Emission Factor Handbook 2015

The calculations used in this verification are as follows:

Table 7 Baseline and Project Emissions

Baseline Emissions 41,836 tonnes CO2e in 2018

Major Sources of Emissions

Emissions from Collection, Transfer and Transport of Biomass (B1) Emissions from Biomass Disposal (B15) Emission from Displaced Off-site Electricity Generation (B6) Emission from Displaced On-site Heat Generation (B18) Emission from Fuel Extraction and Processing (B4)


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Calculations Used

EmissionsBaseline = sum of the emissions under the baseline condition

= Emissions from Collection, Transfer and Transport of Biomass (B1) + Emissions from Biomass Disposal (B15) + Emission from Displaced Off-site Electricity Generation (B6) + Emission from Displaced On-site Heat Generation (B18) + Emission from Fuel Extraction and Processing (B4)

Project Emissions

10,568 tonnes CO2e in 2018

Major Sources of Emissions

Emissions Facility Operation = emissions under SS (P12) Emissions Combustion of Biomass and Fossil Fuels = emission under SS (P15) Emissions Fuel Extraction and Processing = emission under SS (P4)

Calculations

Emissions Project = sum of the emissions under the project condition.

= Emissions from combustion of biomass, biogas and fossil fuels (P15) + Emissions from facility operation (P12)

+ Emissions from fuel extraction and processing (P4)

Emission Reduction

EmissionReduction = EmissionBaseline - EmissionProject = 31,268 tonnes CO2e

We completed our review in accordance with the:

• Alberta’s Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7; • Carbon Competitiveness Incentive Regulation (CCIR), 2017; • Standard for Greenhouse Gas Emission Offset Project Developers (Version 2.0, July 2018); • Standard for Validation, Verification and Audit (Version 3.0, December 2018); • Quantification Protocol for Energy Generation From the Combustion of Biomass Waste v2.0

(AESRD, April 2014) • ISO 14064 Greenhouse gases – Part 3: Specification with guidance for the validation and

verification of greenhouse gas assertions (1st Edition, 2006)

Keystone Environmental has conducted sufficient procedures to provide the basis of our conclusion.

Based on our review, it is our opinion that the emission reduction credits presented in the Offset Project Report and the Greenhouse Gas Assertion are presented fairly, in all material respects, in accordance with the requirements of the Alberta GHG Offset System and are free of material errors, omissions, or misrepresentations.


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4.5 Summary of Findings Provide a summary of material and immaterial discrepancies expressed in tonnes and as net and absolute error in Table 2. Include whether the discrepancy was an understatement or an overstatement.

Include a more detailed description and log of results in Appendix C the “Issues Log”. This log will include both resolved and unresolved issues from the verification. Unresolved issues should be brought forward to Table 2.


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Table 6: Summary of Findings

Number the finding with the year and provide a unique # for each finding. Note: A detailed description of all material and immaterial findings should be provided in Table 3 of Appendix C. Provide only a summary statement (1-4 sentences) for each unresolved immaterial finding and each material finding (resolved or unresolved). If the finding is a resolved material finding, then put the tonnes net and absolute in the summary description column and indicate n/a in the net and absolute columns. Do not include the tonnes in the total error calculation. Indicate the type of error (qualitative or quantitative). Indicate the Source Category (for facilities) or the Source/Sink (for offsets). Indicate if the finding is an understatement or overstatement. Provide both net and absolute error in tonnes of CO2 eq and as a % of the assertion. Provide the total net error and the total absolute error in tonnes of CO2 eq and as a % of the assertion.

Result #

Type Summary Description of Finding Source Category or Source/Sink

Understatement/Overstatement

Tonnes CO2 eq % net

Tonnes CO2 eq % absolute

17-01 Quantitative Electricity imported from grid in the GHG calculator do not agree with the data in the spreadsheet provided.

Overstatement of the emission reduction

+0.011% 0.011%

17-02

Quantitative Data entry error in the FBB electricity displaced calculation.


+0.017% 0.017%

17-03

Quantitative Steam mass flow rate used in the calculator do not agree with the values obtained from the downloaded data from Proficy

Understatement of the emission reduction

-0.75% 0.75%

17-04

Quantitative Two of the monthly natural gas consumption do not agree with the downloaded data Proficy


+0.006% 0.006%

17-05

Quantitative Monthly biomass weight used in the GHG calculator do not agree with raw material record spreadsheet provided. Data entry in raw material spreadsheet contained


-0.47% 0.47%


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Result #

Type Summary Description of Finding Source Category or Source/Sink

Understatement/Overstatement

Tonnes CO2 eq % net

Tonnes CO2 eq % absolute

missing weight of biomass delivered.

17-06

Quantitative Diesel generator runtime hours used in the GHG calculator is different from the data observed on site.


-0.10% 0.10%

17-07

Quantitative Number of trips for calculating emission from transportation do not agree with the raw material record spreadsheet

Insignificant - -

17-08

Quantitative Emission from propane forklift used for transporting tails to FBB is not included in the quantification. The emission from this source is considered negligible (<20 tCO2e, )


+0.07% 0.07

17-09

Qualitative Data entry errors are observed in transferring data from one source to another. QA/QC procedures is required to be evaluated to reduce errors.

n/a n/a n/a

17-10

Quanitative Propane consumption was calculated based on conservation assumption of 32 L/day. It is recommended to track the actual usage for accuracy.

n/a n/a n/a

Total Error -1.22% 1.42%


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4.6 Opportunity for Improvement Provide feedback on the data management system and controls, transparency, completeness of the inventory, additions to the quantification methodology document or diagrams, etc. Include positive considerations and observations also.

Identify strengths and weaknesses that may help to improve the report/s for the current facility, sector, and compliance program. Identify ways in which the project/facility could be more easily verified.

Data entry errors were observed between source data and GHG calculators. It is recommended to review the data in more detail, and improve internal control processes to minimize errors.

Propane consumption by the forklift delivering tails is not currently tracked. It is recommended to record the use of propane.

The weight of some biomass delivered to FBB were missing in the raw data record. Internal data review is recommended to provide quantities of the biomass to ensure completeness and accuracy.

Calculations contained multiple data entry errors and transcription errors. Improvement on QA/QC is recommended.

5.0 Closure 5.1 Verification Statement Include the signed verification statement in Appendix D.

Instructions to insert a pdf: 1. Click Insert>Object 2. In the Object dialog box click Create from File and then click Browse. 3. Find the pdf you want to insert then click Insert. 4.Click OK.

