Canfor Grande Prairie Sawmill Biomass Energy Project (January 1, 2017 December 31, 2017)

Transcription

1 Verification Report for Offset Project Canfor Grande Prairie Sawmill Biomass Energy Project (January 1, 2017 December 31, 2017) PROPONENT Canfor Green Energy Grande Prairie PREPARED BY Tetra Tech Canada Inc. PRESENT TO Canadian Forest Products Ltd. FEBRUARY 14, 2018 ISSUED FOR USE 704-ENW.EENW Tetra Tech Canada Inc. Riverbend Atrium One, 115, 200 Rivercrest Drive SE Calgary, AB T2C 2X5 CANADA Tel Fax

2 TABLE OF CONTENTS 1.0 PROJECT SUMMARY INTRODUCTION Objective Scope Level of Assurance Criteria Materiality METHODOLOGY Procedure Verification Procedures Verification Steps Site Visit Risk Assessment Verification and Sampling Plan Team Schedule RESULTS Assessment of Internal Data Management and Controls Assessment of GHG Data and Information Assessment against Criteria Evaluation of GHG Assertion Summary of Findings CLOSURE Verification Statement Limitation of Liability Confirmation

3 LIST OF TABLES Table 1: Scope Table 2: Verification Tests Conducted Table 3: Verification Procedures Table 4: Risk Assessment for Applicable Emission Sources Table 5: Verification Schedule Table 6: Non-Applicable Emission Sources Table 7: Summary of Internal Controls Table 8: GHG Data and Supporting Information Table 9: Eligibility Criteria Assessment LIST OF FIGURES Figure 1: Verification Steps Figure 2: Summary of Internal Data Management and Data Flow APPENDICES Appendix A: Final Verification Plan and Sampling Plan Appendix B: Signed Statement of Qualification Appendix C: Finding Logs Appendix D: Signed Statement of Verificaton Appendix E: Signed Conflict of Interest Checklist Appendix F: Limitation On the Use of this Document

4 LIMITATIONS OF REPORT This report and its contents are intended for the sole use of Canadian Forest Products Ltd. and their agents. Tetra Tech Canada Inc. (Tetra Tech) does not accept any responsibility for the accuracy of any of the data, the analysis, or the recommendations contained or referenced in the report when the report is used or relied upon by any Party other than Canadian Forest Products Ltd. Any such unauthorized use of this report is at the sole risk of the user. Use of this report is subject to the Limitations on the Use of this Document attached in the Appendix or Contractual Terms and Conditions executed by both parties. 4

5 1.0 PROJECT SUMMARY Project Title Project Description Project Location Canfor Grande Prairie Sawmill Biomass Energy Project The Project involves direct Greenhouse Gas (GHG) emission reductions by: reducing natural gas used at the sawmill; reducing grid electricity used at the sawmill; and supplying electricity to the Alberta grid generated from the combustion of biomass in the Canadian Forest Products Ltd. s (Canfor s) Combined Heat and Power facility (CHP) at Grande Prairie, Alberta. The Canfor Grande Prairie sawmill is located on 108th Street in Grande Prairie, Alberta. The CHP Plant is located adjacent to the Grande Prairie sawmill at th Street in Grande Prairie, Alberta. Legal Land Location: Section 23, Township 71, Range 6, Meridian 6 Latitude: 55 9' " N Longitude: ' 9.84" W Project Start Date January 1, 2005 Offset Start Date January 1, 2005 Offset Crediting Period Initial project credit duration period: January 1, 2005 December 31, 2012 Credit extension period: January 1, 2013 December 31, 2017 Reporting Period January 1, 2017 December 31, 2017 GHG Assertion (Actual Emissions Reductions /Removals Achieved) Protocol Ownership Project Activity 2017: 80,025 t CO2e Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014). Canadian Forest Products Ltd. The activities undertaken include heat and power generation by combusting biomass, which results in direct GHG emission reductions by reducing natural gas used at the sawmill, indirect GHG emission reductions by reducing grid electricity used in Canfor s Grande Prairie sawmill, and supply of electricity generated to the grid. The Canfor Grande Prairie Sawmill Biomass Energy Project (the Project) meets the requirements for offset eligibility: 1. The project occurs in Alberta as outlined above. 2. The project results from actions not otherwise required by law and beyond business as usual and sector common practices. 5

6 3. The Project results from actions taken on or after January 1, 2002, as outlined above. 4. The Project reductions/removals are real, demonstrable, quantifiable and verifiable: The Project is creating real reductions that are not a result of shutdown, cessation of activity or drop in production levels. The emission reductions are demonstrable, quantifiable and verifiable as outlined in the Project Developer s Project plan. 5. The Project has clearly established ownership: The Proponent owns 100% of the Project activities at the Plant. Credits created from the specified reduction activity have not been created, recorded or registered in more than one trading registry for the same time period. 6. The Project will be counted once for compliance purposes: The Project credits will be registered with the Alberta Emissions Offset Registry (AEOR) which tracks the creation, sale and retirement of credits. Credits created from the specified reduction activity have not been, and will not be, created, recorded or registered in more than one trading registry for the same time period. 7. The Project is verified by a qualified third party, Tetra Tech Canada Inc. Project Contact Verifier Matthew Warkentin, P.Eng. PMP, CEM Energy Manager, Environment & Energy Department Canadian Forest Products Ltd. Tel: (250) matthew.warkentin@canfor.com Min Si, M.N.R.M, GHG-V Tetra Tech Canada Inc. 115, 200 Rivercrest Drive SE, Calgary, AB T2C 2X5 Tel: (403) Min.Si@tetratech.com Brian Adeney, P.Eng. Designated Signing Authority. Mr. Adeney received ISO training in Verification Team Designated Signing Authority Min Si, M.N.R.M, GHG-V, Lead Verifier. Mr. Si completed ISO training with CSA. Bernard Zhang, M. Eng., P.Eng., Verifier. Mr. Zhang has completed ISO training. Nelson Lee, M.A.Sc, P. Eng., GHG-V, Peer Reviewer. Mr. Lee has completed ISO training with CSA. Brian Adeney, P.Eng. 6

