Phase II Monitoring, Reporting and Verification for Offshore Facilities:

“Frequently Asked Questions”

Department of Energy and Climate Change

January 2009

MRG2007 FAQ Version 1.0 January 2009

Table of Contents

General............................................................................................................................................................. 2M&R Plans........................................................................................................................................................ 2

Activity Data.................................................................................................................................................. 2Emission factors, fuel compositions and net calorific values.........................................................................2Oxidation factor............................................................................................................................................. 2

Reporting.......................................................................................................................................................... 2Verification.................................................................................................................................................... 2The Verification Opinion Statement (VOS)....................................................................................................2The Registry.................................................................................................................................................. 2Annual Improvements Report....................................................................................................................... 2

Greenhouse Gas Emissions Permits................................................................................................................2Qualifying Installations and Combustion Plant..............................................................................................2Permit Variations........................................................................................................................................... 2

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General

1. What and who is this Q and A for?

This Q and A is to assist operators to prepare for, and verifiers to carry out, the annual verification process for the EU Emissions Trading Scheme (EUETS).

Annual verification involves an independent review by an accredited verification body (the verifier) of the annual emissions determined by the operator. The verifier also checks that the monitoring and reporting has been performed in accordance with the requirements in the facility’s Greenhouse Gas Emissions Permit, the Phase II Monitoring and Reporting Plan (M&R Plan) and the Commission’s revised Monitoring and Reporting Decision (herewith referred to as MRG 2007).

This Q and A is intended to supplement the “Guidance on Annual Verification for the EU ETS (August, 2005), a Quick Reference Guide for Operators” which is available at:

http://www.defra.gov.uk/environment/climatechange/trading/eu/pdf/faq-annualverify.pdf

Where this Q and A contradicts that guidance, operators and verifiers should use this Q and A as the basis for the Monitoring, Reporting and Verification for the Phase II Annual Emissions Report for Offshore Facilities.

2. Who should I contact to answer further questions?

Any queries about monitoring, reporting and verification that are not addressed in this Q&A should be directed to:

emt@decc.gsi.gov.uk or graeme.cobb@decc.gsi.gov.uk

(website: https://www.og.berr.gov.uk/environment/euetsr.htm )

Any queries in relation to verification body accreditation should be directed to the UK Accreditation Service (UKAS), via:

phil.shaw@ukas.com

(website: www.ukas.com)

M&R Plans

3. Some M&R Plans do not seem to be dated, so it’s difficult to ascertain which is the current and/or approved version. How can verifiers be sure which version is the most current?

The most recent approved version of the M&R Plan will have been used to draft Appendix 2 to the Permit, so the documents can be cross-checked. Where Appendix 2 does not reflect the M&R Plan, the operator should be able to provide documentary evidence relating to the approval of any differences in Appendix 2. Operators are required to incorporate changes to Appendix 2 in their M&R Plan, but there may be cases where the update of the M&R Plan is still outstanding. If in doubt, the DECC Environmental Management Team (EMT) will be able to confirm whether a

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variation to the Permit was requested that is not reflected in an amendment of the M&R Plan. If there has not been a formal request for a variation to the Permit, the original M&R Plan will still be valid, and EMT will be able to provide a copy of that Plan. If inconsistencies are noted and the operator cannot provide documentary evidence to explain the differences, clarification should be sought immediately from EMT, to avoid an unnecessary delay in the verification process. If inconsistencies are noted, it is important to remember that, for the purpose of verification, the M&R Plan has no legal status, and that the operators are being assessed against the obligations detailed in Appendix 2 to the Permit.

Activity Data

4. What is the acceptable Activity Data Tier for flaring

All operators are expected to meet Tier 1 requirements (17.5%) for the reporting of 2008 flare emissions unless otherwise agreed with EMT. Many will have committed to meet Tier 2 (12.5%). All operators will be expected to meet Tier 2 requirements by the end of 2009.

5. Do I need to report volumes in SI units (273.15 k and pressure conditions of 101.325 Pa)?

The offshore sector reports volumes in standard units defined at 15C and 1.01325 bar. However, if you are reporting gas volumes in EU ETS returns, these should be expressed in SI units to avoid confusion when compared against numbers reported by other EU ETS sectors. The CO2 emission factor used offshore is based on mass and there is no need, in calculating this factor, to change from the current use of standard units.

Guidance on conversion can be found at:

http://www.environment-agency.gov.uk/static/documents/Business/ETS7_Gas_Corrections_Guidance.pdf 6. Are there standard or default conversion factors for fuels, to convert from cubic metres

to tonnes etc.?

Conversion factors for gas use on offshore facilities should be based on the fuel composition / density measurements, and it is inappropriate to use industry standard or default factors.

7. Is it acceptable to base fuel gas usage and CO2 emissions calculations on equipment load data, rather than on metered fuel gas volumes?

Fuel gas use should be based on metered volumes. In some circumstances operators can use load / running hours: however, operators will need to demonstrate to the satisfaction of the verifier that the load / fuel usage curve has been calibrated under realistic operational conditions and remains valid, and that the running hours at each load are accurately recorded. Depending upon the quality of the data, this methodology could be used for both Tier 2 and Tier 3 reporting.

Emission factors, fuel compositions and net calorific values

8. Can calculations be carried out using an emission factor based on tCO2/t fuel, rather than tCO2/TJ?

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Yes. The UKOOA EEMS methodology uses a factor based on tCO2/t fuel, and this sort of emission factor is therefore standard practice for offshore facilities. Section 4.2.2.1.6 of the M&R Decision confirms that:

‘An operator may use an emission factor for a fuel expressed as carbon content (tCO2/t) rather than tCO2/TJ for combustion emissions if he demonstrates to the competent authority that this leads to a permanently higher accuracy. In this case the operator shall nevertheless periodically determine the energy content to meet his reporting requirements as specified in section 5 of this Annex’.

Operators should note that they are still required to report the Net Calorific Value of the fuels in the Annual Emissions Report (see Question 19 below).

9. Is it acceptable to use the fuel gas emission factor detailed on the DEFRA website?

As offshore fuel gas compositions vary from facility to facility, and can also change over time, it is considered inappropriate to use an industry standard or default Tier 2 emission factor. The default Tier 2 emission factors, taken from the UK Greenhouse Gas Inventory (and listed on the Defra website), are therefore considered to be inappropriate for calculating emissions from offshore facilities, as they could lead to erroneous reporting of emissions.

