- Terms of Reference - 1. CONTEXT AND GENERAL INFORMATION Background
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1 Analysis and development of methodologies for estimating potential industrial emissions reductions and compliance costs of BAT conclusions adopted under the Industrial Emissions Directive - Terms of Reference - 1. CONTEXT AND GENERAL INFORMATION 1.1. Background Emissions from industrial installations have been subject to EU-wide legislation for some time, in particular through the Directive concerning integrated pollution prevention and control (IPPC Directive 96/61/EC, codified as 2008/1/EC) and other Directives addressing emissions from specific activities (large combustion plants (LCP), waste incineration, solvent using activities, titanium dioxide production). These Directives were revised, streamlined and consolidated into Directive 2010/75/EU 1 on industrial emissions (IED), which has replaced the aforementioned Directives as from 7 January 2014 (from 1 January 2016 in case of the LCP Directive 2001/80/EC). Around installations are covered by the IED and these are required to operate in accordance with permits issued by Member State competent authorities, which have to include industrial emission limit values for polluting substances based on the best available techniques (BAT) as defined in Article 3(10) of the IED. Under the IPPC Directive, BAT were described at EU level in the BAT reference documents (BREFs) adopted by the Commission following an exchange of information with the Member States, industrial stakeholders and environmental NGOs. These BREFs served as guidance documents for establishing the permit conditions. A total of 32 BREFs have been published, covering most of the activities falling under the IED 2. While maintaining and formalising the information exchange process developed under the IPPC Directive, the IED provides for the BAT conclusions of the BREFs to be adopted by the Commission as implementing acts. Most importantly, the IED gives a stronger role to these BAT conclusions in the permitting of industrial installations by requiring them to serve as the reference for competent authorities when setting or revising the permit conditions of IED installations. The aim of this is to ensure improved environmental performance through a more consistent uptake of BAT and to enhance the level playing field for the operators of industrial installations in Europe. In addition, Article 15(3) of the IED gives a particular role to the BAT-associated emission levels (BAT-AELs) set out in the BAT conclusions. It requires the emissions of the installations concerned not to exceed the BAT-AELs, except in specific cases where the conditions are fulfilled to allow a derogation by the competent authority (Article 15(4) of the IED). Such derogation needs to be justified on the basis of an assessment demonstrating the disproportionality of the costs of meeting the BAT-AELs against the environmental benefits. Following the publication of a Decision on BAT conclusions in the Official Journal of the EU, Member States have a maximum of 4 years to implement the BAT conclusions through an update of the permits concerned. 1 OJ L334, , p
2 The BREFs adopted under the IPPC directive are currently being revised under the IED and so far seven BAT conclusions have been adopted as Commission Implementing Decisions 3. Whilst the elaboration of BREFs and their BAT conclusions recognises the diversity within industrial sectors and between countries, there has so far been little quantification of how much the series of BAT conclusions may actually reduce industrial emissions to air and water. There is an expectation that IED's more formalised link between BAT and permit conditions will promote a step reduction of emissions and improved environmental performance. To support further development of industrial emission policy there is a need to better understand the role of the BAT conclusions in promoting the uptake of BAT, and reducing emissions, as well as the potential associated compliance costs Previous study on assessment of the potential industrial emission reductions delivered by BAT conclusions A first step in this direction was set in 2013 with the launch of the study Assessment of the potential emission reductions delivered by BAT conclusions adopted under the IED (AMEC 2015) 4. The goal of that study was to define a baseline/bau scenario (reflecting the situation without IED BAT conclusions, so essentially a forecast of industrial emissions as if they would remain regulated under the IPPC Directive) and to develop a methodology to assess the additional emission reductions that could be delivered by the IED BAT conclusions. The study focused on the seven sectors for which BAT conclusions have already been adopted: cement/lime/magnesium oxide, glass, iron & steel, tanneries, chlor-alkali, pulp & paper and refineries. The scope of this study was limited to the industrial emissions reduction potential, so it did not attempt to estimate the potential associated costs. The general approach used in this study to forecast emission reductions is to use emission data from a selected sector in a base year and project it to the target year with the purpose of comparing the sector s future emissions under different scenarios (with and without the IED BAT conclusions). It implies the setting of a baseline (degree of uptake of BAT and industrial emissions before BAT conclusions were adopted), the establishment of a Business As Usual (BAU) scenario (assumed future degree of uptake of BAT and industrial emission levels in the absence of BAT conclusions) and one or more policy scenarios (the degree of uptake of BAT and emissions achieved once BAT conclusions are adopted). The method relies on the conversion of BAT-AEL into total (annual) mass emissions for the relevant pollutants and processes within the industrial sectors. For this, the methodology proposed requires specific inputs (based on empirical data or assumptions), such as: the (current and future) level of industrial activity (per sector and/or process) including information on fuel types and raw materials (affecting emissions) used; total emissions at the level of the relevant processes within a sector (or their share in total emissions as reported at facility level under E-PRTR); the environmental performance (emission concentrations or emission factors) of the installations in the base year; report_ pdf 2