7 Verification Strategy The strategy used in this verification approach relies on substantive procedures. Tetra Tech applies predominantly substantive procedures during the verification process, with a focus on source data and evidence gathered during site visits and sampling procedures. Tetra Tech has developed the following steps to substantiate the greenhouse gas (GHG) assertion: Conducted a site visit to confirm the boundary, physical sources, sinks and reservoirs (SSRs) at the facility. Observed, interviewed personnel, and verified various processes, instrumentation and data management procedures during the site visit. Conducted sampling on primary documentation to confirm the processes resulting in the GHG assertions. Reviewed original data sources and calculations. 7

8 2.0 INTRODUCTION Tetra Tech Canada Inc. (Tetra Tech) was contracted by Canadian Forest Products Ltd. (Canfor) to conduct verification of greenhouse gas (GHG) emission reductions from the Canfor Grande Prairie Sawmill Biomass Energy Project (the Project) for the period of January 1, 2017 to December 31, The Project is located at Canfor s Combined Heat and Power (CHP) plant adjacent to the Canfor Grande Prairie sawmill. The CHP facility was originally owned and operated by Canadian Gas and Electric Inc. ( CG&E ), a separate company from Canfor. Canfor purchased the CHP plant on October 1, 2011 from CG&E. The offset quantification was conducted by PricewaterhouseCoopers LLP (PwC). The eligible heat is calculated by Amec Foster Wheeler (Amec). Summary of Offset Project Baseline The baseline condition for this project is the use of natural gas and purchased the grid electricity to operate the Grande Prairie sawmill and for space heating. Under baseline conditions, biomass was incinerated at the Grande Prairie sawmill site and other sawmill sites. The baseline condition used for the Project during the first eight years of the credit duration period included the fossil fuel (natural gas) consumed by the lumber drying system and the space heating system for the sawmill and the electricity consumed by the sawmill in the pre-project condition. The baseline selected was historical and was the average of 2002, 2003, and The baseline is considered as the condition that most likely would have persisted for the facility if the CHP plant was not installed. For the purposes of the Project ( ), this is assumed to be a three-calendar-year period immediately preceding the calendar year in which the Project was implemented. From a dynamic baseline will be used as specified in the Quantification Protocol (Version 2.0). Summary of Changes to Baseline or at the Project Condition Project Boundary The project was developed to recover heat content in the low cost (or no cost) wood residue generated by the sawmill during sawmilling and planning by incinerating it and generating heat and power to displace high cost grid based electricity and natural gas. The Project was designed and built by Canadian Gas & Electric (CG&E), a wholly owned subsidiary of Canadian Hydroelectric Developers Inc. CG&E and Canfor entered into an agreement stipulating, among other things, the purchase and sale of land for the project, shared maintenance of the CHP project facility, wood residue supply to the power plant, heat energy supply to the sawmill, capacity and electricity supply to the sawmill, and environmental cooperation. As a part of this agreement, any domestic offset credits that may arise from, or be attributable to the operation of the power plant accrued to Canfor as to a pro rata share of electricity and heat energy purchased from the power plant and the displacement of natural gas consumption. Canfor s purchase of the CHP plant resulted in a change in ownership with respect to the overall green attributes associated with the project. Prior to the change in ownership, Canfor did not claim any of the green attributes associated with electricity sold to third parties (via the grid) from the CHP plant, nor did it account for transportation, CHP on site biomass handling, or CH4 and N2O emissions associated with the incremental biomass purchased by and trucked to the CHP plant as these were both outside of the boundary considered in the project. However, the change in ownership meant that the boundary for the project changed and Canfor now accounts for these sources and sinks. The change of the project boundary is described in detail in the Project Plan. 8