Offshore facilities were required to have implemented Tier 3 emission factors by the end of Phase I of the EU ETS, and are therefore required to use Tier 3 emission factors for the reporting of 2008 emissions. This requires sampling and analysis of the fuel gas to determine site-specific emissions factors (see Question 10 below).

10. What is an acceptable sampling and analysis frequency for measuring the fuel gas composition?

Facilities using the recommended Tier 3 emission factor must, as a minimum requirement, collect and analyse representative samples of the fuel gas stream(s) every calendar quarter. It is recommended that is if there is evidence of a fluctuating fuel gas composition (e.g. fuel switched from different sources), or in response to any significant change that is considered likely to affect the fuel gas composition (e.g. bringing on a new field), samples should be collected and analysed more frequently.

The requirement is for a minimum of four samples per annum spread equally throughout the calendar year. In some instances this may not be feasible (such as during unplanned shutdowns) and sampling may be missed or delayed. In these cases the operator should inform EMT by email as soon as they are aware that the sample has not been taken; informing EMT of the reason for the delay/omission and providing justification for any temporary variation to the requirement for quarterly sampling.

Note that some verifiers have requested evidence that quarterly sampling is sufficient to meet the uncertainty requirements of the EU ETS, i.e. to demonstrate that changes in the gas composition have not significantly change the derived CO2 factor. In response to this, DECC has agreed to develop a spreadsheet that operators can complete and submit to EMT with the annual returns. Pending completion of the spreadsheet, operators should continue to sample in line with the requirements detailed in the Appendix 2 to the Permit, and it can be assumed that EMT is satisfied that the gas composition is sufficiently constant to ensure that the sampling frequency is appropriate to meet the uncertainty requirement

The requirement to use laboratories accredited to EN ISO 17025:2005 has been changed to a preference rather than a statutory obligation, but the operator must demonstrate to the competent

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authority that the laboratory meets equivalent requirements to those set out in EN ISO 17025:2005. Whether it is a statutory obligation will be confirmed in Appendix 2 to the Permit

11. If it is necessary to collect a gas sample using a 'gas sampling cylinder’, is there any defined standard for these gas cylinders (in terms of their make, design, etc.) and are there standard procedures relating to how the sample must be obtained?

Suppliers of gas sampling cylinders can be found by searching the Internet. Any cylinders used should comply with Directive 1999/36/EC, the Transportable Pressure Equipment Directive (also known as the TPED), implemented in the UK as The Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2004.

Operators should be able to obtain advice from their analytical laboratory on the choice of sampling cylinder and, if necessary, guidance and training relating to sample collection. There is also an ISO standard which gives general advice on sampling (ISO 10715). In some cases, the analytical laboratory may require the operator to use the laboratory’s sample cylinders, and may insist upon collection by the laboratory’s staff.

12. Is the expectation that operators should use the results of the fuel gas sampling and analyses to update emission factors?

Operators must base the emission factors on a representative fuel gas composition. This can be handled in a number of ways (for example):

a. Use the standard, or reference, composition each year, comparing the results of the analyses with the standard composition on an annual basis to confirm that there is no significant difference. Existing industry tools (such as the EEMS database) can handle this method, and it is a pragmatic approach. However, it will be necessary to change this approach if there is a confirmed significant change in the fuel gas composition that would result in a material misstatement of reported emissions of carbon dioxide.

b. Retrospectively calculate the emission factor based on the average composition determined during the year. This will not be ideal for operators who routinely calculate and report emissions on a monthly or quarterly basis, as the total emissions would have to be recalculated and adjusted at the end of each year when the average composition data is available.

c. Update the emission factor quarterly on the basis of each set of analyses, and apply that emission factor until the results of the next quarterly sampling and analysis exercise are available. Existing industry tools (such as the current version of the EEMS database) may not be able to handle this approach.

The EMT recommended approach is that operators should use an annual average composition, checked and amended if appropriate for each calendar year, providing this would not result in a material misstatement of reported emissions of carbon dioxide, and that this can be demonstrated to the satisfaction of the verifier.

13. Can the fuel gas composition be applied annually in arrears?

This is acceptable, providing there is no significant change in the fuel gas composition that would result in a material misstatement of reported emissions of carbon dioxide. If there such a change, then the updated composition should be used from the date that the change in operation occurred or the change is the fuel gas composition is recorded. The results of subsequent analyses should then be used to calculate a new annual average composition and emission factor.

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14. I have some source streams on my installation that are de minimis and used infrequently do I need to account for these in my annual returns

Some installations hold small quantities of gas, such as cylinders of propane, that are used infrequently offshore and contribute a small fraction of the overall emissions of CO2. Where no monitoring methodology is specified for a de minimis source, verifiers should check that the emissions have been calculated on a fair and reasonable basis that does not lead to material error, and they should recommend that the operator confirm their chosen approach with the regulator.

Operators are therefore expected to include these sources within their M&R plan and to calculate emissions from them on a fair and reasonable basis. In the case of the propane cylinders this may be estimated based to content (in tonnes) divided by the likely replacement frequency (in years). Notwithstanding this, where these sources have not been included as a Schedule 1 activity, verifiers should note this in the improvements section of the verification report, and should consider whether it affects materiality of the data.

Verifiers do not need to recommend improvements to sources listed as de minimis. Instead, efforts should focus on recommending improvements to the monitoring of larger emission sources on a site.

15. Is the expectation that operators should use the results of the flare gas sampling and analyses to update emission factors?

The situation for flare gas is similar to that described above for fuel gas but complicated by the potential variation in the source of gas and, therefore, its composition. In addition, each platform will have its own flare profile which may also vary from year to year.

In general, gas to flare arises from three main sources:

Pilot & Purge Operational/plant Trips Emergency shutdown/process trips

In many cases fuel gas is used for pilot and purge and therefore the gas composition will be known; however for operational trips and shutdowns it may not be possible to measure the gas composition. In these cases it is acceptable to use data based on the condition of the processing plant and/or source prior to flaring, combined with process modeling to determine the relevant CO2

factor. Whichever method is used, operators should submit information on their proposed approach to EMT for approval.