3 the extent of uptake of BAT (at process level) within an activity (base year and forecast), and the (quantified) extent of deviation from BAT. The availability and accuracy of this input data will determine the quality and reliability of the model output and hence, of the quantification of the potential emission reductions due to implementation of the BAT conclusions. A first test application of the already developed methodology highlighted that some of those data are not always easily available and assumptions might be necessary. For instance, the assessment of current emissions from IED activities, based on the analysis of data reported in E-PRTR 5, has limitations due to the fact that the level of aggregation of the data reported (i.e. at facility level) does not allow a direct comparison with emissions of parts of IED installations for which BAT conclusions are defined (generally at the level of individual production processes or technical units within an installation). This first study allowed identifying the further work needed to improve the methodological approach and to refine the results achieved so far towards a better quantification of the emission reduction potential and costs of implementing BAT conclusions Other existing methodologies Different methodologies or models exist, which allow estimating industrial emissions to the environment from industrial processes and/or possible emissions reductions resulting from abatement measures applied to those processes and/or their associated costs. Such methodologies have been developed either at international, EU or national level and may have been applied in various contexts. Two examples are highlighted in particular. The Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS) model 6 has been developed by IIASA to identify cost-effective emission control strategies that simultaneously tackle air pollution and greenhouse gases so as to maximize benefits at local, regional and global scale. GAINS is used for policy analyses, e.g. for the EU's Clean Air and Climate and Energy policy and under the Gothenburg Protocol to the Convention on Long-range Transboundary Air Pollution (CLRTAP). Several emission reduction options (technologies) and their costs are represented in GAINS. The model can be operated in the 'scenario analysis mode, i.e., following the pathways of the emissions from their sources to their environmental impacts. In this case the model provides estimates of costs and environmental benefits of alternative emission control strategies. The model can also operate in the 'optimization mode' which allows identifying cost-optimal allocations of emission reductions in order to achieve specified environmental objectives (e.g. deposition levels, concentration targets, or GHG emission ceilings). The current version of the model can be used by an expert user registered in the system for viewing activity levels and emission control strategies, as well as calculating emissions and control costs for those strategies. Estimates of industrial emissions from processes, as used in the context of Life Cycle Assessment (LCA) may also contribute to the development of the methodology subject of this contract. LCA is a technique to assess environmental impacts associated with all the stages of a product's life and thus allows evaluating the potential impacts associated with
4 identified inputs and releases. For this, it relies on an inventory of relevant energy and material inputs and environmental releases. In this context, emissions from industrial processes are taken into account for the different phases of the manufacturing processes. 2. SUBJECT OF THE SERVICE REQUEST The objective of this Service Request is to contribute to the further development of a methodology allowing assessment of the potential reductions of industrial emissions to air and water and compliance costs triggered by BAT conclusions adopted under the IED. This includes the identification of existing methodologies/models that may be used to quantify those emission reductions and associated costs, followed by an analysis of the feasibility of their application in practice, in view of the necessary accuracy of the output, and limitations in terms of human and financial resources needed for gathering the necessary data and performing the calculations. The general feasibility analysis should be made more concrete by applying the methods considered to the sector of Iron and Steel Production as an example. This assessment should allow making an informed decision on whether a sufficiently accurate estimate of the potential emission reductions of BAT conclusions and their associated compliance costs is feasible in the short term while relying on proportionate efforts and, if so, how such a methodology would look like and what data it would rely on. To this end, the contractor should recommend a way forward. The results of the study shall be presented and discussed during a workshop with relevant stakeholders and experts in this field. 3. TASKS TO BE PERFORMED The contractor should perform the following tasks: Task 1 - Identification and analysis of methodologies allowing for estimation of the potential emission reductions from implementing abatement measures for industrial activities and the associated costs; Task 2 - Feasibility analysis of selected methodologies; Task 3 Recommendations; Task 4 Organisation of a stakeholder workshop to discuss the provisional results of tasks 1 to 3; Task 5 Report on the findings of this study. These tasks are described in more detail below. Each tenderer is invited to set out, in its offer, its overall approach as well as the specific methodology proposed for each of the Tasks defined under this Service Request. This should be based on robust knowledge (literature research, comparison of national practice/guidance in this field) and practical examples or demonstrations. 4