9 Baseline For the first eight years of the Project, a historical baseline from the period was used to calculate the baseline emissions according to the Quantification Protocol (Version 1.0). With the updated quantification protocol (Version 2.0), a dynamic, projection baseline is applied for subsequent years of the Project. As a result, the baseline calculation methodology was changed in order to satisfy the requirement in the updated protocol. Heat Calculation For the first eight years of the project, the thermal energy calculations were based on the volume of natural gas combusted in the sawmill and in the CHP. The latest revision of the protocol quantifies the emissions for thermal production on an energy basis. As a result, the quantity of steam generated in the CHP and the quantity of steam used in the saw mill lumber drying process are now measured and recorded, and used to calculate the total emissions from heat generation. Prior to 2016, the gross heat of Low Pressure (LP) extraction steam to the sawmill was taken from Steam Computer (Tag Number: UY 2607). In 2016, errors were noted in the steam computer data. For 2016 and 2017 reporting, the gross heat was calculated by using raw metering data of temperature, pressure and flow for the LP steam. Diesel Calculation Methodology Under the latest version of protocol, it states that the volume of each fuel combusted must be measured using Direct metering or reconciliation of volume in storage (including volumes received). Since the biomass for the project comes from several sources and multiple suppliers external to Canfor in Alberta and elsewhere, this calculation methodology was not viable for the calculation of transportation emissions. Canfor has submitted a letter to Alberta Environment and Parks (AEP) Climate Change Office (ACCO) requesting the use of the 2007 protocol methodology to calculate biomass transportation emissions. Canfor requested the use of the flexibility mechanism stated in Appendix A of the Quantification Protocol for Diversion of Biomass to Energy from Biomass Combustion Facilities from the old protocol (September 2007 Version 1) to calculate the incremental emissions associated with the transportation of biomass. Canfor has received approval for this calculation methodology from AEP in a letter dated February 3, Objective The objective of this verification is to provide an independent assessment of the offset project to identify any material and immaterial errors, omissions or misrepresentations, and to provide our opinion on the GHG assertion in the Offset Project Report. 2.2 Scope The scope of this Project level emission reduction verification includes the project boundaries, physical infrastructure, activities, technologies, and processes of the project, GHG sources, sinks, and/or reservoirs (SSRs), types of GHGs, and time periods covered. The scope of the verification is listed in Table 1. 9

10 Table 1: Scope Item Geography Organization Activities and Processes Canfor Grande Prairie Sawmill Biomass Energy Project The project is located adjacent to the Canfor Grande Prairie sawmill at th Street in Grande Prairie, Alberta: Legal Land Location: Section 23, Township 71, Range 6, Meridian 6 Latitude: 55 9' " N Longitude: ' 9.84" W Canadian Forest Products Ltd. Combined Heat and Power Generation SSRs Baseline: Emissions from collection, transfer and transport of biomass (B1), biomass disposal (B15) and processing (B3), facility operations (B12), displaced offsite and on site electricity generation (B6 and B13), displaced offsite and on-site heat generation (B16 and B18), and fuel extraction and processing (B4). Project: Emissions from collection, transfer and transport of biomass (P1), biomass processing (P3), facility operations (P12), combustion of biomass and fossil fuel (P15) and fuel extraction and processing (P4). GHG GHG Assertion Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O) Baseline Emissions: 81,149 t CO2e Project Emissions: 1,124 t CO2e Reductions: 80,025 t CO2e Time Period January 1, 2017 to December 31, 2017 *included sources as specified in the Protocol. 2.3 Level of Assurance The verification was conducted to a reasonable level of assurance as required by the Carbon Competitiveness Incentive Regulation (CCIR). The level of assurance is used to determine the depth of detail that a verifier designs into their verification plan to determine if there are any material errors, omissions, or misrepresentations. Reasonable level of assurance is conducted to evaluate whether the GHG assertion is deemed to be presented fairly and substantiated by sufficient and appropriate evidence. As such, the goal of verification is to provide positive, but not absolute assurance regarding the GHG assertions. 2.4 Criteria The verification assesses the Project against Alberta Offset program eligibility criteria, including: Alberta Carbon Competitiveness Incentive Regulation (CCIR), December 18, 2017; Standard for Greenhouse Gas Emission Offset Project Developer (Version 1.0, December 2017); Standard for Verification (Version 1.0 December 2017); Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014); 10

11 Offset Project Plan for Grande Prairie Sawmill Biomass Energy Project; and Offset Project Report for Grande Prairie Sawmill Biomass Energy Project. 2.5 Materiality A 5% materiality threshold is set to assess errors, omissions, and misrepresentations in the GHG assertion as required by the SGER. Quantitative discrepancies are aggregated and assessed on the basis of net and absolute values. Qualitative discrepancies are evaluated by professional judgement of the verification body, and assessed to determine if the discrepancies could be deemed to be material errors. 3.0 METHODOLOGY The verification is performed according to ISO : Specification with Guidance for the Validation and Verification of GHG Assertions and Standard for Verification (ACCO, Version 1.0 December 2017). Tetra Tech applies predominantly substantive procedures during the verification process, with a focus on source data and evidence gathered during site visits and sampling procedures. Tetra Tech has developed the following steps to substantiate the GHG assertion: Conducted a site visit to confirm the boundary, physical sources, sinks and reservoirs (SSRs) at the facility. Observed, interviewed personnel, and verified various processes, instrumentation and data management procedures during the site visit. Conducted sampling on primary documentation to confirm the processes resulting in the GHG assertions. Reviewed original data sources and calculations. The verification tests conducted are summarized in Table 2. Table 2: Verification Tests Conducted Verification Test Vouching Recalculation Tracing Applicable Sources/Element & Evidence Reviewed Off-site electricity generation displaced by the Project (B6), Combustion of biomass (P15), Fuel extraction and processing (B4 and P4), Facility operation (P12) On-site heat generation displaced by the Project (B18) Collection, transfer and transport of biomass (P1) 3.1 Procedure Verification Procedures Verification procedures for the key components are provided in Table 3. 11