Additional information on approaches to flare gas measurement can be found in the flare consent application documentation at:

https://www.og.berr.gov.uk/regulation/guidance/flare_vent.htm

16. Can modeling be used in place of a flare gas meter to determine activity data?

The Department’s preference is for the installation of flare gas meters but it is accepted that, for some installations, these may not meet the required turndown or that it may not be physically possible and/or cost effective to install and maintain a flare gas meter. In these instances, it is acceptable to adopt a flare gas measurement system based on monitoring of process operating conditions and control element positions, provided this can be shown to achieve an acceptable degree of uncertainty in flare reporting. In some cases, operators have adopted both approaches.

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17. What are the requirements for maintenance and calibration of gas chromatographs offshore?

Gas chromatographs (GCs) are often installed offshore for fiscal gas quality measurement, and the requirements for maintenance and calibration of fiscal measurement systems are described in the DECC Measurement Guidelines. There are no specific or additional maintenance and/or calibration requirements for offshore GCs that are also used for EU ETS reporting, but operators will be expected to have complied with the requirements prescribed in the DECC Measurement Guidelines. All records of relevant maintenance and calibrations should be made available to the verifier during the verification process.

18. Do online analysers and GCs for top tier reporting require calibration by a BS EN ISO/IEC 17025:2005 (ISO 17025) accredited company, as well as the use of ISO 17025 accredited reference gases?

Both requirements are considered to be reasonable and appropriate, to satisfy Section 7.2 of the Commission’s M&R Decision. However, operators can make a case for alternative arrangements if current practices do not involve the use of accredited companies or gases. If the operator has not made a case for alternative arrangements, and either the company or the gases used to perform the calibration are not ISO 17025accredited, this should be noted in the Verification Opinion Statement (VOS), and highlighted as a potential improvement. It does not, however, mean that the monitoring undertaken will not have met the requirements of the current tier, and should be dropped to a lower tier and use a standard, or reference, emission factor. Providing that the use of an online analyser satisfies the requirements of the DECC Measurement Guidelines, and the lack of accreditation is unlikely to have led to a material error, the verifier should issue a ‘Verified With Comments’ VOS. If the requirements of the DECC Measurement Guidelines are not being met, the verifier should advise the operator to bring this to the immediate attention of EMT, with a view to resolving the issues before the 31st March deadline for submission of the verified Annual Emissions Report.

19. Why are operators required to determine the Net Calorific Value of the fuel gas?

The Net Calorific Value (NCV) is not required to calculate the emissions, providing the EEMS methodology is used. However, the NCV of the fuel still needs to be determined and included in the Annual Emissions Report, to comply with the requirements of the EU Monitoring and Reporting Decision set out below.

“Emission factors are based on the carbon content of fuels or input materials and expressed as tCO2/TJ (combustion emissions), or tCO2/t or tCO2/m3 (process emissions). Emission factors and provisions for the development of activity-specific emission factors are given in sections 8 and 10 of this Annex. An operator may use an emission factor for a fuel expressed as carbon content (tCO2/t) rather than tCO2/TJ for combustion emissions if he demonstrates to the competent authority that this leads to a permanently higher accuracy. In this case the operator shall nevertheless periodically determine the energy content to meet his reporting requirements as specified in section 5 of this Annex.”

20. How is Net Calorific Value of the fuel gas determined?

Operators should calculate the Net Calorific Value (NCV) using the gas composition data used to determine the emission factor, as per the methodology detailed in ISO 6976. It is acceptable to use other standard methods to determine the NCV, but in most cases it will be simpler to use the fuel gas composition data. Where an alternative method is used, it will be necessary to provide evidence to EMT and the verifier that the method provides an equivalent result to that obtained using the fuel gas composition. This could be achieved through comparison of the NCV determined using the two methods, e.g. comparing analysis and modelling on an annual basis.

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EMT considers both procedures to be satisfactory for the purpose of meeting the Tier 3 reporting requirements.

21. Are there conversion factors to convert from Gross Calorific Value (GCV) to Net Calorific Value (NCV)?

Factors for converting GCV to NCV are contained in the emission factor spreadsheet on the Defra website at:

http://www.defra.gov.uk/environment/climatechange/trading/eu/operators/mon-rep-ver.htm

22. What are requirements for sampling and analysis of diesel fuel?

The requirement to sample diesel, or to obtain the results of diesel analyses undertaken by suppliers, has been withdrawn. The UKOOA emission factor (3.2 tonnes CO2/per tonne diesel) should be used, and the NCV should be recorded as per the DEFRA emission factor spreadsheet (43.32 GJ/tonne).

Oxidation factor

23. What oxidation factor should be applied in combustion calculations?In line with the requirements of the Commission’s M&R Guidelines, it will be necessary to apply an oxidation factor of 1 to the reported emissions from fuel use. For flaring, operators reporting at Tier 2 can continue to use an oxidation factor of 0.98.

Reporting

24. Who completes the Annual Emissions Report?

The operator must complete the annual report, NOT the verifier. The verifier then checks the report, the monitoring data, the calculations etc, following the process outlined in the Defra Guidance on Annual Verification and the requirements of MRG 2007.

25. Can operators use a methodology other than the standard EEMS methodology for reporting CO2 emissions?

Yes, provided it is specified in the M&R Plan approved by EMT (in which it will have been necessary to demonstrate equivalency to the satisfaction of EMT) and subsequently reflected in the Appendix 2 to the Permit. The methodology detailed in the Appendix 2 must be followed, and a variation of the Permit would be required to implement an alternative methodology.

26. With respect to fuel and flare gas composition, should any carbon dioxide (CO2) in the gas be included in, or excluded from, the Annual Emissions Report?

Any CO2 in the fuel gas that is being combusted should be included in the reported emissions. However, any CO2 removed from the produced gas prior to use as a fuel gas can be excluded. This anomaly arises because the EU ETS requires total emissions of CO2 from the sources listed on the Greenhouse Gas Emissions Permit to be monitored and reported, and ‘emissions’ means releases into the atmosphere from those sources. This definition does not, therefore, differentiate between CO2 created by combustion, and CO2 already present in the fuel gas that is being combusted. The EEMS methodology includes the CO2 component of the fuel gas when calculating the CO2 emissions. If an alternative methodology is used, the CO2 component of the fuel gas must

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also be included in the total emissions. In all cases, it is essential that the CO2 component is determined to the satisfaction of the verifier (see Question 23 above).