For Offset Projects: fill in the sample Verification Statement provided, sign, scan and paste.

For Facilities: paste a signed version of the Verification Statement from the facility compliance form. Include the conclusion on the GHG assertion and any qualification or limitations and the level of assurance.

Provide the verification conclusion in the drop down box below.

The verification conclusion is:

Positive

5.2 Limitation of Liability Include signed Conflict of Interest Checklist in Appendix E.

For Offset Projects: fill in the sample Conflict of Interest Checklist provided, sign, scan and paste.

For Facilities: paste the signed Conflict of Interest Checklist from the facility compliance form.

Insert limitation of liability statement and include information in an Appendix F if applicable.

Findings and conclusions documented in this report have been prepared in a manner consistent with that level of care and skill normally exercised by other members of the environmental consulting profession practising under similar circumstances in the area at the time of the


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performance of the work. This report is not intended nor is it able to provide a totally comprehensive review of the proposed project.

This report has been prepared solely for the internal use of Blue Source Canada ULC and Cargill Ltd., and for review by Alberta Climate Change Office pursuant to the agreement between Keystone Environmental Ltd. and Blue Source Canada ULC. A copy of the general terms and conditions associated with this agreement is attached in Attachment F. By using this report, Blue Source Canada ULC, Cargill Ltd., and Alberta Climate Change Office agree that they will review and use the report in its entirety. Any use which other parties make of this report, or any reliance on or decisions made based on it, are the responsibility of such parties. Keystone Environmental Ltd. accepts no responsibility for damages, if any, suffered by other parties as a result of decisions made or actions based on this report.

5.3 Confirmations Document information confirmed, including any discrepancies or inconsistencies, as per the Confirmations section in the Standard for Greenhouse Gas Verification.

As ACCO required, the verifier has confirmed the following information:

• Consistency of offset project information across offset project documentation; • Offset project location; • Project plan and report exists; • Offset project contact, report dates and the amount of GHG emission reductions; and • Completeness and accuracy of process and data flow.

6.0 References Author. Year. Title. (no hyperlinks)

• ACCO. December 21, 2017. Offset Project Verification Report Template. • AEP. 2015. Carbon Offset Emission Factors Handbook, Version 1.0. • AEP. 2014. Quantification Protocol for Energy Generation from the Combustion of Biomass

Waste, Version 2.0. • Blue Source Canada 2019. Offset Project Calculator ‘Cargill_FBB_Calculator_v1.3_

2019_01_18.xlsx’ • Blue Source Canada. Cargill High River Fluidized Bed Boiler Offset Project Greenhouse Gas

Emissions Reduction Offset Project Plan, v 3.0. April 19, 2016 • Blue Source Canada. Offset Project Report Form Cargill High River Fluidized Bed Boiler

Offset Project, February, 2019 • Government of Alberta. 2017. Carbon Competitiveness Incentive Regulation (CCIR), Alberta

Regulation 255/2017. • Government of Alberta. 2003. Climate Change and Emissions Management Act (the Act).

SA 2003. c C-16.7. • Standard for Greenhouse Gas Emission Offset Project Developers (Version 2.0, July 2018); • Standard for Validation, Verification and Audit (Version 3.0, December 2018);

• ISO 14064 Greenhouse gases – Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions (1st Edition, 2006)

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Appendix A: Final Verification Plan and Sampling Plan


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Information to be included in the Verification Plan and Sampling Plan:

Revisions to the sampling plan

Date originally sent to Facility/project

Level of assurance agreed with the facility/project developer

Verification scope

Verification criteria

Amount and type of evidence (qualitative and quantitative) necessary to achieve the agreed level of assurance

Methodologies for determining representative samples

Sampling Plan and Procedures

Risk Assessment: Risks of potential errors, omissions or misrepresentations that are identified throughout the verification process including:

- Details of site visit

-offset/facility boundaries

- Methodologies, emissions factors and conversions used

- Comparability with the approved baseline

- Conformance to the program criteria

- Integrity for the responsible party’s data management system and control (organization chart, GHGH management plan, personnel/consultant training, protocols used, control system documentation, software/program documentation/certifications)

- Greenhouse gas data and information, including the type of evidence collected, verification testing and crosschecking, inventory of emission sources

- Discussion of data management, (measurement, fuel sampling, calibration, consistent use of standard conditions, data storage, procedures to fill missing data; procedures to repair inconsistent data, adjustment of variables and factors)

- Other relevant information

Verification Plan

Cargill High River Fluidized Bed Boiler Project

for Emission Reduction Credits in 2018

High River, AB

Page 1 of 9 Project 11855 / February 2019

VERIFICATION PLAN

REVISION INFORMATION

Revisions to the Verification & Sampling Plans: Revision 2

Date originally sent to Facility/project: January 2, 2019

OBJECTIVE

The objective of the verification is to provide assurance to Alberta Climate Change Office (ACCO) that the GHG Assertion is materially correct and presented fairly in accordance with the relevant criteria.

SCOPE

The scope of this verification is presented in Table A-1. It includes the Project boundaries, activities, technologies, and processes of the operation, GHG sources, sinks, and/or reservoirs, types of GHGs for the time period covered, materiality and level of assurance. The geographic verification scope is defined by the Project boundaries.

Table A-1 Scope Information

Item Cargill High River Fluidized Bed Boiler Offset Project

Project boundary

The project boundary includes the entire Cargill

Meat Plant, as biomass is sourced from various areas within the operation.

Specifically, the FBB System includes: the biomass metering bin, natural gas lines, fluidized bed

combustor, storage containers, boiler, steam turbines, ash storage, fans, stack, and the power

lines for electricity production.



LSD: 12-19-19-28 W4M

The Project is located at the Cargill High River Beef Processing Plant in the northwest quarter of

Section 19 (Township Road 19, and Range Road 28) and 5 km north of the town of High River,

Alberta.

Organization Cargill Ltd.

Verification Plan



High River, AB


Activities

the Project used bovine by-products as a biomass

fuel source to the FBB displacing natural gas demands and electricity sourced from the

commercial grid. Therefore, the Project directly

avoided the release of non-biogenic CO2, CH4, and N2O into the atmosphere as a result of combustion

processes. In the absence of the Project, the SRMs would have continued to be sent to a landfill for

disposal where varying degrees of anaerobic decomposition may take place and result in the

release of non-biogenic CH4.