12 Table 3: Verification Procedures Verification Component Description of the nature, scale and complexity of the verification activity Procedures The verification is conducted for Canfor Grande Prairie Sawmill Biomass Energy Project for 2017 calendar year. The Offset Project involves direct GHG emission reductions by reducing natural gas used; reducing grid electricity used; and supplying electricity to the Alberta grid generated from the combustion of biomass The quantification for the offset project is conducted in accordance with Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014). As specified in the Protocol, the GHG sources include: Baseline: Emissions from collection, transfer and transport of biomass (B1), biomass disposal (B15) and processing (B3), facility operations (B12), displaced offsite and on site electricity generation (B6 and B13), displaced offsite and on-site heat generation (B16 and B18), and fuel extraction and processing (B4). Project: Emissions from collection, transfer and transport of biomass (P1), biomass processing (P3), facility operations (P12), combustion of biomass and fossil fuel (P15) and fuel extraction and processing (P4). The complexity of the verification is deemed to be medium. Comparability with the baseline Review the baseline calculations and supporting documents. Review Project Plan and Report. Interview facility operators. Confidence and completeness of the responsible party s GHG information and assertion Assessment of GHG information system and its controls Assessment of GHG data and information Conduct a site tour to determine GHG sources and compare with the Protocol and calculation tool for completeness. Check the quantification against the Protocol. Interview personnel for completing GHG quantification. Review data collection and transfer processes. Interview personnel for internal control procedures. Inquiry of data verification procedures for double entries. Examine natural gas and biomass records reconciliation. Examine the electricity and heat generation and reconcile. Compare sources and sinks inspected through site visit to the GHG identified in the Project Report and calculator. Review raw data, including metering data and third party records. Review emission factors used. Assessment against criteria Review and check against related criteria. Conduct site visit for physical boundary. Evaluation of the GHG assertion Recalculate GHG assertions. Evaluate supporting documents. 12

13 3.1.2 Verification Steps The verification follows the steps outlined in the following diagram (Figure 1). Acceptance Client and verification evaluation Independence and team evaluation Planning Gain an understanding - data and process flow, historical analysis Risk assessment, planining analytics, contribution analysis and materiality analysis Verification strategy, verification plan, sampling plan Execution Conduct verification procedures and collect evidence Review evidence against program criteria Document findings log and unadjusted differences Completion Conclusion: senior review, Issue for Review verification report Peer review: approval and sign off Issuance: Issue for Use verification report Figure 1: Verification Steps Site Visit Mr. Bernard Zhang of Tetra Tech visited the facility on January 16, The purpose of the site visit was to gain an understanding of the offset project s operation, equipment, and control processes for assessment of the Project s conformance with the Criteria. During the site visit, the emission sources, various processes, data acquisition and onsite records handling processes were observed. The control devices that were used to collect and monitor activity data for emission calculations were also observed Risk Assessment As part of the verification process, a risk-based verification and sampling plan must be developed that outlines: The amount and type of evidence necessary to achieve the agreed level of assurances; Methodologies for determining representative samples; and Risks of potential errors, omissions, or misrepresentation. 13

14 Tetra Tech s verification team utilizes the risk assessment process to develop a compliant verification and sampling plan. The risk assessment includes considerations associated with regulatory requirements, GHG program requirements, industry/sector specific factors, and other non-technical risks. The risk assessment considers inherent risk, control risk and detection risk. Inherent risk is the Responsible Party s risk of material error, omission, or discrepancy due to the complexity of the facility or lack of capacity by staff at the facility. Control risk is the risk that the Responsible Party s control system will not detect and rectify a material error, omission or discrepancy. Detection risk is the risk that the Tetra Tech verification team will not identify a material discrepancy. The method to determine the risk is provided in Appendix A Verification Plan. The risk assessment for the applicable reporting elements are provided in Table 4. Table 4: Risk Assessment for Applicable Emission Sources Applicable Emission Sources Inherent Control Collection, Transfer and Transport of Biomass (P1) Low Low Fuel Extraction/Processing (P4) Low Low Facility Operation (P12) Low Low Combustion of Biomass(P15) Low Low Fuel Extraction/Processing (B4) Low Low On-site Heat Generation Displaced by the Project (B18) Medium Medium Off-site Electricity Generation Displaced by the Project (B6) Low Low Verification and Sampling Plan Convenience sampling methods are used for the verification. The sample plan is developed based on the risk assessment to achieve an overall low detection risk. The sample size is based on the Guidance Document for GHG verification sampling by the European Commission with verifier s professional judgement. The sample size varies based on the number of evidence records. The type and amount of evidence reviewed for each emission source is provided in the Final Verification Plan (Appendix A). 3.2 Team The verification team meets the requirements under the Carbon Competitiveness Incentive Regulation (CCIR) and have the technical knowledge of GHG emission quantification methodologies required by Standard for Verification (ACCO Version 1.0 December 2017) Part 1 Section 3. The team members have experience in completing third-party GHG verifications, reviews and audits related to emission inventories, including verifications in Alberta. Verification team members have been trained under ISO Mr. Brian Adeney, P. Eng., is a Professional Engineer registered by the Association of Professional Engineers and Geoscientists of Alberta. Mr. Adeney is the Designated Signing Authority and is Regional Manager in Tetra Tech Environment and Water Practice. He has reviewed and been involved in audits for permit compliance at construction sites, multiple verifications for Climate Change Emissions Management Corporation (CCEMC) and SGER verifications. He has over 4 years of GHG verification experience, and received ISO training in Mr. Adeney is responsible for ensuring: 14