In the case of flare emissions, any CO2 removed from the export stream and disposed of via the flare would also have to be included in the reported emissions, but any CO2 removed from the export stream and disposed of by venting would be outwith the scope of the EU ETS.

Verification

27. What does the verifier do once they have the operator’s Annual Emissions Report?

By this time, the verifier will have performed most of the verification process and raised any issues with the operator that they required to be taken into consideration when compiling the Annual Emissions Report. The verifier will now undertake a final verification assessment, based on the information in the Annual Emissions Report, and provide a professional opinion as to whether, having considered all the available relevant information, the annual emissions are free from material misstatement, and that the monitoring has been performed in accordance with the Appendix 2 to the Permit and any other relevant requirements (see Defra Guidance on Annual Verification for more information). The verifier will collate that assessment in the Verification Opinion Statement (VOS), and copy the VOS into the relevant labelled “tabs” in the Annual Emissions Report. The completed Annual Emissions Report, incorporating the VOS, is then provided to the operator in a form that cannot be edited, for submission to EMT by 31 March. It should be noted that this process has changed slightly from that outlined in the Defra Guidance on Annual Verification, as the verifier now has to ‘cut and paste’ the VOS into the Annual Emissions Report and ‘lock’ it to prevent further editing.

28. Should verifiers request evidence that the Phase II M&R Plan has been approved by EMT?

The Phase II M&R Plans submitted by operators were all accepted by EMT. It should therefore be unnecessary to request evidence of approval, unless the operator has amended the plan and/or there are significant discrepancies between the plan and the Appendix 2 to the Permit that are not the subject of separate documentation provided by the operator. If evidence of approval, or in relation to any discrepancies, is required, the verifier should raise the matter with the operator, and ask the operator to contact EMT to seek confirmation of the approval.

29. Where the M&R Plan refers to particular standards, should the latest available version of that standard be used for verification, or the version referred to in the M&R plan?

The version referred to in the M&R Plan should be used, unless the operator confirms that there is a new version, and that version has been applied. If the operator has used the version referred to in the M&R Plan, the verifier may wish to point out that a more recent version is now available, and to refer to this in the improvements section of the VOS. This will ensure that the regulator is aware of the updated version and can consider whether it is appropriate to amend the permit requirements. If the operator has used the new version and not informed EMT, the verifier should confirm whether this has significantly affected the materiality of the data. In both cases, providing the version used has not significantly affected the materiality of the data, the verifier will be able to issue a ‘Verified With Comments’ VOS.

30. Can the verifier proceed if there are errors or discrepancies in the Appendix 2 to the Permit?

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No. The primary document is the Appendix 2 to the permit, and any errors or discrepancies in the Appendix must be brought to the attention of the operator and EMT, and subsequently corrected or approved by EMT.

31. What if the verifier advises the operator to apply for a Permit variation, and the application has still to be processed by EMT - can the verifier perform the verification and issue a VOS to allow the operator or the verifier to submit the Annual Emissions Report?

The verifier should proceed with the verification on the basis of the requested variation, but it should be clearly indicated that it is a ‘Verified With Comments’ VOS and that the request for a variation is still outstanding. The comments should include information about the requested variation, and confirmation that the application had not been approved at the time of completing the verification.

32. What should the verifier do when the tiers indicated in the Appendix 2 to the Permit are above those expected - i.e. are higher than the required tier identified in the M&R Plan or MRG 2007 or higher than required in respect of allowed minor or de minimis sources - should the verifier accept the higher tiers?

The verifier should initially cross-check the M&R Plan and the Appendix 2 to the Permit, to confirm that both refer to the higher tier. If they do not agree, the verifier should raise this with the operator and obtain records of any communication with EMT confirming the relevant tier. If there are no records, the verifier should ask the operator to liaise with EMT to confirm the relevant tier. If it is confirmed that the higher tier is correct, the verifier should proceed with the verification. It should not be assumed that the higher tier is incorrect, as Table 1 in MRG 2007 identifies the minimum tiers that may be required by a Competent Authority during Phase I of the ETS, and the use of lower tiers for minor and de minimis sources is also at the Competent Authorities’ discretion

If use of the higher tier has resulted in a failure to fully meet the requirements of that tier and a material misstatement of the emissions, the verifier should raise this with the operator and ask them to liaise with EMT to obtain a determination on how to proceed. The EMT determination will depend upon the significance and materiality of the misstatement, and will involve consultation with both the operator and the verifier.

33. What should the verifier do when the tiers indicated in the M&R Plan and/or the M&R Appendix to the Permit are below those expected - i.e. are lower than the required tier identified in the MRG 2007 - should the verifier accept the lower tiers?

Again the verifier should initially cross-check the M&R Plan and the M&R Appendix to the Permit, to confirm that both refer to the lower tier; and, if they do not agree, the verifier should raise this with the operator and, if necessary EMT, to confirm the relevant tier (see Question 45 above). If it is confirmed that the lower tier is correct, the verifier should proceed with the verification.

If it is subsequently confirmed that the operator has complied with the requirements of the lower tier, the verifier should issue a ‘Verified With Comments’ VOS, drawing attention to the requirement to move to a higher tier, and explaining that assessment. The verifier’s comments will then be taken into consideration by EMT when it reviews the Annual Improvements Report prepared by the operator. It should be borne in mind that the default required by the MRG 2007, which will have been applied when determining the Permit application, is that monitoring and reporting should be carried out according to the highest tier, subject to this being technically feasible and unlikely to result in unreasonable costs.

If, despite the lower tier, the Annual Emissions Report contains a material misstatement of the emissions, the verifier should raise this with the operator and ask them to liaise with EMT to obtain

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a determination on how to proceed. The EMT determination will depend upon the significance and materiality of the misstatement, and will involve consultation with both the operator and the verifier.

34. What requirements are there for verifiers to assess meter uncertainty and to appraise meter maintenance and calibration?

