11 ritchie ccs_mrv_presentation_jan_2012_v1a

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Presentation to the

UKCCSC Winter School

Thursday 12th January

2012

By

Andrew Ritchie

Climate Change Services

Manager, LRQA Ltd

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Content

Discussion on three areas:

1. Carbon Capture & Storage in the EU Emission Trading Scheme

2. Carbon Capture & Storage in the Clean Development Mechanism

3. Verification

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Carbon Capture & Storage in the

EU Emissions Trading Scheme (1)

So what is EUETS and how does it work.

• The EU ETS is one of the policies introduced across the European Union (EU) to help it

meet its greenhouse gas emissions reduction target under the Kyoto Protocol. The EU

has to make an eight per cent reduction on 1990 levels by the first Kyoto Protocol

commitment period (2008 - 2012).

• The EU ETS commenced in 2005 and is the largest multi-country, multi-sector

greenhouse gas emissions trading system in the world. It includes around 11,000

installations (excluding aviation) accounting for about 45 per cent of EU carbon dioxide

(CO2) emissions.

• An overall limit, or 'cap', is set by Member State's Governments on the total amount of

emissions allowed from all the installations covered by the scheme. The allowances are

then distributed to the installations in the scheme.

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• At the end of each year, operators are required to ensure they have enough allowances to cover their installation's emissions. They have the flexibility to buy additional allowances (on top of their free allocation), or to sell any surplus allowances generated from reducing their emissions.

• Installations covered by the EU ETS are those which carry out activities listed in Annex I of the EU ETS Directive. These include energy activities, production and processing of ferrous metals, mineral industries and pulp and paper industries.

• The EU ETS Directive requires all installations carrying out activities listed in Annex I to hold a greenhouse gas emissions permit. The conditions of the permit will require installations to monitor and report emissions in accordance with the Commission's guidelines for monitoring and reporting.

• Each year emissions data must be verified, and the equivalent number of allowances surrendered. All transactions and surrendering of allowances take place on a national registry.

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Documents to consider:

• Commission Decision 2007/589/EC of 18 July 2007 establishing guidelines for the

monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC

• Commission Decision of 8 June 2010 amending Decision 2007/589/EC as regards the

inclusion of monitoring and reporting guidelines for greenhouse gas emissions from the

capture, transport and geological storage of carbon dioxide

• Directive 2009/31/EC of 23 April 2009 on the geological storage of carbon dioxide

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Directive 2009/31/EC defines the following:

• Selection of storage sites and exploration permits

• Storage permits (application process, conditions, etc)

• Operation, closure and post-closure obligations

• CO2 stream acceptance criteria and procedure

• Monitoring

• Reporting

• Measures in case of leakages or significant irregularities

• Closure & post-closure obligations

• Annex II – Criteria for establishing and updating the monitoring plan

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The Commission Decision of 8 June 2010:

• Defines what is meant by ‘Transferred CO2’

• Creates 3 new annexes to the Decision 2007/589/EC (known as the ‘MRG’) which

define:

• Boundaries – these will be defined in the Permit for the installation issued by the

competent authority

• How CO2 amounts transferred/emitted/leaked will be determined

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Key documents for a CCS Installation will be:

• Permit issued by the Competent Authority

• Monitoring Plan

• Improvement Plan

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Clean Development Mechanism (1)

So what is CDM and how does it work.

• The CDM allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialised countries to a meet a part of their emission reduction targets under the Kyoto Protocol.

• The mechanism stimulates sustainable development and emission reductions, while giving industrialised countries some flexibility in how they meet their emission reduction limitation targets.

• The CDM is the main source of income for the UNFCCC Adaptation Fund, which was established to finance adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change. The Adaptation Fund is financed by a 2% levy on CERs issued by the CDM.

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Simplified CDM process:

• Project Participant (PP) designs an emission reduction project and prepares a Project

Design Document (PDD) in accordance with the scheme requirements and a specific

methodology

• A Designated Operational Entity (DOE) validates the PDD (including a visit to the site

and review of data) and recommends registration of the project to the Executive Board.

• The Executive Board registers the project as a CDM project.

• When the project has achieved emission reductions, the PP produces a Monitoring

Report (MR)

• A DOE verifies the emissions reductions in the MR and recommends issuance of the

Certified Emission Reductions (CERs) to the Executive Board.

• The Executive Board approves issuance and the PP receives their CERs.

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Documents to consider:

• Decision 3/CMP.1 Modalities and procedures for a clean development mechanism as

defined in Article 12 of the Kyoto Protocol

• Draft decision -/CMP.7 Modalities and procedures for carbon dioxide capture and

storage in geological formations as clean development mechanism project activities

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Draft decision -/CMP.7 defines the following:

• Participation requirements

• Validation and registration

• Monitoring

• Verification and certification

• Issuance of certified emission reductions

• Addressing non-permanence

• Additional requirements covering:

• Selection and characterisation of the geological storage site

• Risk assessment, monitoring, liability, etc

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Key documents for a CDM Project will be:

• Project Design Document

• Methodology

• Monitoring Plan

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Verification

How does Verification fit in to EUETS and CDM?

• In EUETS, it is a requirement of section 10 of Annex I of Decision 2007/589/EC for a verification to

be undertaken by an accredited third party to enable the verifier to come to a verification opinion

that states with reasonable assurance whether the data in the emissions report is free from

material misstatements and whether there are no material non-conformities.

• In CDM, it is a requirement of Modalities and Procedures for a CDM as defined in Article 12 of the

Kyoto Protocol for

• Validation of a project activity by a designated operational entity;

• Verification by the designated operational entity of the monitored reductions in anthropogenic

emissions by sources of greenhouse gases that have occurred as a result of a registered

CDM project activity during the verification period.

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Verification

So what is Verification?

• The methodology to provide reasonable assurance of the reliability,

credibility and accuracy of monitoring systems and the reported data and

information relating to emissions

• It enables a verifier to state that the data is ‘free from material misstatement’

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Completeness

Boiler

Boiler

Boiler

Production Process

Site Boundary Fence

Transparency

Consistency

vs

Trueness (or Accuracy)

Sta

ndby G

enera

tor

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Verification

The Verification Process

• Strategic Analysis (SA)

• Risk Analysis (RA)

• Verification Planning

• Process Analysis

• Report

Verification Report

Process Analysis

Verification Planning

Risk Analysis

Strategic Analysis

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Verification

Benefits of 3rd Party Verification

• Verification

• provides credibility, trust and confidence

• ensures good quality data that is free from material misstatement

• 3rd Party Verification

• enables greater coverage of installations and data

• provides greater efficiency

• utilises experience

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Any questions?