15 the verification acceptance requirements have been met as outlined in the Technical Guidance; the verification was conducted in accordance with ISO standard, and the Tetra Tech s management system for quality assurance and control and independence has been applied during the verification; the verification was conducted in a professional manner; and the verification report was presented appropriately. Min Si, M.N.R.M., GHG-V, was the Lead Verifier for this verification. Mr. Si is an Environmental Scientist with Tetra Tech in Calgary. He has worked on GHG verification and quantification projects for a wide range of sectors, including oil and gas, pulp and paper, agriculture, manufacturing, etc. His emission experience includes GHG life cycle assessment, GHG quantification and verification for carbon offset projects, compliance report verification, National Pollution Registry Inventory (NPRI) and corporate GHG reporting. Mr. Si has completed CSA ISO training with CSA. Mr. Si is responsible for: managing the verification project; ensuring the team has appropriate competencies for the verification; communicating to key members of the responsible party regarding the verification objectives and results Nelson Lee, M.A.Sc., P.Eng., GHG-V is the Peer Reviewer for this verification. Mr. Lee has a B.Sc. in Chemical Engineering from the University of Alberta, and a M.A.Sc. in environmental engineering from the University of British Columbia. He has 20 years of experience in the oil and gas industry, and has completed over 100 GHG verifications in Alberta and BC. Mr. Lee completed ISO part 3 training with Environment Canada. Mr. Lee is a CSA certified GHG verifier, and a California Air Resources Board (ARB) registered offset project lead verifier. His responsibilities include independent review of verification deliverables and supporting documentation to confirm all verification activities have been completed, and conclude whether the GHG assertion is free of material discrepancy and the verification activities conducted achieved a reasonable level of assurance. Bernard Zhang, P.Eng is the verifier for this verification. Mr. Zhang is an Environmental Engineer specializing in validation/verification of GHG offset projects and quantification/verification of air emissions for industrial facilities. His GHG experience covers different industrial scopes including renewable energy generation, coal mine methane power generation and industrial waste heat regeneration. Mr. Zhang s responsibilities include data analysis, data evaluation, evidence review, etc. Mr. Zhang has completed ISO training. The Statement of Qualifications is provided in Appendix B 3.3 Schedule The schedule for the verification is presented in Table 5. Table 5: Verification Schedule Activity Date Project Awarded December 18, 2017 Site Visit January 16, 2018 Issued for Review Report February 9, 2018 Issued for Use Report February 14,

16 4.0 RESULTS The included GHG emissions identified in the Protocol were observed, assessed, and evaluated. It was determined that the following emissions are not applicable to the project (Table 6). Table 6: Non-Applicable Emission Sources Emission Source Collection, Transfer and Transport of Biomass (B1) Biomass Disposal (B15) Processing of Biomass (B3 & P3) Displaced Off-site Heat Generation (B16) Displaced On-site Electricity Generation (B13) Facility Operations (B12) Rationale for Exclusion In the baseline, a portion of biomass waste was sent to a particleboard plant in Wanham, Alberta for utilization. Canfor does not claim credits from transportation of biomass to offsite. The trucked- in Biomass disposal in the baseline is not claimed for credits. Biomass is waste residues from several sawmill operations. The wood residue is not processed further in either the baseline or project conditions. Heat was provided by combusting natural gas on site in the baseline condition therefore no off-site heat was displaced by the project. Electricity was purchased from the Alberta grid; therefore, no electricity was generated on site in the baseline. In the baseline condition, wood residue generated by the sawmill was burned on site in an incinerator with no on-site energy recovery. Canfor does not claim credits from incineration. 4.1 Assessment of Internal Data Management and Controls A summary of the Responsible Party s internal data management and data flow is provided on Figure 2. Figure 2: Summary of Internal Data Management and Data Flow 16

17 The data used to calculate the GHG assertion of emission reduction credits include metered, invoiced, and referenced data. The GHG data management system and its controls are assessed through a combination of verifier site visit activities, interviews with staff involved in the data flow and review of the data itself. These activities verify the data flow process and information management system. A summary of the Responsible Party s control is provided in Table 7. Table 7: Summary of Internal Controls Reporting Element Data Source Controls Wood Waste Electricity Steam Natural gas Diesel CHP Infeed conveyor belt weight measurement Truck weigh scale tickets Moisture measurement (hardcopy log and excel spreadsheet) Hog Database (monthly spreadsheet) Wood Tracking Inventory (excel spreadsheet and hardcopy records) Meters with internal memory Third party data storage Monthly Generation Summary (excel spreadsheet) Flow, temperature and pressure meters Historian Database (Flow, temperature and pressure) Steamheat_Invoicing Spreadsheet (excel spreadsheet for BPP program) Meters Invoices Historian Database Fuel Delivery Slips Division Monthly summary billing (invoices) Meter checks for normal operation, calibration Hog Database prepared and reviewed by financial accountant, including reconciliation of weigh scale tickets with data electronically transferred from scale. Wood Tracking Inventory spreadsheet prepared and reviewed by financial accountant. Electricity meters monitored and maintained by third party specializing in energy meters. Service also includes polling and retrieval of the meter data, identification of anomalies, notification of any irregularity with the meter or data and data storage. Calculation spreadsheet prepared and reviewed by the financial accountant. Annual calibration of flow, temperature and pressure transmitters. Net heat is calculated for BPP by Professional Engineer of Amec, and reviewed by Amec. Invoice data against internal meter reading, summary spreadsheet reviewed by accounting. Reviewed by accounting and reconciled with summary billing (with hardcopy records retained). GHG Calculator Custom Excel based calculator Offset report Quantification completed by PwC with review by senior personnel at PwC and Canfor Authorized Project Contact. Reviewed by PwC and Canfor Authorized Project Contact. 17