Relevant GHG Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O)

GHG Emission Reductions Claimed

31,268 tonnes CO2e

CO2:19,045 tonnes CO2e

CH4: 14,266 tonnes CO2e

N2O: -440 tonnes CO2e

CO2e: -1,603 tonnes CO2e

End Products Meat products

Time Period January 1, 2018 to December 31, 2018

Materiality 5%

LEVEL OF ASSURANCE

The verification was conducted to a reasonable level of assurance. The objective of a verification program is to obtain sufficient appropriate evidence to express a conclusion, providing reasonable or limited assurance, as to whether the audited body has complied with the specified requirements of the program criteria in all material respects.

Reasonable level of assurance is a higher level of assurance, providing a greater confidence the individual can place in the matter being verified. To provide a higher level of assurance, the verification needs to reduce the risk that a material misstatement exists in the matter being audited. The verification team achieves this by conducting a more in-depth and rigorous assessment of the verification.

MATERIALITY

The project generates less than 500,000 tonnes of emission offset credits. According to

ACCO requirements, the materiality threshold is 5% of the emission offsets generated.

VERIFICATION STANDARD

The verification is conducted in accordance with the ISO 14064 Part 3: Greenhouse Gases:

Specification with guidance for the validation and verification of greenhouse gas assertions

Verification Plan



High River, AB


PROGRAM CRITERIA

Alberta’s Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7;

Carbon Competitiveness Incentive Regulation (CCIR), 2017;

Standard for Greenhouse Gas Offset Project Developers (Version 2.0, July 2018);

Standard for Validation, Verification and Audit (Version 3.0, December 2018);

Quantification Protocol for Energy Generation From the Combustion of Biomass Waste v.2 (AESRD, April 2014); and

Carbon Offset Emission Factors Handbook, Version 1.0, March 2015.

RISK ASSESSMENT

As part of the verification process, a risked-based verification and sampling plan must be

developed that outlines the amount and type of evidence necessary to achieve the agreed level of assurances, methodologies for determining representative samples, and risks of

potential errors, omissions, or misrepresentation.

The risk assessment is conducted by the verification team considering inherent risk, control risk, and detection risk.

Inherent Risk

Inherent risk is the risk of error due to the data complexity or lack of understanding by the

staff. Inherent risk is determined to be Medium due to:

Fifth time verification, first time by Keystone Environmental after three years interval.

Single facility.

Control Risk

Control risk is the risk that the responsible party’s control system will not detect and rectify a discrepancy. Control risk is determined to be Medium due to:

Biomass consumption was metered.

Electricity displaced and imported were metered.

Thermal energy was calculated based on metered steam production and set pressure

and temperature.

Natural gas consumption was recorded by internal meter.

Baseline fuel consumption for the transport of biomass was calculated based on truck

efficiency and capacity, not directly measured.

Cargill has a data management system to review, and cross check data sources.

Verification Plan



High River, AB


Detection Risk

Detection risk is the risk that the verification team will not identify a material discrepancy.

Detection risk must be Medium due to:

Reasonable level of assurance requires a medium to low detection risk.

Large amount of data both metered and calculated to review.

A detail risk assessment is summarized in Table 2 in the verification report.

A contribution analysis was conducted to assess the relative contribution of each emission

source to the overall GHG assertion.

Table A-2 Contribution Analysis

Table A-3 Summary of Emission Reduction

GHG In tonnes CO2e CO2 CH4 N2O CO2e Total

Baseline 23,168 18,337 156 174 41,836

Project 4,123 4,071 596 1,777 10,568

Total Emission Reductions

19,045 14,266 -440 -1,603 31,268

VERIFICATION PROCEDURES

The verification procedures to obtain sufficient and appropriate evidence can be summarized

into the following tasks.

t CO2 t CH4 t N2O t CO2e t CO2e

B1 transportation 579.64 0.72 25.95 - 606.31 1.45

B4 Fuel Extraction and Processing 1,405.43 731.50 21.83 - 2,158.76 5.16

B6 Electricity Production - - - 174.56 174.56 0.42

B15 Decomposition of Biomass and Methane

Collection/Destruction- 17,596.19 - - 17,596.19 42.06

B18 Thermal Energy Produced 21,183.55 9.57 107.86 - 21,300.98 50.91

23,168.62 18,337.98 155.64 174.56 41,836.79 100.00

t CO2 t CH4 t N2O t CO2e t CO2e % of Project

P4 Fuel Extraction and Processing 248.83 121.61 3.90 - 374.34 3.54

P12 Facility Operations 42.02 0.05 1.88 1,777.81 1,821.77 17.24

P15 Combustion of Biomass and Fossil Fuels 3,832.42 3,949.45 590.36 - 8,372.22 79.22

4,123.27 4,071.11 596.14 1,777.81 10,568.33 100.00

t CO2 t CH4 t N2O t CO2e t CO2e

19045.00 14266.00 -440.00 -1603.00 31,268.00

SS

Total Baseline

Total Project

ALL

Baseline Emissions

Project Emissions

Emission Offset Credits Created

Verification Plan



High River, AB


General Procedures

Assessed independence between the Verification Team and the Project Team; address

conflicts of interest as required.

Obtained an understanding of the management systems, processes and the relevant

controls used to generate, aggregate and report GHG emissions.

Assessed the information collected for accuracy, consistency, completeness,

relevance, and transparency.

Identified potential inherent, detection, and control risks, as well as material

misstatements in net emissions calculations.

Emissions Data and Reporting Procedures

Interviewed relevant Cargill and Blue Source management and staff responsible for data collection and reporting.

Reviewed quantification methodology document.

Reviewed relevant documents and records on a sample basis.

Reviewed calculations and methodologies used to calculate net emission.

Assessed the use of emission factors and conversions, where applicable.

Assessed the comparison of current emissions to baseline conditions.

Tested and re-calculated information related to the data on a sample basis.

Assessed the types of information collected for accuracy, consistency, completeness,

relevance, and transparency.

Assessed the individual data collected for accuracy, consistency, completeness, relevance, and transparency.

Data Management and Control Procedures

Data management system and control are the procedures and system that the

responsible party uses to measure, manage, store and report data and information. It was assessed during the facility tour at Cargill High River facility and the office tour at

Blue Source office.

Assessed the organization of management systems and controls

Assessed the types of information collected and corresponding methods of collection

Reviewed the information technology policy and data management systems and

controls

Verification Plan



High River, AB


Changes to Operations, and Organizational or Operational Boundaries since Previous Verification

During the 2018 reporting period the turbine in the fluidized bed boiler was down for maintenance between October 28, 2018 to January 21, 2019. During that time period no electricity was generated thus reducing emissions in source B6.

