EU Companies are required to monitor and report their greenhouse gas emissions under the European Union Emissions Trading Scheme (ETS). In 2013 Phase 3 begins and new guidelines for reporting have been developed to build upon the previous two phases. Chris Dimopoulos from the National Physical Laboratory (NPL) has been reviewing the new guidelines. He explains the current system and what the changes will mean.
The ETS requires emitters of carbon dioxide within the EU to monitor their emissions and report them annually. Every year they must surrender allowances (one allowance equals one tonne of CO2), to account for their actual emissions.
The installations get the trading credits from NAPS (national allocation plans) which are part of each country”s government. Besides receiving this initial allocation, an operator may purchase EU and international trading credits, either from other organisations or from carbon offset projects. Equally, organisations that reduce carbon emissions can sell their credits. NAPs will be replaced by a single EU-wide cap for Phase 3 of the scheme.
This system creates a cap on overall European emissions and provides financial incentives for organisations to reduce their emissions. The target is that by 2020 the number of allowances available will be 21% below 2005 levels.
The importance of measurement
The ETS currently covers more than 11,000 installations in the energy and industrial sectors, which are collectively responsible for close to half of the EU”s CO2 emissions and 40% of its greenhouse gas emissions. This includes over 850 organisations in the UK.
Key to the success of the programme is ensuring companies accurately report their emissions to the relevant authority. The EU has published a set of monitoring and reporting guidelines (MRG) to ensure these are measured and reported accurately.
The current MRG defines the methodology used to measure emissions. Companies must monitor their emissions either through a calculation based methodology or through direct measurement. The calculation involves multiplying activity data (fuel consumption) by emission factor (carbon content of fuel) by oxidation factor (ratio of carbon oxidised to CO2). Direct measurement requires analysis of the CO2 content of stack emissions onsite through Continuous Emissions Monitoring Systems (CEMS).
Companies fall into three categories, A, B or C, depending on their emissions – the higher the emissions, the more stringent the reporting requirements. The category and the type of process or fuel, will in turn assign a specific tier to the company as a whole, or to a specific emission source within it. Different tiers have different requirements in regards to the methods used to determine CO2 emissions. For example lower tiers can use a default value for fuel emission factor, but higher tiers must send samples for analysis.
Once allocated a tier, companies must submit a plan specifying their methodology for measuring and reporting emissions, including any uncertainties in their methods.
Time to update the requirements
The ETS sets targets which run over a period of several years. The second phase of the ETS, which started in 2008, will end this year and the third will begin in 2013. As we enter a new period, consultations have been run to identify ways to improve reporting for the next trading period.
The new guidelines make a number of small but significant changes which address shortcomings in the current guidelines.
One issue that has been addressed, is the more clear and concise definition of clauses within the guidelines which allow companies to use lower tiers if the measures needed to adhere to their specified ones are deemed ‘technically not feasible or would incur unreasonable costs’. The new MRG requires operators to prove by means of calculation, that the costs outweigh the benefits. The benefit will be calculated by multiplying an improvement factor with a reference price of 20 euro per allowance. The improvement factor will be dependent on average annual emissions and the difference between uncertainty achieved by the operator and the uncertainty threshold of the tier they should be adhering to.
The current version of the MRG requires companies that choose direct measurement to determine their emissions to receive approval from the competent authority and demonstrate that direct measurement will achieve greater accuracy. The new guidelines place the two methods on a more equal footing recognising the increased confidence in CEMS and the quality assurance procedures related to them. Operators will now be able to use direct measurement as long they can adhere to uncertainty and tier requirements, reducing the barriers for companies wishing to use this method.
For those using the calculation method, an uncertainty assessment of measurement systems for fuel consumption must be carried out by operators and the new guidelines will provide more detail about calibration and uncertainty requirements. Suppliers of metering devices will provide an uncertainty for the system, but factors such as calibration, maintenance, operating conditions and environmental conditions can affect uncertainty further. The new MRG requires operators to multiply calibration results by a conservative adjustment factor at least once a year and after each calibration. This is to take into account the effect of uncertainty during use. Any additional uncertainty sources in regards to how the metering devices are operated are also required to be included in the uncertainty budget.
The new guidelines also introduce a requirement for operators to review methodologies at specified time intervals to establish what steps can be taken to improve their methodology. Operators that are using lower tiers than those specified in the guidelines should report on steps taken to adhere to their required tier. For Category A the time interval is four years, Category B two years and Category C one year.
The monitoring plan will be a core element of the MRG for Phase 3, and understanding its requirements and the documentation needed for submission, including the new requirements, will be crucial for operators responsible for emissions monitoring.
Reviewing the guidelines and the supporting measurement expertise
The review of the new guidelines was carried out as part of an ongoing NPL project called Metrology for Emissions Trading. This draws on NPL’s expertise in emissions monitoring, and falls under the remit of the recently launched Centre for Carbon Measurement at NPL, which is developing the technology and expertise to accurately and practically monitor carbon emissions in a wide range of environments. The Centre is supported by the National Measurement System and is a key component of the National Measurement Strategy.
The ETS project involves working closely with industry to analyse methods for monitoring, provide uncertainty guidance, and exploring difficulties in meeting requirements. This experience and expertise feeds into projects such as the development of guidelines which meet the needs for emissions reductions whilst reflecting the realities of business. It also supports the development of new techniques and services to help the industry meet monitoring guidelines as cost-effective and accurately as possible – helping both government and business meet emissions reductions targets.
NPL is available for advice and guidance on matters relating to the ETS and carbon measurement in general, and invites any feedback from industrial operators drawing from their experience on monitoring greenhouse gas emissions under the ETS so far.
National Physical Laboratory, Teddington, Middlesex can also be contacted on Tel: 0208 977 3222.