18 Conclusion The internal data management and controls are assessed based on the review of the Offset Project Plan, observations during the site visits, and interviews with key project personnel. The internal data management and controls for the offset project are deemed to be adequate. 4.2 Assessment of GHG Data and Information The GHG data and information provided to support the GHG assertion is deemed to be sufficient. The quantification methodologies used are consistent with the Offset Project Plan and the Quantification Protocol. The information to support activity data is provided in Table 8, the emission factors used are taken from Alberta Environment and Parks (AEP) Emission Factors Handbook and Canada s National Inventory Report. 18

19 Table 8: GHG Data and Supporting Information Applicable Emission Sources GHG Data and Information Results Collection, Transfer and Transport of Biomass (P1) Fuel Extraction/Processing (P4) Facility Operation (P12) Combustion of Biomass(P15) Estimated based on average of truck load and millage of round trip. Natural gas invoices Diesel invoices for on-site diesel used by loaders Biomass waste quantity is tracked by Canfor s wood tracking inventory tool in kg on a wet basis. The average monthly moisture content from lab tests is used to convert from the wet basis to dry basis. The calculation methodology under the latest version of protocol was not viable for the calculation of transportation emission. Canfor has submitted a letter to AEP requesting the use of the flexibility mechanism stated in Appendix A of the Quantification Protocol for Diversion of Biomass to Energy from Biomass Combustion Facilities from the old protocol (September 2007 version 1) to calculate the incremental emissions associated with the transportation of biomass. AEP approved the request on Feb 3, The natural gas consumption includes the natural gas supplied to the CHP plant and to sawmill. The natural gas consumed by the CHP plant is supported by supplier s invoices. The natural gas consumed by the sawmill is supported by the internal gas meter readings. Tetra Tech reviewed the invoices and metering data. The GHG data and information provided are deemed to be sufficient and appropriate. The quantity of diesel consumed is determined by diesel supplier s invoices. Average daily usage is used for calculating diesel consumption for the period of December 22 to 31, The assumption is deemed to acceptable. The dry based emission factors and biomass quantity are used. The method to calculate emissions from biomass combustion is deemed be appropriate. The eligibility of the biomass at Canfor is deemed to comply with the requirement as outlined in the Appendix A of the Protocol. The emissions from sawmill biomass combustion is function equivalent. See Appendix C Issue for more details. Fuel Extraction/Processing (B4) The average of natural gas consumed in is used for this baseline parameter. The method is consistent with the Project Plan. 19

20 Applicable Emission Sources GHG Data and Information Results On-site Heat Generation Displaced by the Project (B18) Off-site Electricity Generation Displaced by the Project (B6) The net heat calculated for the Alberta Bio- Energy Producer Program (BPP) by a Professional Engineer is used as heat displaced by the project. Metering data is used. The displaced electricity calculated by using gross generation and subtracting the parasitic load and CHP wood handling usage. Monthly average pressure and temperature data is used to estimate the net heat generation. The historian data management system was updated in August The timestamps between the old and new historians are not exactly the same, which results in slight variations between the two historians. The discrepancy is GJ understatement for the eligible heat (B18). It is Tetra Tech s opinion that the data used is deemed to be acceptable and it is also conservative. No issues found 20

21 4.3 Assessment against Criteria The assessment against program eligibility criteria is provided in Table 9. It is our opinion that the eligibility criteria are met. Table 9: Eligibility Criteria Assessment Offset Eligibility Criteria Reduction or sequestration occurs in Alberta Result from actions not required by Law at the time the action is taken Results from actions taken on or after January 1, 2002 and occur on or after January 1, 2002 Reduction or sequestrations is real and demonstrable Quantifiable and measurable Verified by a third-party verifier that meets the requirements in Part 1 for the Standard for Verification. Assessment Site visit confirmed the project s physical location. Combustion of biomass waste is not required by law for energy generation. Project started commercial operations January 1, Site visit confirmed the existence of the project. Activity data is measured and emissions are quantified using the approved protocol. The verification team meets the requirements set out in the Standard for Verification (Version 1.0 Dec 2017) Part 1 Section 3. The designated signing authority and peer review have over 4 years of providing GHG verification and received ISO training. 4.4 Evaluation of GHG Assertion The verification opinion is that the GHG assertion meets the requirements of the Carbon Competitiveness Incentive Regulation (CCIR). The GHG data and supporting documents are deemed to be sufficient and appropriate. The GHG assertion is calculated in accordance with the approved quantification protocol. It is our opinion that 80,025 t CO2e of the emission reductions meet the materiality requirements and the reasonable level assurance criteria. 4.5 Summary of Findings During the verification, no material misstatements were identified. The detailed description of the findings is provided in Appendix C. 5.0 CLOSURE 5.1 Verification Statement The verification conclusion is positive. Based on our review, it is our opinion that the Emission Reductions of 80,025 t CO2e contained in the GHG assertion generated from the Canfor Grande Prairie Sawmill Biomass Energy Project (2017) for the period of January 1, 2017 to December 31, 2017 is materially correct and presented fairly in accordance with the relevant criteria. The Statement of Verification is provided in Appendix D. 21