In June and July of 2018, less electricity than usual was produced because of the lower number of cows were processed in the summer months than in rest of the year. Therefore, there was less raw material available for the fluidized bed boiler to incinerate and emissions in source B6 were reduced.

While the protocol was updated since June 2018 in alignment for the carbon levy requirement under the CCIR, the project may continue to use the existing protocol for the 2018 vintage year. The project will be required to follow the new Protocol in 2019 and to account for levied and non-levied emission reductions from fuel types impacted by the carbon levy, and levied emissions will be excluded from the greenhouse gas reduction assertion.

GHG Subject Matter Associated With Assertion

Carbon Dioxide (CO2)

Methane (CH4)

Nitrous Oxide (N2O)

SCHEDULE OF ACTIVITIES

Table A-4 Schedule of Verification Activities

Task Completion Date

Verification Initiation & Planning December 20, 2018

Kick Off Meeting December 18, 2018

Site Visit January 8, 2019

Verification Review January 31, 2019

Verification Completion February 26, 2019

Final Verification Documents February 28 2019

VERIFICATION TEAM

Table A-5 Verification members and roles

Role Name

Lead Verifier, Designated Signing Authority Judy Tai, MASc., P.Eng

Independent Peer Reviewer Nelson Lee, MASc., P.Eng

Senior Technical Advisor Francisco Perello, PhD. P.Eng.

Verifier Kareena Gill, M.Eng., EIT

Verification Plan



High River, AB


SAMPLING PLAN

The sampling plan guides and ensures that sufficient and appropriate evidence, in support of the principles and quantification methodology that formed the emission assertions made

by Cargill. It also ensures that sufficient and appropriate evidence has been collected and reviewed to disclose any material discrepancies that contribute to the GHG assertion, if such

exist. The following key parameters were sampled for review:

Project boundary

Sources of emissions

Facility operations relevant to the project

Methodologies, emission factors and conversions used

Conformance to the program criteria

Integrity of the responsible party's data management system and controls

GHG data and information, including type of evidence collected, verification testing, and cross-checking

CO2, CH4 and N2O emission factors

SRM weight scale tickets

Electricity meters

Calibration records

Emergency generator usage

Verification Plan



High River, AB


SITE VISIT

The site visit was conducted on January 8, 2019. The following lists the individuals who will participate in the site visit:

Names Title Company

Thomas D’Amato Process Engineer Cargill

Paula Motruk Maintenance Administrator Cargill

Justin Friesen Carbon Solution Analyst Blue Source Canada

Judy Tai Lead Verifier Keystone Environmental Ltd.

The purpose of the site visit is to review the Project physical boundaries, and review the

relevant GHG emission sources and sinks identified in the Offset Project Report. The on-site

data management procedures, such as data collection control devices and record retention practices will also observed. Activities on-site can be summarized as follows:

On-Site Tour

The site visit included an opening meeting, health and safety, facility tour, interviews with

key personnel, review of records, calculations and other supporting information, and closing meeting.

The purpose of the site visit was to confirm emissions, production, emission reductions,

financial data and information reporting in the assertion. It allowed the verifier to physically inspect the various source operations, review records, data management systems.

Ms. Tai was accompanied by Mr. Thomas D’Amato from Cargill, and Mr. Justin Friesen from

Blue Source during the on-site tour. Mr. D’Amato provided Ms. Tai a general overview of the FBB system for thermal heat generation and electricity generation, mobile equipment usage,

supplementary fuel distribution system, raw material delivery and handling, and overall data management and collection process. The tour enabled Ms. Tai to become familiar with the

on-site operation and to verify whether all the emission sources were identified in the Offset Project Report.

The following areas of operation were visited:

FBB system

SRM storage and transfer areas

Truck scale house

Process control room and screen displays

Natural gas meter

Biogas meter

Onsite mobile equipment

Verification Plan



High River, AB


Diesel storage for emergency generator

Process control

During the tour, Ms. Tai observed the various FBB operations including combustor, natural

gas and biogas distribution systems, process control and monitoring screens. Ms. Tai also observed the biomass (SRM and other bovine waste products) delivery, handling and

processing area. Biomass was delivered by truck after weighing at the scale house, loaded to

the collection area and grinded prior to enter the combustor. Ms. Tai observed the meters used to collect and monitor activity data for the GHG calculation : LP steam meters, natural

gas meter, biogas meters and electricity meters.

Ms. Tai also visited the scale house where biomass was weighed and ticketed. Ms. Tai observed the diesel storage tank for emergency generator on site.

Interview

Interviews to specific key personnel was conducted to obtain a more detailed understanding of the project. Mr. D’Amato provided description on the standard operating procedure of the

combustion process and the on-Site data recording and management process (Proficy Historian). Ms. Tai also interviewed Ms. Paula Motruk who explained data transcription and

review process and record keeping procedure. She explained how the data was recorded downloaded, managed and transferred to spreadsheet for quality assurance and control.

Phone interview was conducted with Mr. Darryl Stewart, IT Project Coordinator. He

explained the data management and control system. He explained the data backup procedures, data security and record retention procedures. All process data were backed up

nightly at the facility. Backup data were stored onsite and offsite for a duration of seven years.

of 44

Appendix B: Statement of Qualifications


Page 32 of 44

Sample Statement of Qualifications (SOQ)

Statement of Qualifications Offset Report Project Name Offset Project ID

Cargill High River Fluidized Bed Boiler Offset Project 9327-1871

Reporting Company Legal Name Report Type Reporting Period

Cargill Ltd. Offset Report from

January 1, 2018 – December 31, 2018

to Signature of Third Party Verifier

I , Judy Tai (Third Party Verifier), meet or exceed the qualifications of third party

Third-party verifiers described in Section 29 of the Carbon Competitiveness Incentive Regulation.

Verifying Company Name

Keystone Environmental Ltd. Per:

Signature of Third Party Verifier Date

February, 28, 2019

Training Received Under ISO 14064 Part 3

Ms. Tai completed ISO 14064-3 training in October 2010.

First Name Last Name

Judy Tai Professional Designation E-mail Address Phone Number

P.Eng. [email protected] 604-430-0671

Lead Verifier

☒ Same as third party verifier??

