verification 2013 EU ETS Dr. Marco Wisniewski, Contact meeting with Oslo, Miljø Direktoratet Anette Rønnov Norsk Akkreditering and

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1 EU ETS verification 2013 Contact meeting with Norsk Akkreditering and Miljø Direktoratet Oslo, Dr. Marco Wisniewski, Anette Rønnov

2 Agenda I Introduction of KPMG Cert II KPMG EU ETS verification approach III Accreditation process IV Relationship with MDir V Experience with the installations VI Summary. Outlook what do we expect going forward? 1

3 KPMG Cert in a Nutshell KPMG Cert GmbH German company located in Cologne Specific purpose subsidiary of KPMG Service focused on validation and verification management systems certification specialist expertise Main sectors: chemistry, utilities, oil & gas and other energy intensive i industries i Interdisciplinary team of technical experts (incl. chemists, biologists, engineers, economists, lawyers, physicists, meteorologists). Additional experts in national KPMG practices Active Member of governmental ETS working groups ISO standards working groups: 14064, etc. Cologne 2

4 KPMG s EU ETS team in Norway Chemical and Mechanical Engineering, Chemistry, Physics, Environmental Science, Geography, Economics. 1/3 Norwegian workforce Average professional work experience in the field: 19 years All auditors are experienced ETS specialists Started with EU ETS verification in 2004 EU ETS Scope: Combustion Refinery Chemicals Iron & Steel Non-Ferrous Metals CCS Aviation 3

5 Agenda I Introduction of KPMG Cert II Accreditation process III KPMG EU ETS verification approach IV Relationship with MDir V Experience with the installations VI Summary. Outlook what do we expect going forward? 4

6 Accreditation process Timeline October Follow-up completed 13 th March Received accreditation September Contact meeting with DAkks Development of quality management system July Head quarters audit August Head quarters audit Individual EU ETS experts accreditation September Application for accreditation August Witness audits on-site 31 st March Deadline emission report 2013 December Contact meeting with DAkkS and DEHSt October - February Witness audits on-site. The accreditation process took 1 ½ year and was completed 17 days before final reporting deadline 5

7 Agenda I Introduction of KPMG Cert II Accreditation process III KPMG EU ETS verification approach IV Relationship with MDir V Experience with the installations VI Summary. Outlook what do we expect going forward? 6

8 KPMG Verification Approach (1/2) Precontract Phase Communication to Client Design of Project Structure Development of Proposal Contracting Strategic Analysis I Verification Planning Strategic analysis II Risk analysis Operational planning Main Verification Assessment of the monitoring plan Substantive data testing Addressing of misstatements and nonconformities Verification Follow-up Follow-up of Corrections and Changes Check of outstanding and corrected data/evidence Final Check Control of final emissions report Check of correctness of form and content, completeness, plausibility 7

9 KPMG Verification Approach (2/2) Report Internal verification documentation Drafting of verification report Independent review Approval Entry in EU emissions registry Finalization of regular projects Rework (not mandatory) Handling of additional questions and objections ie. similar procedure as in previous trading periods Standard EU ETS approach New reporting template from EU More detailed d documentation ti requirements additionally: changes of operation, Art. 24 AVR 8

10 Elements and Verification Steps Explanation Verification Steps Definition Compliance with the latest version of EU ETS Check whether the locally applied definitions correspond definitions and monitoring plan for EU ETS with the latest version of company-wide EU ETS reporting definitions and monitoring plans for reporting. Scope Check whether the data are reported according to the Compliance with installation boundaries installation boundary of installation specific monitoring plans. Collection Recording Collection methods (calculation, estimation or Check whether data processing is correctly carried out measurement) according to the monitoring plan. Recording methods, for example, IT systems, data sheets, etc. Check whether data recording is properly carried out and inspect the existing documentation. Internal Controls Aggregation Compliance with the aggregation methods Inclusion of all reporting units and time periods Check whether data aggregation is carried out correctly and in accordance with monitoring plan. Analysis and Validation Analysis and validation of data and consistent reporting, for example, trend analysis, management age e reviews, e internal audits, comparison with previous reports Check whether an analytical review and consistency check has taken place and inspect the existing documentation. 9