22 5.2 Limitation of Liability Tetra Tech has undertaken the verification of the asserted emission reductions associated with the Project in accordance with related program criteria. Tetra Tech has assessed the offset project GHG assertion using reasonably ascertainable information as defined by ISO The assessment represents the condition in the subject area at the time of the assessment. Tetra Tech did not conduct direct GHG emissions monitoring or other actual environmental data sampling or analysis as part of this verification. The purpose of this report is to identify noted exceptions and observations in the quantification of emission reductions. This report is not intended to imply exhaustive compliance or non-compliance by the verification team. The verification team has made diligent effort to sample applicable information available regarding emission reductions by the Project during the verification. It should be noted that the inherent limitation in verification sampling and review practices may result in the verifier not identifying all potential aspects of the project. Observations, exceptions and conclusions are based on the judgment of the verifier. The Conflict of Interest Checklist is provided in Appendix E. 5.3 Confirmation As required by ACCO, the verifier has confirmed the following information: Consistency of offset project information across offset project documentation; Offset project location; Methodology document/project Report exists; Offset project contact and the amount of GHG emission reductions; and Completeness and accuracy of process and data flow diagram. If you have any questions or comments, please contact Min Si ( , Respectfully submitted, Tetra Tech Canada Inc. Issued in Calgary, AB, February 14, Prepared by: Bernard Zhang, P.Eng. Environmental Engineer Prepared by: Min Si, M.N.R.M., GHG-V Environmental Scientist Reviewed by: Brian Adeney, P.Eng. Designated Signing Authority 22

23 APPENDIX A: FINAL VERIFICATION PLAN AND SAMPLING PLAN 23

24 Appendix A Verification Plan February 14, 2018 Canadian Forest Products Ltd West 75 th Avenue Vancouver, BC V6P 6G2 Issued for Use ENW.EENW Via matthew.warkentin@canfor.com Attention: Matthew Warkentin, P.Eng. PMP, CEM Energy Manager, Environment & Energy Department Subject: Verification Plan Canadian Forest Products Ltd Canfor Grande Prairie Sawmill Biomass Energy Project January 1, 2017 December 31, 2017 A1.0 INTRODUCTION Tetra Tech Canada Inc. (Tetra Tech) was contracted by Canadian Forest Products Ltd. (Canfor) to verify Greenhouse Gas (GHG) emission reductions from Canfor Grande Prairie Sawmill Biomass Energy Project for the 2017 Calendar Year. A1.1 Objective The objective of this audit is to provide an independent assessment of the offset project to identify any material and immaterial errors, omissions or misrepresentations and to provide our opinion on the GHG Assertion in the Offset Project Report. A1.2 Assurance The scope and level of effort of this verification is planned to achieve a reasonable level of assurance as required by the Carbon Competitiveness Incentive Regulation (CCIR). The level of assurance is used to determine the depth of detail that a verifier designs into their verification plan to determine if there are any material errors, omissions, or misrepresentations. Reasonable level of assurance is to evaluate whether the GHG assertion is deemed to be presented fairly and substantiated by sufficient and appropriate evidence. As such, the verification is to provide positive, but not absolute assurance regarding the GHG assertions. A1.3 Scope The scope of this Project level emission reduction verification includes the project boundaries, physical infrastructure, activities, technologies, and processes of the project, GHG sources, sinks, and/or reservoirs (SSRs), types of GHGs, and time periods covered. The scope of the verification is listed in Table A1. 24

25 Appendix A Verification Plan Table A1: Scope Item Geography Canadian Forest Products Ltd Grande Prairie Sawmill Biomass Energy Project The project is located adjacent to the Grande Prairie sawmill at th Street in Grande Prairie, Alberta. Legal Land Location: Section 23, Township 71, Range 6, Meridian 6 Latitude: 55 9' " N Longitude: ' 9.84" W Organization Activities and Processes Canadian Forest Products Ltd. Combined Heat and Power Generation Sources* Baseline: Emissions from collection, transfer and transport of biomass (B1), biomass disposal (B15) and processing (B3), facility operations (B12), displaced offsite and on site electricity generation (B6 and B13), displaced offsite and onsite heat generation (B16 and B18), and fuel extraction and processing (B4). Project: Emissions from collection, transfer and transport of biomass (P1), biomass processing (P3), facility operations (P12), combustion of biomass and fossil fuel (P15) and fuel extraction and processing (P4). Sinks / Reservoirs GHG GHG Assertion N/A Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O) Baseline Emissions: 81,149 t CO2e Project Emissions: 1,124 t CO2e Reductions: 80,025 t CO2e Time Period January 1, 2017 December 31, 2017 *included sources as specified in the Protocol. A1.4 Verification Standard The verification is performed according to ISO : Specification with Guidance for the Validation and Verification of GHG Assertions. A1.5 Verification Criteria The verification assesses the Project against Alberta Offset program eligibility criteria, including: Alberta Carbon Competitiveness Incentive Regulation (CCIR), December 18, 2017; Standard for Greenhouse Gas Emission Offset Project Developer (Version 1.0, December 2017); Standard for Verification (Version 1.0 December 2017); Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014); Offset Project Plan for Grande Prairie Sawmill Biomass Energy Project; and Offset Project Report for Grande Prairie Sawmill Biomass Energy Project. 25