First Name Last Name Professional Designation E-mail Address Phone Number Training Received Under ISO 14064 Part 3


Page 33 of 44

Peer Reviewer First Name Last Name Nelson Lee E-mail Address Phone Number [email protected] 778-317-7613 Training Received Under ISO 14064 Part 3

Mr. Lee completed ISO 14064-3 training with Environment Canada in March 2006.

of 44

Appendix C: Findings and Issues


Page 35 of 44

Table 7: Detailed Findings and Issues Log

Number the issue with the year and provide a unique # for the issue. If the issue resolved during the verification, indicate that in the resolution column. If the issue is not resolved during the verification, or if the issue was material (whether resolved or not) record it as a finding in Table 2 and provide a cross reference to the finding # in the resolution column. Describe the issues investigated. State the verification criteria that are not met. Provide a description of how it is not met and provide the evidence. Indicate the Source Category (for facilities) or the Source/Sink (for offsets). Indicate if the finding is an understatement or overstatement. Summarize information between verifier and client. Provide a conclusion including % discrepancy, if applicable.

Item (YR-##)

Description of the Issues Investigated During the

Verification

Summary of information exchanged between verifier and client

Resolution Conclusion (including % discrepancy if

applicable)

17-01 Electricity imported from grid in the GHG calculator do not agree with the data in the spreadsheet provided.

Data entry errors were observed in two of the monthly data.

Unresolved 0.011% overstatement

17-02 Electricity displaced in the GHG calculator do not agree with the data in the spreadsheet provided.

Data entry errors were observed in three of the monthly data.


17-03 Steam mass flow rate used in the calculator do not agree with the values obtained from the downloaded data from Proficy

Steam mass directly download from Proficy is the most accurate data.

Unresolved -0.75% understatement

17-04 Two of the monthly natural gas consumption do not agree with the downloaded data Proficy

Errors were observed in creating pivot table and resulted in discrepancies


17-05 Monthly biomass weight used in the GHG calculator do not agree with raw material record spreadsheet provided. Data in the raw material spreadsheet continued missing weights of biomass delivered.

Some of the missing weight of biomass were retrieved based on truck tickets and some of the were estimated. Not all data entry errors were resolved.

Unresolved -0.47% understatement

17-06 Diesel generator runtime hours used in The runtime hours used in the GHG Unresolved -0.1%


Page 36 of 44

Item (YR-##)


Verification



applicable)

the GHG calculator is different from the data observed on site.

calculator is overestimated, based on conservative assumption, compared to the actual recorded runtime hours.

understatement

17-07 Number of trips for calculating emission from transportation do not agree with the raw material record spreadsheet which recorded each entry of the truck delivery

Minor discrepancies in counting the number of trips and resulted in insignificant differences in the emission reduction

Unresolved Insignificant

17-08 Emission from propane forklift used for transporting tails to FBB is not included in the quantification.

Propane forklift was observed onsite transporting tails to weight scale. This source of emission was estimated based on a conservative estimation of 32 L of propane used per day. The emission was less than 25 tCO2e annually, less than 0.1% of the total emission reduction.

Unresolved Negligible (<0.1%)

17-09 Propane consumption was calculated based on conservation assumption of 32 L/day.

It is recommended to track the actual propane usage for accuracy.

Unresolved Qualitative

17-10 Data entry errors are observed in transferring data from one spreadsheet to another on multiple calculations.

Improvement on QA/QC procedures is recommended.

Unresolved Qualitative

17-11 Amount of avoided feedstock going to landfill is different between B1 and B15 calculation

Blue Source has corrected the difference and updated the GHG calculator

Resolved n/a

17-12 The emergency generator diesel consumption calculation inherited previous year data and is not relevant to this year.

Blue Source corrected the calculation Resolved n/a


Page 37 of 44

Item (YR-##)


Verification



applicable)

17-13 Ash and bone chip third party invoices were missing.

Blue Source provided the invoices and the values in calculator agree with the invoices.

Resolved n/a

17-14 Supporting information/specifications were missing for the determination of low pressure steam enthalpy, high pressure pressure enthalpy, boiler efficiency, feed water temperature and boiler feed water

Blue Source and Cargill provided the relevant supporting information and specifications.

Resolved n/a

17-15 Pumped paunch was party of the biomass combusted in FBB but not included in the biomass calculation for B1 and B15 for avoided feedstock

Blue Source provided explanation of the exclusion of pumped paunch in the calculation. The explanation is accepted

Resolved n/a

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Appendix D: Statement of Verification


Page 39 of 44

Statement of Verification Associated SGER Submission

Offset Project Protocol Project ID #

Cargill High River Fluidized Bed Boiler Offset Project

Energy Generation from the Combustion of Biomass Waste version 2.0 April 2014 9327-1871

Project Developer Serial Range Start Report Period

Cargill Ltd.

January 1, 2018December 31, 2018

Serial Range End

Statement of Verification

GHG Assertion

Value Units

Total Baseline Emissions) 41,836 tonnes CO2eq

Total Project Emissions ) 10,568 tonnes CO2eq

Other ) tonnes CO2eq

Net Reductions) 31,268 Units

Statement of Assertion

Emission reductions of 31,268 t CO2e were achieved in the period January 1, 2018 to December 31, 2018.


Page 40 of 44

Responsibilities of Project Developer and Third Party Verifier

Blue Source is responsible for the preparation and fair presentation of the information within the Offset Project Plan, Offset Project Report and the Greenhouse Gas Assertion of Emission Reduction Credits in accordance with the requirements of the Alberta Offset Credit System under the Carbon Competitiveness Incentive Regulation (CCIR). Cargill is responsible for the implementation and operation of the Project at the site location.

Keystone Environmental is responsible to provide our opinion to a reasonable level of assurance that the GHG Emission Reduction Assertion in the 2018 reporting period is materially correct and presented fairly in accordance with the applicable criteria.

Conclusion

Based on our review, it is our opinion at a reasonable level of assurance that the Greenhouse Gas Assertion presented in the Offset Project Report dated February 28, 2019 prepared by Blue Source Canada, are presented fairly, in all material respects, in accordance with the requirements of the Alberta GHG Offset System and are free of material errors, omissions, or misrepresentations.

Signature of Third Part Verifier


Keystone Environmental Ltd. Per: Judy Tai

Signature of Third Party Verifier Date:

February, 28 2019

First Name Last Name

Judy Tai

Professional Designation E-mail Address Phone Number

P.Eng [email protected] 604-430-0671

of 44

Appendix E: Conflict of Interest Checklist


Page 42 of 44

Conflict of Interest Checklist Associated SGER Submission Offset Project Protocol Cargill High River Fluidized Bed Boiler Offset Project

Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014)

Project Developer Report Type Report Period

Blue Source Canada Offset Project 2018 Checklist Respond either "True" or "False" to each of the following statements:

1. The relationship between my firm and this reporting company poses unacceptable threat to or compromises the impartiality of my firm.