11 General timeline of verification Kickoff Process testing begins Freezing of nonconformities Reception of the draft reports August September October Nov-Dec Jan February March On-site visits begin Clients start report internally Emissions reporting deadline Verification work starts early Offshore visit must be completed before extreme weather season 10

12 Agenda I Introduction of KPMG Cert II Accreditation process III KPMG EU ETS verification approach IV Relationship with MDir V Experience with the installations VI Summary. Outlook what do we expect going forward? 11

13 Verifier and MDir August 2013: Contact meeting with MDir. Presentation of KPMG Cert and approach October 2013: Submission of risk assessment on site visits February 2014: Contact meeting with MDir. Reporting on current status and specific items August 2014: Feedback from MDir September 2014: Contact meeting Norsk Akkreditering/MDir Topics: Reporting requirements and expectations Permit schedule Guidance on specific items Roles of verifier and MDir in the process On-site visits Practical issues September 2014: Response to feedback 12

14 Date of receipt of approved monitoring plans Timeline Site Apr Pp 54 Ealing Site 9 pp Site 11 pp Site 15 Pp Site Site 19 pp Site 20 Pp Site 18 Pp 44 (permit only) 18.2 Site 24 Pp Site 25 Pp Site 29 Pp 26 (permit only) 14.2 Pp Site (permit Site Pp Site 6 only) 17 (permit Site 27 Pp 36 Pp 31 only) Pp Site 31 Pp September October November December January February March April 23.8 Site 1 Pp Site 2 Pp 16 (permit only) Site 4 Pp Site 5 Pp 18 (permit only) 9.12 Site 7 Pp Site 8 Pp Site 10 Pp Site 12 Pp Site 13 Pp Site 16 Pp Site 14 Pp Site 21 Pp Site 23 pp Site 26 Pp Site 28 pp Site 31 Pp 44 Few permits arrived during the normal verification schedule Last minute workload from end January 13

15 Reporting EU reporting template 14

16 Agenda I Introduction of KPMG Cert II Accreditation process III KPMG EU ETS verification approach IV Relationship with MDir V Experience with the installations VI Outlook what do we expect going forward? 15

17 Experience with the installations Overall experience in Norway: Operations similar to other countries, but locations may be specific, e.g. platforms Platform logistics and weather conditions determine the availability of sites Extensive operators parallel reporting experience to NPD from CO2 taxation Mostly highly competent people Sophisticated technology widely used (Online GC, ultrasonic meters, flare meters, assessment of uncertainty) t Scientific flare modelling In some cases limitation of analysis capabilities due to rare source streams - accreditation Good organisation throughout the operators and installations Close and detailed follow-up of permits by the authorities Late arrival of (conditioned) MPs resulted in backlog and misinterpretations by operators Emissions factors in Norway are often not energy based: comparison difficult Sm³ instead of Nm³ 16

18 Experience with the installations Specific items Data gaps CMR model conservativity approach Scientific approach guidance available rather late (December / January) - in many EU countries widely spread application under standard procedures in day-to-day business different and parallel legislation traditions in place on the correction methods Operators had to provide data gaps procedures until only once per year needed outcome is determined by a number of professional judgements, even if the model is used in the desired way Significant effort of training, testing, control and reporting Unique but risky method! Practical definition of a material data gap would be useful. Different practices observed. 17

19 Experience with the installations Decision making more complicated decision tree than in Trading Periods I and II higher differentiation of final statements AVR: material misstatement means a misstatement that, in the opinion of the verifier, individually or when aggregated with other misstatements, exceeds the materiality level or could affect the treatment of the operator s or aircraft operator s report by the competent authority; Sources: AVR Key guidance note no. II.1, Version of 13 August

20 Agenda I Introduction of KPMG Cert II Accreditation process III KPMG EU ETS verification approach IV Relationship with MDir V Experience with the installations VI Summary. Outlook what do we expect going forward? 19

21 What do we expect going forward Summary Outlook Transition year from TP II to TP III Transition not yet completed General monitoring methodes and approaches not much changed Huge number of novelties and modifications in detail Adaptation of operators to the new rules expected Concentration on persisting transition issues General guidance for some issues would be very practical equal level Time and complexity challenges for all parties involved We welcome the contact meetings as a forum for exchanging experiences. 20

22 Thank you Presentation by Dr. Marco Wisniewski Head of Verification Body of KPMG Cert GmbH

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