26 A1.6 Materiality 2017 Canfor Sawmill Biomass Energy Project Appendix A Verification Plan A 5% materiality threshold is set to assess errors, omissions, and misrepresentations in the GHG assertion as required by the CCIR. Quantitative discrepancies are aggregated and assessed on the basis of net and absolute values. Qualitative discrepancies are evaluated by professional judgement of the verification body, and determined if the discrepancies could be deemed to be material errors. A2.0 TEAM The verification team is presented in Table A2. Table A2: Verification Team Team Min Si, M.N.R.M., GHG-V Nelson Lee, M.A.Sc., P.Eng., GHG-V Xiaobo Zhang, P.Eng. Brian Adeney, P.Eng. Role Lead Verifier Peer Reviewer Verifier Designated Signing Authority A3.0 SCHEDULE The schedule for the verification is presented in Table A3. Table A3: Verification Schedule Activity Date Project Awarded December 18, 2017 Site Visit January 16, 2018 Issued for Review Report February 9, 2018 Issued for Use Report February 14, 2018 A4.0 RISK ASSESSMENT As part of the verification process, a risked-based verification and sampling plan must be developed that outlines: The amount and type of evidence necessary to achieve the agreed level of assurances; Methodologies for determining representative samples; and Risks of potential errors, omissions, or misrepresentation. Tetra Tech s verification team utilizes the risk assessment process to develop a compliant verification and sampling plan. The risk assessment includes considerations associated with regulatory requirements, GHG program requirements, industry/sector specific factors, and other non-technical risks. The risk assessment considers inherent risk, control risk and detection risk. Inherent risk is the Responsible Party s risk of material error, omission, or discrepancy due to the complexity of the facility or lack of capacity by staff at the facility. Control risk is the risk that the Responsible Party s control system will not detect and rectify a material error, 26

27 Appendix A Verification Plan omission or discrepancy. Detection risk is the risk that the Tetra Tech verification team will not identify a material discrepancy. The inherent risk and control risk are rated by likelihood multiplied by consequence in accordance with the matrix provided in Table A4. The detection risk is based on the combination of the inherent and control risks. Table A4: Rating Matrix for Inherent Risk and Control Risk Likelihood Risk Matrix 5 Almost Certain 4 Likely 3 Possible 2 Unlikely 1 Rare Consequence Immaterial Minor Moderate Major Material The definition for the scoring is provided in Table A5, adapted from Intergovernmental Panel on Climate Change (IPCC) Table A5: Scoring Definition Score Likelihood Consequence 5 possibility of misstatement >95% misstated GHG assertion (threshold) >5% 4 66% < possibility of misstatement <95% 4%<misstated GHG assertion <5% 3 33% < possibility of misstatement <66% 3%<misstated GHG assertion <4% 2 5% < possibility of misstatement <33% 1%<misstated GHG assertion <3% 1 possibility of misstatement <5% misstated GHG assertion<1% Inherent risk is determined to be low based on the following: Third party invoiced data is used for natural gas consumption; and Metering data is used for heat and electricity generation. Control risk is determined to be low based on the following: Data used for emission reduction quantification consists of manually recorded data, metered data capture, and manual entry into the Canfor offset quantification tool; and 27

28 Appendix A Verification Plan Canfor completes an internal senior review in order to check both calculations and reports for transcription errors and omissions, correctly functioning links and formulas as part of their QA/QC (low risk). Detection risk is the risk that Tetra Tech s procedures do not detect a misstatement in the GHG Assertion. The detection risk is determined based on Table A6, as outlined in the Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance (V1, January 2013). Table A6: Design of Detection Risk Control Risk High Medium Low Inherent Risk Score in Table High Lowest Lower Medium Medium 6-10 Lower Medium Higher Low 1-5 Medium Higher Highest The verification procedures were designed and performed to achieve low detection risk so that the overall verification risk is low for a reasonable level of assurance, as specified in the Verification Technical Guidance. A summary of risk assessment is provided in Table A7. Table A7: Summary of Risk Assessment Element Risk Assessment Site Visit Offset boundary Methodologies, emission factors and conversion used Comparability with the baseline Conformance to the program criteria Integrity for the responsible party s data management system and control (e.g. organization chart, GHG management plan, personnel/consultant training, protocols used, control system documentation, software/program documentation/certifications Low. Canfor Sawmill facility is a relatively small facility, major equipment was observed during the site visit. Low. Site visit confirmed the offset boundary Low. Quantification methodologies follow the approved protocol and emission factors. Quantification is conducted in the Excel spreadsheet. Emission factors and conversions are transparent. Low. No operational change. Low. The offset project has been verified by several verifiers for over eight years. Medium. The Responsible Party s data management system and control procedures are provided in the Verification Report. Data transfer is a combination of digital and manual transfer. 28