False

2. The finances and sources of income of my firm compromise the impartiality of my firm.

False

3. The personnel my firm has scheduled to participate in the verification may have an actual or potential conflict of interest.

False

4. My firm participated in some manner in the development or completion of the associated offset submission for this reporting company.

False

5. My firm provided greenhouse gas consultancy services to this reporting company.

False

6. My firm will use personnel that have, are, or will be engaged or previously employed by the reporting company.

False

7. My firm will outsource the Statement of Verification for the associated offset submission.

False

8. My firm offers products or services that pose an unacceptable risk to impartiality.

False

Important: If you have checked "True" to any of the above, you may not fulfill the "independence" requirement for third party verifiers. Please contact Alberta Environment and Parks for further instruction. If the potential conflict of interest is a sufficient threat to impartiality (perceived or actual), or cannot be effectively managed, you Third Party Verification Report will not be acceptable to Alberta Environment and Parks.


Page 43 of 44

Signature of Third Party Verifier

I , Judy Tai (Third Party Verifier), have personally examined and am familiar

with the information contained in this Conflict-of Interest Checklist, and can demonstrate freedom from any conflict of interest related to the reporting company for which the verification was performed. I hereby warrant that the information submitted in this Conflict-of Interest Checklist is true, accurate and complete to the best of my knowledge, and that all matters affecting the validity of this Conflict-of-Interest Checklist have been fully disclosed. Impartiality shall be monitored over the duration of the verification and any identified actual or potential conflict-of-interest situations will be communicated to AEP directly.


Keystone Environmental Ltd. Per: Judy Tai

Signature of Third Party Verifier Date

February 28, 2019

First Name Last Name Judy Tai

Professional Designation E-mail Address Phone NumberP.Eng. [email protected] 604-430-0671


Page 44 of 44

Appendix F: Keystone Environmental Ltd. General Terms and Conditions for Services

1 Rev.Date: 181205

KEYSTONE ENVIRONMENTAL LTD. GENERAL TERMS AND CONDITIONS FOR SERVICES

All work and/or professional services described in the Proposal or Work Plan prepared by Keystone Environmental Ltd. ("Keystone Environmental shall be performed in accordance with these General Terms and Conditions. The Proposal or Work Plan stipulate the scope of work/services, schedule, compensation, and any other specified conditions. 1. COMPENSATION

The fees for services provided by Keystone Environmental consists of: (1) an hourly billing rate for any staff member working on the project, except for lump-sum or percent of construction fee basis projects; (2) reimbursement of direct expenses; (3) reimbursement of subcontractor's and other special costs; and (4) use and rental charges for equipment. Invoices will be issued monthly for payment, unless other arrangements have been agreed upon in writing. Invoices are due in 30 days of the invoice date. Subcontractor billings are payable upon presentation. A finance charge of 1.5% per month (19.6% per annum) may be charged on past due accounts. Payment of Keystone Environmental invoices shall be in Canadian currency. Payment shall be provided by money transfer, cheque, or with prior approval by Keystone Environmental, Master Card or Visa. A surcharge of 3% may be added to payments by MasterCard or Visa if the invoice amount exceeds $6,000.00. Fees shall be paid in advance if stipulated in the proposal and/or work plan. Keystone Environmental may, at its sole discretion, withhold work products at any time that invoices are past due and until invoices are paid in full. Keystone Environmental may also, at its sole discretion, stop work at any time invoices are past due. In the event that Keystone Environmental shall take collection or legal action for the recovery of the payment of outstanding invoices, Keystone Environmental shall be entitled to recover all collection and legal fees and expenses incurred by it with respect to such action. All time, including traveling hours, spent on the project by Keystone Environmental personnel will be invoiced. Overtime incurred by and paid to personnel may be invoiced at a rate of 1.2 times the hours worked, if so stipulated in the proposal and/or work plan. Unless a lump-sum or percent of construction fee basis is used, the fee estimate presented in the proposal and/or work plan is for budgetary purposes only and is not a fixed lump-sum or maximum fee. The estimated fee does not include GST/HST which will be charged in addition to the professional fees, expenses and disbursements. The estimated fee will not be exceeded without prior written approval from CLIENT. Estimated fees may be exceeded as a result of changed conditions outside the control of Keystone Environmental and/or change in scope of work. REIMBURSABLE EXPENSES (a) The following expenses will be invoiced at cost plus 10% to cover overhead:

(i) Travel expenses including airfare, rental vehicles, personal vehicles at $0.55/km for less than 5,000 kms and $0.49/km for 5,000 kms and over, subsistence and lodging.

(ii) Costs for expendable sampling and field supplies. (iii) All project-related purchases including subcontractor costs, laboratory charges, material fees,

duties, deposits, equipment purchases, third party equipment rentals and other outside costs incurred specifically for the project.

(b) The following expenses will be invoiced at the rates which follow:

(i) Field and reproduction equipment in accordance with our Equipment Rate Schedule. (ii) Engineering and specialty software services will be invoiced at $20.00/connect hour as

stipulated in the proposal and/or work plan

Technology & Support fee equal to three percent (3%) of all labour fees will be charged to cover communications costs, including telephone, cellular data, mailing and courier, creating electronic PDF reports, electronic file transfer, project administration and accounting labour, secure electronic professional signatures and seals.

2 Rev.Date: 181205

2. INDEPENDENT CONTRACTOR Keystone Environmental shall be an independent contractor and shall be fully independent in performing the

services and shall not act or hold themselves out as an agent, servant or employee of CLIENT. 3. KEYSTONE ENVIRONMENTAL'S PERFORMANCE Keystone Environmental shall perform the services with the standard of care that is in accordance with

generally accepted professional practices, for services of a similar nature and time. In the event Keystone Environmental's professional performance, fails to conform to the above stated

standard, Keystone Environmental shall, at its discretion and its expense, proceed expeditiously to repertory the nonconforming, or upon the mutual agreement of the parties, refund the amount of compensation paid to Keystone Environmental for such nonconforming work. In no event shall Keystone Environmental be required to bear the cost of gaining access in order to perform its obligations.