EMT recognises that offshore metering is a specialist area, and that expert guidance is required in relation to calculating meter uncertainty, and specifying meter maintenance and calibration requirements. To assist operators and verifiers, DECC has produced a guidance note against which verifiers should assess metering uncertainty. Where the verifier considers that improvements can be made to obtain more reliable data and evidence of the uncertainty, the verifier will provide details in the improvements section of the VOS, and issue a ‘Verified With Comments’ VOS. The operator will then be obliged to take these comments into consideration when completing the Annual Improvements Report, which should detail the timeframe for implementing the improvements that would not entail unreasonable costs. Further guidance on demonstrating that meters meet the required tier, and in the use of meters offshore for EU ETS, is provided in separate meter guidance produced for Phase II that can be found at:

https://www.og.berr.gov.uk/environment/MeteringGuidanceOffshoreFacilities_1207.pdf

35. Can the verification proceed where the meter has not been recently calibrated?

Where the frequency and nature of the checks is not specified in the M&R Plan, and there are no specific relevant international calibration standards, the specifications set out in the above referenced guidance should be accepted as evidence that the meter meets the required accuracy. Nevertheless, the verifier should review documentation describing any checks performed on the meter in recent years, particularly the reporting year. The verifier should take account of whether the operator has demonstrated that the metering equipment has been checked at regular intervals, including prior to use; whether the operator has demonstrated that the equipment has been checked against appropriate calibration standards traceable to international standards, appropriate draft standards, appropriate industry best practice guidelines, or appropriate on-site procedures; whether the operator has promptly taken any necessary remedial action when the equipment has been found not to conform to requirements; and whether the current procedures could lead to a material misstatement in the emissions figure that would justify a 'Not Verified' VOS. This element of the verification should be seen as the verifier working to meet the obligations under Section 7.4 of the Monitoring and Reporting Guidance to check that operators have satisfactorily met their obligations under Section 7.2. If the verifier considers that the procedures are inadequate, the verifier should then consider what improvements are necessary to obtain more robust evidence of meter accuracy, and this should be documented in the improvements section of the VOS. The operator will then be obliged to take these comments into consideration when completing the Annual Improvements Report, which should detail the timeframe for implementing the improvements that would not entail unreasonable costs. In the event that the verifier concludes that the current procedures could lead to a material misstatement in the emissions figure that would justify a 'Not Verified' VOS, the verifier should advise the operator to bring this to the immediate attention of EMT, with a view to resolving the issues before the 31st March deadline for submission of the verified Annual Emissions Report.

36. What evidence are operators required to present to verifiers regarding maintenance, calibration & uncertainty of diesel meters on supply boats?

The meters on third party supply boats are used for financial billing and cost allocation purposes, and all necessary controls over meter accuracy can be assumed to be have been addressed in that context. Offshore facilities will typically take deliveries from many different supply boats during the year, sometimes from supply boats that are not under hire to the operator of the facility. Gathering evidence in relation to the maintenance, calibration and uncertainty of meters on all

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supply boats servicing a facility would therefore be extremely difficult and resource intensive, and EMT does not consider this to be feasible, or necessary. The supply boat delivery data should therefore be accepted as correct and assumed to meet the required level of uncertainty.

37. Should verifiers investigate the over-reporting of emissions, where the source of the over-estimation is related to the inability to disaggregate excluded emissions, such as emissions relating to propulsion?

No, providing there is not a material misstatement of the emissions. If it is not possible to disaggregate the emissions, the only pragmatic solution is to include the emissions relating to the excluded sources or uses in the Annual Emissions Report. If the operator chooses to disaggregate all excluded sources or uses, but the disaggregation does not satisfy the verifier, the operator should consider including the disaggregated emissions in preference to accepting a ‘Not Verified’ VOS (see Question 67 below).

38. Is there a requirement for offshore visits?

There is no mandatory requirement for a site visit, but the generally accepted procedure is that a site visit will be performed unless the verifier and operator are agreed that a visit is not necessary. If the operator and the verifier agree that a site visit is unnecessary, for example because the verifier is already acquainted with the facility and has undertaken site visits in connection with EMAS or ISO 14001 audits, or because the verifier has concluded that the potential risks of not visiting the site, as outlined in Paragraph 108 of the Defra Guidance on Annual Verification, can be managed in other ways, then the operator can apply to EMT for an exemption from the requirement to undertake a site visit. EMT will normally approve such applications.

39. What are the verification requirements for facilities that have permanently closed?

For the offshore sector, permanent closure will normally occur when the aggregated capacity of the viable combustion units on the facility falls below the 20MW(th) threshold. Thus, a facility will declare Cessation of Production (CoP), but will remain within the Scheme until sufficient combustion units have been decommissioned to take the aggregated capacity below the threshold. The operator will therefore be required to notify EMT when the aggregated capacity falls below the threshold, i.e. permanent closure, in addition to notifying CoP. The only foreseeable exception to this rule will occur when facilities cease operations at one site, and are relocated to another site whilst serving the same development or developments. In such cases, if the relocation is considered to be minor, EMT may determine that it does not constitute permanent closure, and that the relocation should be the subject of an application for a Permit variation. However, in the vast majority of cases, relocation will be determined to constitute permanent closure. In circumstances where the facility is relocated to serve another development or developments, the facility would qualify for New Entrant status at the new location. Where the relocation qualifies as permanent closure, the date of closure will be the date of relocation (assuming that the relocation is not accompanied by decommissioning of combustion units to take the aggregated capacity below the threshold prior to the date of relocation, in which case the date of closure will be the date of decommissioning of the relevant combustion units). The operator is required to notify EMT of all proposed relocations, irrespective of whether they would constitute permanent closure.

In addition to notifying permanent closure, the operator must apply to surrender the facility’s Greenhouse Gas Emissions Permit within one month of the closure (if EMT is aware that a permanent closure has taken place, it will instruct the operator to surrender the Permit if it does not receive an application from the operator). Following permanent closure, the operator must also prepare an Annual Emissions Report for the period up to the notified date of closure. The procedure will essentially be the same as that required for a routine Annual Emissions Report, but the verifier will additionally wish to confirm the date on which the facility fell below the threshold or was relocated. In the case of the former, the verifier will also wish to confirm whether the facility

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fell below the threshold because combustion units were decommissioned (removed or made inoperable), or because selected units were fitted with interlock systems to prevent concurrent use. (Section 4.9 of the Defra Guidance on Annual Verification provides additional information about the process for verifying facilities that are about to close or cease a Schedule 1 activity and fall below the 20MW(th) threshold)

When facilities permanently close, they will retain the allowances for the year of closure, but no future allowances will be issued after the year of closure.

