Compliance with RHI sustainability requirements

Luke Bailey – Senior Policy Manager20/04/2016

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Overview

• The sustainability requirements

• Scheme update

• Demonstrating compliance with the sustainability requirements

• The annual independent sustainability audit report

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• The sustainability requirements came into force on 5th October 2015.

• Applies to all new and existing participants generating heat (or heat and power) from biomass or biogas and those producing biomethane for injection.

• Applies to fuel used from the date the regulations came into force.

• The requirements are made up of:- a greenhouse gas (GHG) emissions limit- land criteria

Sustainability

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• The greenhouse gas (GHG) emissions limit is 34.8 gCO2(eq) per MJ of biomass heat generated or biomethane injected. The methodology for calculating the GHG value is aligned with the RED.

• For woody biomass fuel the land criteria requirement is aligned with the Timber Standard.

• For non-woody fuels the land criteria requirement is aligned with the RED.

• Waste as a fuel is considered to be sustainable under the regulations.• However, participants using waste as a fuel (solely or in addition to other fuels) must

declare that the relevant fuel is a waste and be able to demonstrate that their fuel meets the regulatory definition of a waste.

Further information can be found in our guidance and the woodfuel advice note (for woody biomass).

Summary of GHG and land criteria

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• The regulations specify that ‘waste’ has the meaning given in Article 3(1) of Directive 2008/98/EC of the European Parliament and of the Council on waste(b) and includes excreta produced by animals

“…any substance or object which the holder discards or intends or is required to discard.” Waste and “excreta produced by animals.”

• The RHI regulations definition of waste differs slightly from the Environment Agency definition. You must demonstrate that any ‘waste’ consignments meet the RHI definition.

Waste and excreta

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Technology Number of installations

approved

Number of applications under

review

Solid biomass (inc.CHP)

13075 1202

Biogas (inc. CHP) 40 421

Biomethane 41 31

Biomass, Biogas and Biomethane update

Figures cover since scheme opening to 31st March 2016. Full applications only.

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Application stage

• All biogas and biomethane applicants submit an FMS

• Agree with Ofgem how each consignment will be determined

• Enter your agreed consignments on the register ready to report against

Periodically

• Declaration of sustainability criteria compliance and submit GHG figure (per consignment)

• In addition, retain GHG emissions calculations and land criteria compliance evidence

• Keep FMS up-to-date – inform Ofgem of process changes by re-agreeing the updated FMS with us.

• Annual (within 3 months of accreditation date anniversary) submission of an independent audit report if biogas ≥1MW or biomethane

Demonstrating compliance

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What is an annual sustainability audit report?

• This audit is a regulatory requirement and an ongoing obligation in order to remain compliant and continue to receive RHI payments.

• The audit should be prepared in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised).

• A lack of supporting evidence for sustainability of fuels may lead to enforcement action, including reducing or withholding payments.

Sustainability audit reports

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Who needs to provide these?

• Biomass and biogas self-reporting and ≥ 1MWth (including waste)• Biomethane producers

• Must be prepared by a person who is not the participant and is not a connected person.

• The RHI regulations are clear that “connected person” means any person connected to the participant within the meaning of section 1122 of the Corporation Tax Act 2010.

When do I have to do this?

• The audit report should be submitted annually, no later than 3 months after each anniversary of the tariff start date.

Sustainability audit reports

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What needs to be verified?

• The audit provides independent assurance to Ofgem that the fuel classification and sustainability reporting done quarterly are accurate and based on verifiable evidence.

• It will also verify that these can be traced back through supply chain by use of an adequate chain of custody system for the entire annual reporting chain.

• The auditor will therefore be looking for:

• Traceability of the information down the supply chain.• Completeness of the data being reported - does it accurately identify individual

consignments.• Consistency in methodologies followed for calculating and reporting actual carbon

data.• Accuracy of the reporting party’s collation and reporting of data.

Sustainability audit reports

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Sustainability audit reports

What do I need to do now?

• Read the Sustainability Audit Guidance for Participants and Auditors

• This contains a wealth of useful and important information and instructions.

• Find out when your tariff anniversary date is and be prepared in advance to appoint an auditor and have all your paperwork in order.

• Ofgem will contact you to remind you that this needs to be submitted. You will be contacted around the time of your tariff anniversary date.

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Ofgem Enquiries: rhi.biomass-sustainability@Ofgem.gov.uk 0845 200 2122

DECC Renewables Delivery Team: deccbiomass@decc.gsi.gov.uk 0300 068 6184/6194

RHI main guidance documents:

• RHI Guidance Volume 1: Eligibility and how to apply• RHI Guidance Volume 2: Ongoing obligations and payments• RHI sustainability self-reporting guidance• Fuel Measurement & Sampling (FMS) Guidance• Sustainability Audit Guidance for Participants and Auditors

• FMS Questionnaire• FMS Questionnaire for biomethane producers• Biogas and biomethane apportioning tool

Further information