4. CLIENT WARRANTY CLIENT warrants that it will provide to Keystone Environmental all information regarding the site, including

underground structures and utilities, facilities, buildings, and land involved with the work and that such information shall be true and correct and that it has title to or will provide right of entry or access to all property necessary to perform the work. The Client shall provide all licenses and permits required for the work, unless otherwise stated in the proposal and/or work plan,

5. INDEMNITY

a. Subject to the limitations of Section 7 below, Keystone Environmental agrees to indemnify, and hold harmless CLIENT (including its officers, directors, employees and agents) from and against any and all losses, damages, liabilities, and the costs and expenses incident thereto (including reasonable legal fees and reasonable costs of investigation) which any or all of them may hereafter incur, become responsible for or pay out as a result of death or bodily injuries to any person, destruction or damage to any property, private or public, contamination or adverse effects on the environment or any violation or alleged violation of governmental laws, regulations, or orders, to the extent caused by or arising out of: (i) Keystone Environmental's errors or omissions or (ii) negligence on the part of Keystone Environmental in performing services hereunder.

b. CLIENT agrees to indemnify and hold harmless Keystone Environmental (including its officers,

directors, employees and agents) from and against any and all losses, damages, liabilities, and the costs and expenses incident thereto (including legal fees and reasonable costs of investigation) which any or all of them may hereafter incur, become responsible for or pay out as a result of death or bodily injuries to any person, destruction or damage to any property, private or public, contamination or adverse effects on the environment or any violation or alleged violation of governmental laws, regulations, or orders, caused by, or arising out of in whole or in part: (i) any negligence or willful misconduct of CLIENT, (ii) any breach by CLIENT of any warranties or other provisions hereunder, (iii) any condition including, but not limited to, contamination existing at the site, or (iv) contamination of other property arising or alleged to arise from or be related to the site, provided however, that such indemnification shall not apply to the extent any losses, damages, liabilities or expenses result from or arise out of: (i) any negligence or willful misconduct of Keystone Environmental; or(ii) any breach of Keystone Environmental of any warranties hereunder.

6. LIMITATION OF LIABILITY Keystone Environmental's total liability, whether arising from or based upon breach of professional standard

of care, breach of contract, tort, including Keystone Environmental's negligence, strict liability, indemnity or any other cause of basis whatsoever, is expressly limited to the limits of Keystone Environmental's insurance coverage. This provision limiting Keystone Environmental's liability shall survive the termination, cancellation or expiration of any contract resulting from this Proposal and the completion of services thereunder. After three (3) years of completion of Keystone Environmental's services, any legal costs arising to defend third party claims made against Keystone Environmental in connection with the project defined in the Proposal or Agreement will be paid in full by the CLIENT.

7. INSURANCE Keystone Environmental, during performance of this Agreement, will at its own expense carry Worker's

Compensation Insurance within limits required by law; Comprehensive General Liability Insurance for bodily injury and for property damage; Professional Liability Insurance for errors, omissions and negligence; and Comprehensive Automobile Liability Insurance for bodily injury and property damage. At CLIENT'S request, Keystone Environmental shall provide a Certificate of Insurance demonstrating Keystone Environmental's compliance with this section. Such Certificate of Insurance shall provide that said insurance shall not be cancelled until at least ten (10) days after written notice to CLIENT.

3 Rev.Date: 181205

8. CONFIDENTIALITY Each party shall retain as confidential all information and data furnished to it by the other party which relate

to the other party's technologies, formulae, procedures, processes, methods, trade secrets, ideas, improvements, inventions and/or computer programs, which are designated in writing by such other party as confidential at the time of transmission and are obtained or acquired by the receiving party in connection with work or services performed subject to this Proposal or Agreement, and shall not disclose such information to any third party.

However, nothing herein is meant to prevent nor shall it be interpreted as preventing either

Keystone Environmental or CLIENT (the Parties) from disclosing and/or using said information or data; (i) when the information or data is actually known to the receiving Party before being obtained or derived from the transmitting Party; or (ii) when the information or data is generally available to the public without the receiving Party's fault; or (iii) or (iii) where a written release is obtained by the receiving Party from the transmitting Party; or (iv) as required by law.

9. PROTECTION OF INFORMATION Keystone Environmental specifically disclaims any warranties expressed or implied and does not make any

representations regarding whether any information associated with conducting the work, including the report, can be protected from disclosure in responses to a request by a federal, provincial or local government agency, or in response to discovery or other legal process during the course of any litigation involving Keystone Environmental or CLIENT. Should Keystone Environmental receive such request from a third party, it will immediately advise CLIENT.

10. ASSIGNMENT/SUBCONTRACT Neither party hereto shall assign this Agreement or any part thereof nor any interest therein without the prior

written approval of the other party hereto except as herein otherwise provided. Keystone Environmental shall not subcontract the performance of any work hereunder without the written approval of CLIENT. Subject to the foregoing limitation, the Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto.

11. ESTIMATES

To the extent the work requires Keystone Environmental to prepare opinions of probable cost, for example, opinions of probable cost of construction, such opinions shall be prepared in accordance with generally accepted engineering practice and procedure. However, Keystone Environmental has no control over construction costs, competitive bidding and market conditions, costs of financing, acquisition of land or rights-of-way and Keystone Environmental does not guarantee the accuracy of such opinion of probable cost as compared to actual costs or contractor's bid.

12. DELAYED AGREEMENTS AND OBLIGATIONS The performance by Keystone Environmental of its obligations under this Agreement depends upon the

CLIENT performing its obligations in a timely manner and cooperating with Keystone Environmental to the extent reasonably required for completion of the Work. Delays by CLIENT in providing information or approvals or performing its obligations set forth in this Agreement may result in an adjustment of contract price and schedule.

13. CONSTRUCTION PHASE To the extent the work is related to or shall be followed by construction work not performed by

Keystone Environmental, Keystone Environmental shall not be responsible for the construction means, methods, techniques, sequences or procedures of construction contractors, or the safety precautions and programs incident thereto, and shall not be responsible for the construction contractor's failure to perform the work in accordance with the contract documents, drawings and specifications. Keystone Environmental will not direct, supervise or control the work of the CLIENT'S contractors or the CLIENT'S subcontractors.

14. DOCUMENTATION, RECORDS, AUDIT Keystone Environmental when requested by CLIENT, shall provide CLIENT with copies of all documents

relating to the service(s) of work performed. Keystone Environmental shall retain true and correct records in connection with each service and/or work performed and all transactions related thereto and shall retain all such records for twelve (12) months after the end of the calendar year in which the last service pursuant to this Agreement was performed. CLIENT, at its expense and upon reasonable notice, may from time to time during the term of this Agreement, and at any time after the date the service(s) were performed up to twelve (12) months after the end of the calendar year in which the last service(s) were performed, audit records of Keystone Environmental in connection with all costs and expenses which it was invoiced.