40. What are the verification requirements for facilities that permanently closed because of insolvency?

It is advisable for the receiver to comply with the conditions of all consents, permits and approvals issued by EMT, including conditions relating to permit surrender. In the case of requirements specific to the EU ETS, it is also advisable for the receiver to ensure that the emissions during the period leading up to the closure are properly reported and verified.

41. What are the verification requirements for facilities that have temporarily closed?

Operators are required to notify EMT of any closure that is not permanent, where the period of cessation is intended to be, or becomes, 50 days or longer. In such cases, providing EMT is satisfied that the closure can be considered as temporary for the purpose of the EU ETS, the facility will retain its full allowances for the activity throughout Phase II. As it is virtually impossible to temporarily “close” an offshore facility, because there will always be a power generation requirement even during a production shut-down, the only circumstances that are envisaged that could lead to a temporary closure would be the decommissioning and replacement of major combustion units, possibly involving the transport of temporary combustion units to the facility to provide power during the change-out. Under such circumstances, if the aggregated capacity of the permanently installed combustion units fell below the 20MW(th) threshold, the operator would be required to notify EMT if the capacity was scheduled to remain, or remained, below the threshold for 50 days or longer. In the unlikely event that a notification is required, the operator should e-mail emt@decc.gsi.gov.uk with the relevant details. It is unnecessary to use the notification form ETS8 prepared by the Environment Agency.

Where there has been a ‘Notifiable Temporary Closure’, this should be stated in the Annual Emissions Report and brief details provided. The verifier will be obliged to confirm that the appropriate information was provided to EMT. This will include checking EMT was provided with the date on which the temporary closure occurred; the date on which the unit is due to recommence operations, or did recommence operations; and a description and explanation of the closure.

42. What are the verification requirements for facilities that have partially closed?

Partial closure occurs when a facility partially ceases to carry out a Schedule 1 activity, for example when a facility decommissions a combustion unit included in the Greenhouse Gas Emissions Permit (but the aggregated capacity remains above the 20MW(th) threshold), or when a development producing from, or tied-back to, the facility ceases production. In all such cases, the facility will retain its full allowances for the activity throughout Phase II, even after the year of partial closure. Nevertheless, operators are required to notify EMT of the change of operation, and to submit an application for a variation of the Permit. In the event that a notification is required, the operator should e-mail emt@decc.gsi.gov.uk with the relevant details. It is unnecessary to use the notification form ETS8 prepared by the Environment Agency.

Where there has been a partial closure, this should be stated in the Annual Emissions Report and brief details provided. The verifier will be obliged to confirm that the appropriate information was

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provided to EMT. This information check will include the date on which the partial closure occurred, and the date of submission and receipt of the Permit variation. If the partial closure involves the decommissioning of one or more combustion units fitted with a dedicated fuel meter or meters, the verifier will also wish to see evidence of the meter readings at the time of the partial closure. If the operator has still to be granted the Permit variation, the verifier will record this in a ‘Verified With Comments’ VOS.

43. What are the verification requirements for facilities that have transferred ownership?

When ownership of a facility is transferred within a reporting year the new owner takes on responsibility for reporting that year’s emissions and should ensure that sufficient data on historic emissions, including any changes as a result of tiebacks or improvements, have been made available by the previous owner. Further guidance on transfer of ownership is available from EMT.

The Verification Opinion Statement (VOS)

44. What comments should be made in the section dealing with the ‘calculation methodology’?

Verifiers should state any particular standard methods used in the monitoring and/or calculations, including any standard methods approved by EMT. The title of each method and its author / publication body should be indicated, and the emission sources that the method covers should be confirmed. If the operator has not used a formally-recognised standard method (for the offshore sector, the EEMS methodology is a formally-recognised standard), the date and means of the regulatory approval of the methodology should be clearly stated.

45. What comments should be inserted in the section dealing with the ‘approved methodology used’?

The verifier should confirm whether an approved methodology or an alternative methodology has been used. If an updated or amended approved method has been used, this should be noted, with any title ascribed to the methodology, and the merits or otherwise of the methodology further discussed in Annex 2 of the VOS (if this is considered to be necessary). The verifier should raise any inconsistencies with the operator, and the operator should contact EMT to confirm that the alternative or updated / amended methodology is acceptable (and, if appropriate, to obtain the necessary Permit variation).

46. What is the Compliance Account Number, and is it mandatory to insert this number into the VOS?

The compliance account number is the same as the operator’s Registry account number. Where the operator can provide the Registry account number, it should be included in the VOS, but it is not mandatory

47. Section A3 of the Annual Emissions Report requires the operator to record all the changes that have taken place during the year, so can the verifier refer to Section A3, rather than repeating the information in the VOS?

The verifier should provide brief details of any changes that may have a material affect on the reported emissions, and on any additional factors or trends that have not been disclosed in any previous VOS, such as details of energy efficiency projects or production changes that have had, or could have, an impact on emissions. It will be sufficient for the verifier to provide a brief

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summary of the most significant changes, and to refer to section A3 of the Annual Emissions Report for further information.

48. The verifier is required to take note of any 'Competent Authority Guidance on MRG 2007' - which guidance does this refers to?

This refers to any additional guidance or correspondence between the operator and EMT and/or Defra, relating to how the monitoring and reporting should be performed and consequently how it should be verified. It may include information relating to whether minor changes to the monitoring system have been noted and accepted by EMT. It may also include brief reference to, or recognition of, correspondence from EMT confirming the sources that should be included in the Permit. If there is no relevant additional guidance or correspondence, this can be stated. It should also include this Q&A.

49. What should be entered in Annex 2 under ‘Objectives and Scope of the Verification’? The legal departments of the verification bodies will generally determine the appropriate text for this section. Text along the lines of ‘to verify the facility’s annual emissions figure for the EU Emissions Trading Scheme, and to confirm compliance with the approved monitoring and reporting requirements’ would be acceptable.

50. What should be entered in Annex 3 under ‘Summary of conditions / changes / clarification / variations approved by the Competent Authority but which have NOT been incorporated within a re-issued Permit at completion of verification’?

The verifier should note any correspondence between the operator and EMT and/or Defra relating to how the monitoring and reporting should be performed, and consequently how it should be verified. It may include information on whether minor changes to the monitoring proposals have been noted and accepted by EMT and/or Defra. It may also be appropriate to include brief reference to, or recognition of, any correspondence from EMT confirming the scope of the permit and the sources that should be included in the permit.