4 Rev.Date: 181205

15. REPORTS, DOCUMENTS AND INFORMATION All field data, field notes, laboratory test data, calculations, estimates and other documents prepared by

Keystone Environmental in performance of the work shall remain the property of Keystone Environmental. If required as part of the work, Keystone Environmental shall prepare and provide to the CLIENT a report summarizing the work, detail design, specifications and drawings, as the case may be (CLIENT Report), with electronic secure signature and professional seal. CLIENT shall use the report for its internal purposes and only for those purposes consistent with that which the services and work were performed. , Keystone Environmental shall retain an electronic copy of such CLIENT Report which shall be deemed the original and true copy of the report..

The CLIENT Report shall not to be changed in any way without the prior written consent of Keystone Environmental. The Client accepts full responsibility for any changes made to the report without the prior written consent of Keystone Environmental and shall indemnify and hold harmless Keystone Environmental from any claims arising from use of such changed reports.

16. LIMITED USE OF REPORT Any report prepared as part of the work will be prepared solely for the internal use of CLIENT. Unless

otherwise prior to agreed by Keystone Environmental in writing, CLIENT agree that third parties are not to rely upon the report.

17. SAMPLE MANAGEMENT CLIENT shall be the owner of all samples collected by Keystone Environmental from the project site .

Keystone Environmental or its laboratory sub-contractor will store such samples in a professional manner in a secure area for the period of time necessary to complete the project. Upon completion of the project, Keystone Environmental disposes of the samples in a lawful manner.

18. ACKNOWLEDGMENT AND RECOGNITION OF RISK CLIENT recognizes and accepts the work to be undertaken by Keystone Environmental may involve

unknown undersurface conditions and hazards. CLIENT further recognizes that environmental, geologic, hydrological, and geotechnical conditions can and may vary from those encountered by Keystone Environmental at the times and locations where it obtained data and information and that limitations on available data may result in uncertainty with respect to the interpretation of these conditions. CLIENT recognizes that the performance of services hereunder or the implementation of recommendations made by Keystone Environmental in completing the work required may alter the existing site conditions and affect the environment in the site area.

Unknown undersurface conditions, including underground utility services, tanks, pipes, cables and other

works (Underground Works) may be present at the site. Keystone Environmental will conduct utility locates to obtain available information regarding the location of Underground Works in accordance with industry practice. Utility locates are not a guarantee of the location of, or existence of, Underground Works and as a result damage to Underground Works may occur. Keystone Environmental relies on utility locates and Client provided “as-built” and record drawings to determine the location and existence of Underground Works. CLIENT recognizes that the use of utility locates is not a guarantee or warranty that Underground Works may not be damaged and acknowledges that Keystone Environmental is not responsible for any damage caused to Underground Works or the repair of such damage or any resulting or related damage and any costs related to such damage.

19. DISPOSAL OF CONTAMINATED MATERIAL It is understood and agreed that Keystone Environmental is not, and has no responsibility as, a generator,

operator or storer of pre-existing hazardous substances or wastes found or identified at work sites. Keystone Environmental shall not directly or indirectly assume title to such hazardous or toxic substances and shall not be liable to third parties.

CLIENT will indemnify and hold harmless Keystone Environmental from and against all incurred losses,

damages, costs and expenses, including but not limited to attorneys' fees, arising or resulting from actions brought by third parties alleging or identifying Keystone Environmental as a generator, operator, storer or owner of pre-existing hazardous substances or wastes found or identified at work sites.

20. SUSPENSION OR TERMINATION In the event the work is terminated or suspended by CLIENT prior to the completion of the services

contemplated hereunder, Keystone Environmental shall be paid for: (i) the services rendered to the date of termination or suspension, (ii) the demobilization costs, and (iii) the costs incurred with respect to non-cancelable commitments.

5 Rev.Date: 181205

21. FORCE MAJEURE Neither party shall be responsible or liable to the other for default or delay in the performance of any of its

obligations hereunder (other than the payment of money for services already rendered) caused in whole or in part by strikes or other labour difficulties or disputes; governmental orders or regulations; war, riot, fire, explosion; acts of God; acts of omissions of the other party; any other like causes; or any other unlike causes which are beyond the reasonable control of the respective party.

In the event of delay in performance due to any such cause, the time for completion will be extended by a

period of time reasonably necessary to overcome the effect of the delay. The party so prevented from complying shall within a reasonable time of its knowledge of the disability advise the other party of the effective cause, the performance suspended or affected and the anticipated length of time during which performance will be prevented or delayed and shall make all reasonable efforts to remove such disability as soon as possible, except for labour disputes, which shall be solely within said party's discretion. The party prevented from complying shall advise the other party when the cause of the delay or default has ended, the number of days which will be reasonably required to compensate for the period of suspension and the date when performance will be resumed. Any additional costs or expense accruing or arising from the delaying event shall be solely for the account of the CLIENT.

22. NOTICE Any notice, communication, or statement required or permitted to be given hereunder shall be in writing and

deemed to have been sufficiently given when delivered in person or sent by facsimile, wire, or certified mail, return receipt requested, postage prepaid, to the address of the party set forth in the Authorization for Work, or to such address for either party as the party may be written notice designate.

23. GOVERNING LAW This Agreement shall be governed by and interpreted pursuant to the laws of the Province of

British Columbia. 24. HEADINGS AND SEVERABILITY

Any heading proceeding the text of sections hereof is inserted solely for convenience or reference and shall not constitute a part of the Agreement and shall not affect the meanings, context, effect or construction of the Agreement. Every part, term or provision of this Agreement is severable from others. Notwithstanding any possible future finding by duly constituted authority that a particular part, term or provision is invalid, void or unenforceable, this Agreement has been made with the clear intention that the validity and enforceability of the remaining parts, terms and provision shall not be affected thereby.

25. ENTIRE AGREEMENT The terms and conditions set forth herein constitute the entire Agreement and understanding or the parties

relating to the provision of work or services by Keystone Environmental to CLIENT, and merges and supersedes all prior agreements, commitments, representation, writings, and discussions between them and shall be incorporated in all work orders, purchase orders and authorization unless otherwise so stated therein. The terms and conditions and details of this proposal and/or work plan may be amended only by written instrument signed by both parties.