51. Should the verifier ‘password protect’ the VOS when it is completed?

This is unnecessary, providing the Annual Emissions Report has been ‘locked’ and provided to the operator in a form that cannot be edited. However, if the operator requests that the verifier should password protect the pages containing the VOS, the verifier should use the same password for all VOSs, and must provide EMT and the Registry Administrator (Environment Agency) with a copy of the password. EMT and the Registry Administrator will treat VOS passwords provided by verifiers in the strictest confidence.

52. What happens if a verifier informs the operator that they intend to issue a ’Verified With Comments’ VOS?

The comments are provided for the benefit of both the operator and EMT, and will identify potential shortcomings in M&R performance that may not have been significant enough to result in a “not verified” verification opinion, but which should nevertheless be addressed. They may relate to, for example, small non-compliances with the M&R Plan (i.e. that are not significantly material); shortcomings in the quality of data recording or other QA/QC procedures; or need to improve the quality of future Annual Emissions Reports. The operator is obliged to consider the comments, and will be expected to address relevant comments appropriately. This may mean modifications with immediate effect, or in some cases in conjunction with the Annual Improvements Report (especially if the verifier has also listed the issue in an Annex 1 improvement recommendation). However, the operator can proceed directly to submission of the verified Annual Emissions Report.

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53. What happens if a verifier informs the operator that they intend to issue a ’Not Verified’ VOS?

In such cases, the verifier is required to clearly state why the data could not be verified, e.g. to identify missing data or any errors, and to identify where the material errors lie. The verifier should also indicate the likely materiality of the error or misstatement. If a verifier advises an operator that their data cannot be verified, the operator can try to address the verifier’s comments with a view to amending the Annual Emissions Report to meet the verifier’s requirements, or can contact EMT to discuss the ‘Not Verified’ VOS and explain the errors or misstatement. EMT will then determine whether it will accept or reject the Annual Emissions Report. As rejection could lead to a failure to submit a final agreed Annual Emissions Report to meet the Registry deadline, operators should consult EMT for advice as soon as the verifier advises that their data cannot be verified, and prior to submission of an Annual Emissions Report that includes a ‘Not Verified’ VOS.

54. What are the potential outcomes of EMT’s determination of a ‘Not Verified’ VOS?

EMT will consider whether to accept that the proper checks, calibrations etc could not be performed for the reporting year. If EMT accepts that the operator could not comply with certain requirements of the Appendix 2 to the Permit, the M&R Plan or MRG 2007 for that year, they will notify the operator. The verifier can then proceed with the verification and issue a ‘Verified With Comments’ VOS, detailing the outcome of the communication between EMT and the operator. It should be noted that the determination will relate solely to the reporting year, and cannot be assumed to apply to future years.

If EMT does not accept the non-compliance, the ‘Not Verified’ VOS must be entered into the Annual Emissions Report, and the report submitted to the operator and then EMT. EMT will then determine the annual emissions for the facility, and inform the Registry of their determination. In such circumstances, the verifier will not be required to approve the annual emissions entered into the Registry (see Question 69 below).

The Registry

55. Once a verification body has obtained accreditation or approval from UKAS, how do they arrange Registry access?

In order to access the Registry, the accredited or approved verification body will need to complete an online application form and provide the required documentation. The online application form can be found at:

http://www.emissionsregistry.gov.uk

And the address to send the required documentation is:

EU ETS Registry AdministratorEnvironment AgencyRichard Fairclough HouseKnutsford RoadWarringtonCheshireWA4 1HG

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Verifiers will not be granted multiple access accounts for the Registry, and the individual chosen to represent the verification body will be the only person able to access the secure area of the Registry to approve verified annual emissions.

Any additional queries relating to the operation of the Registry should be emailed to etregistryhelp@environment-agency.gov.uk

56. Who enters the verified annual emissions into the Registry?

The operator can enter the annual emissions endorsed by a ‘Verified’ or ‘Verified With Comments’ VOS, but the entry then has to be checked and endorsed by the verifier. Alternatively, the operator can delegate responsibility to the verifier, who can then enter the annual emissions directly.

57. What is the deadline for entry of the verified annual emissions into the Registry?

All verified annual emissions must be entered into the Registry and, where appropriate, endorsed by the verifier by 30 April of the calendar year immediately following the calendar year to which the emissions relate, as allowances equal to the verified annual emissions must be surrendered from the facility holding account by that date to avoid potential penalties.

Annual Improvements Report

58. What is the situation regarding submission of the offshore Annual Improvements Report (ETS5/6), which identifies proposed improvements to move towards the highest tier for the monitoring of major sources?

Offshore operators are required to submit this form to EMT by the end of June of each calendar year.

Greenhouse Gas Emissions Permits

Qualifying Installations and Combustion Plant

59. Are Floating Production, Storage and Off-take (FPSOs) and Floating Storage Units (FSUs) etc included?

FPSOs and FSUs are considered to be qualifying stationary production facilities, and must be included if the aggregated thermal capacity of the facility exceeds the 20MW(th) threshold. EMT is satisfied that all relevant production and storage vessels currently operating on the UKCS have been included.

60. Is there a general definition that summarises the combustion units that should be included in the Greenhouse Gas Emissions Permit?

A “combustion installation” is a stationary technical unit that burns fuel for the production of an energy product. The energy product could be electricity, heat or mechanical power. Where energy is produced as heat, it may be transferred using different media such as steam, hot oil, hot water, and hot air. The only significant exemption is units where the mechanical power is used for propulsion, or when electrical power is used for propulsion. However, if it is not possible to disaggregate the emissions relating to propulsion to the satisfaction of the verifier, then it will be necessary to include those emissions in the Annual Emissions Report. If they can be effectively disaggregated, they can be excluded. However, it should be noted that, if the propulsion

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emissions were included in the baseline emissions data and are then excluded from the Annual Emissions Report, the verifier will be obliged to confirm whether their exclusion has had a material effect on the annual emissions, and EMT may determine that it is necessary to recalculate the baseline and the related allowance.

It should be noted that additional exemptions are applicable in the case of some onshore facilities, but those exemptions are not relevant to the offshore facilities sector.

61. When calculating the aggregated thermal capacity, can operators exclude combustion units owned and operated by contractors?

For the offshore sector, there is only one “operator”, the facility operator, and the facility cannot be broken down into units assigned to the operator and a number of contractors. All of the Schedule 1.1 activities must therefore be aggregated for the purpose of determining whether the facility is included in the EU ETS.

62. The inert gas generator on my offshore facility does not have a specified load. What numbers should I enter in the “installed capacity” and “aggregated thermal capacity” sections?

Inert gas generators should be treated as direct-fired heaters using a thermal efficiency of 80%. Normally the manufacturer’s data sheet will include a maximum fuel rate which can be used in the calculation of the thermal capacity and, the 80% efficiency figure used to calculate the installed capacity.

63. Are all the combustion units used for propulsion excluded from the EU ETS for the offshore sector (e.g. ship’s engines on FPSO’s)?

Combustion units used exclusively for propulsion are not included in the EU ETS. In cases where such units are also used to provide energy for the exploration, production, processing or export of oil or gas, the emissions relating to the energy production are included, but the emissions relating to the propulsion can be disaggregated and removed from the Annual Emissions Report. In cases where such units are also used to provide energy for other purposes, e.g. light and heat to maintain the safety of personnel, the emissions relating to that energy production can also be excluded. Lifeboat engines are therefore excluded from the EU ETS.

64. What happens if the operator is unable to disaggregate the fuel used for propulsion and the fuel used to provide energy for other purposes, or is unable to disaggregate the emissions to the satisfaction of the verifier?

If it is not possible to disaggregate the emissions, then it will be necessary to include the emissions relating to propulsion in the Annual Emissions Report. If they cannot be disaggregated to the satisfaction of the verifier, the operator can choose to seek EMT’s approval for a ‘Not Verified’ Verification Opinion Statement (see Question 67 below), or choose to include the emissions relating to propulsion in the Annual Emissions Report. Where the emissions relating to propulsion have been included in the reports used to calculate the baseline EU ETS emissions, disaggregation will usually be inappropriate anyway (or it may be necessary to recalculate the baseline and the related allowance).

65. Are combustion units dedicated to accommodation uses included in EU ETS for the offshore sector?

Where combustion units are used exclusively for purposes such as living accommodation or office central heating, cooking or laundries, they can be excluded, providing the fuel use and emissions can be effectively disaggregated. If it is not possible to disaggregate the emissions, then it will be

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necessary to include them in the Annual Emissions Report. If the emissions cannot be disaggregated to the satisfaction of the verifier, the operator can choose to seek EMT’s approval for a ‘Not Verified’ Verification Opinion Statement (see Question 67 below), or choose to include the emissions in the Annual Emissions Report. Although the combustion units used exclusively for accommodation purposes can be excluded, fuel use in the main combustion units to derive energy that is attributable to accommodation uses should NOT be excluded, and should be included in the Annual Emissions Report.

66. Are stand-by combustion units included in the EU ETS for the offshore sector?

If the stand-by combustion units can be operated at the same time as the main combustion units then they must be included. This applies to both stand-by emergency generators and “black start” generators. If the stand-by combustion units cannot be run concurrently, they can be excluded from the aggregation to determine whether the facility exceeds the 20MW(th) threshold, but there would have to be some form of approved inter-lock in place to prevent concurrent operation. However, once the 20MW(th) threshold has been exceeded (i.e. it has been determined that the facility is included in the Scheme), then all eligible combustion units must be included in the Greenhouse Gas Emissions Permit and the Annual Emissions Report, even if some of the combustion units cannot be run concurrently.

67. Are direct-fired air heaters included in the EU ETS for the offshore sector?

Yes. All combustion emissions relating to fuel use in direct-fired air heaters should be included.

68. Are glycol recovery units, or glycol re-boilers, included in the EU ETS for the offshore sector?

Yes. All combustion emissions relating to fuel use in glycol recovery units should be included.

69. Are offshore lifeboats, cranes and fire-pumps included in the EU ETS for the offshore sector?

Offshore lifeboat engines are excluded (see Question 6 above), but offshore cranes and fire-pumps are included. This is consistent with the verified historic data used to develop the NAP.

70. Are drilling generators, well cementing units, wire-line engines and other well management combustion units included in the EU ETS?

If the generators, engines etc are permanently installed on the facility, then they are included. However, combustion units transported to the facility for specific activities are not included, and fuel use should be separately monitored so that the emissions can be disaggregated and excluded from the Annual Emissions Report. If it is not possible to disaggregate the emissions, then it will be necessary to include the emissions relating to the temporary combustion units in the Annual Emissions Report (see also Question 7 above). If combustion units included in the Greenhouse Gas Emissions Permit are temporarily or permanently replaced by the occasional use of temporary combustion units, the operator should notify EMT of the change. If it is considered relevant to verification of the Annual Emissions Report, verifiers should seek confirmation from the operator that the appropriate notification has been submitted to EMT, and that a response to the notification has been received. A Permit variation will usually only be required if combustion units included in the Permit are permanently replaced, or the replacement affects the M&R Plan.

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Permit Variations

71. What is process for varying a Permit / M&R plan? Do offshore operators use ETS9 (the application for a variation to a Permit), and will EMT send out a letter approving the change?

The offshore sector should not use ETS9. It should follow the procedure used for all Permits issued by EMT, viz amend the original application, highlighting the changes, and then e-mail the amended application to EMT. To speed up the process, operators should also “track-change” a Word copy of the permit to highlight the requested changes, and include the amended document in the submission to EMT. If the changes do not affect the Permit, EMT will confirm this in a letter to the Permit Holder. If the changes affect the Permit, EMT will issue an amended Permit (assuming there are no objections to the requested variation).

72. What happens if a verifier identifies combustion units included in, or excluded from, a Greenhouse Gas Emissions Permit in error, and how and when should the Permit be amended?

Verifiers should raise issues relating to any missing or ineligible combustion units with the operator, and the operator should then immediately request guidance from EMT. Where appropriate, EMT will request an application for a Permit variation, and process that application as quickly as possible, and the verifier should proceed to verify against the amended Permit. If the missing or ineligible units should have been included in, or excluded from, the baseline data used to determine the facility’s allocation for Phase I, this should be confirmed in the notification to EMT, detailing the nature of the error, and an estimate of the quantity of emissions involved. EMT will consider the information provided on a case-by-case basis, and determine what action should be taken.

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