5 In general terms, the Commission anticipates that the work will entail at least the elements described below. The tenderer is invited to describe how the tasks will be fit together in terms of both timing and substance Task 1 - Identification and analysis of methodologies for estimating the potential emission reductions from implementing abatement measures for industrial activities and the associated costs In a first step, the contractor shall identify approaches that may be used to estimate the potential industrial emissions reductions from industrial activities to air and water, and/or their associated costs. This includes the methods mentioned in Section 1, but also other models that may be used by research institutes, governments or local authorities. The methodologies may either tackle all aspects in a comprehensive manner or focus on particular specific aspects (e.g. only costs or only emission reductions). They should in principle be applicable for all relevant IED sectors. In a second step, the contractor shall analyse the identified methodologies, and in particular the following aspects thereof: coverage and description of industrial sectors (e.g. top down/bottom up, level of aggregation, relation with IED and BAT conclusions); process technologies and abatement techniques covered, and how their costs are documented; baseline definition; BAU scenario in target years (assumptions, parameters considered); possibilities to define different scenarios, additional (e.g. innovative) technologies and abatement techniques. In this step the contractor shall also indicate, for each of the approaches identified, the need for particular input data and the estimated degree (in terms of completeness, quality, level of detail) of availability of such data (or how to generate it) and the process used or needed for its collection. The contractor is also expected to identify the main differences and similarities among the identified approaches, with the aim of highlighting possible complementarities (e.g. one module of a given methodology might be combined with another model to provide additional information or improved accuracy of the input). To make the assessment more robust and concrete, the contractor shall analyse in depth the applicability of the methods considered to the BAT conclusions for the sector of Iron and Steel Production, giving details on how the sector is described in the various methodologies, level of aggregation, availability of input data. The tenderers are invited to indicate any relevant methodologies they are aware of and to propose additional elements which could contribute to improving the analysis, as well as more sectors or activities for which the applicability will be tested Task 2 - Feasibility analysis of selected methodologies Under this task, the contractor shall assess the practical feasibility and resource implications of applying the methodologies identified in Task 1 (or appropriate combinations thereof) for the purpose of estimating the potential emission reductions and costs of BAT conclusion implementation. 5
6 This assessment shall consider in particular the following: availability of appropriate input data and efforts needed to obtain it; complexity of the approach in terms of data needs and making a direct link with individual BAT conclusions set out in the BAT conclusions; achievable level of accuracy; compatibility with other modules (e.g. possibilities and efforts needed for combining methodologies used for estimation of emission reduction with approaches for assessing the associated costs); the need for adaptation or modification of existing methodologies; flexibility for use across sectors, tackling air and water pollutants, etc.; potential gaps and inconsistencies. As regards the data needs and availability, the contractor shall consider in particular the data collected during the information exchange process for the review of the BAT Reference Documents and take into account that from September 2017 additional data will be made available by Member States in the framework of IED reporting (Article 72) on their implementation of the IED and the BAT conclusions. The contractor shall assess the financial and human resources (especially, regarding data gathering and data mining) needed for using the methodologies and identify their possible drawbacks. The feasibility analysis shall be made more concrete by applying it at least to the BAT conclusions for the sector of Iron and Steel Production Task 3 - Recommendations Building on the outcome of Tasks 1 and 2, the contractor shall propose possible ways forward for assessing the potential emission reductions and associated costs related to implementing the BAT conclusions. Among these, the preferred option(s), taking into account the expected quality of the output and the efforts required to achieve this, shall be identified. The preferred option shall allow at least, for each IED activity for which BAT conclusions will be adopted: identification of the current situation (baseline); calculation of BAU scenario considering the degree of uptake of BAT and emission reductions in the absence of BAT conclusions (time horizon: ); estimation of the emission reduction potential due to the implementation of selected (key) BAT conclusions (this could be expressed as a range taking into account the BAT-AEL ranges and the potential application of derogations); estimation of the costs associated with the implementation of selected (key) BAT conclusions; (optional) estimation of the environmental and health benefits of the potential emission reductions. 6
7 For the preferred option(s) proposed the contractor shall provide an outline of the work needed to further develop and implement it. Where possible, in light of the findings under Tasks 1, 2 and 3, the contractor shall implement the methodology in the form of an IT tool allowing estimating the potential emission reductions and related costs of BAT conclusions implementation Task 4 - Organise a stakeholder workshop The contractor shall organise a one day workshop in Brussels with identified relevant stakeholders to present and discuss the provisional results and conclusions of Tasks 1 to 3 and, in particular, to obtain feedback on the identified methodologies and their practical feasibility. The contractor will be responsible for the organisation of the workshop, its preparation and content, based on consultation and agreement with the Commission. The Commission services will provide the premises. The total number of participants should be around people 7 and balanced participation must be ensured (representatives from as many Member States as possible, the industry concerned, environmental NGOs, other relevant stakeholders). The contractor shall identify, with the help of the Commission services, independent experts who might contribute to providing comments on the provisional results. Once a date for the workshop has been set, the contractor shall inform the potential participants about the date. A final invitation with an agenda shall be sent 4 weeks before the event. A discussion paper and the interim report shall be made available to the participants no later than 2 weeks before the workshop. The contractor shall write the draft minutes of the workshop within 10 working days. The findings of the workshop shall be taken into account when finalising the deliverables under Task Task 5 - Summarise the findings in a report Apart from the actual findings, the (draft) final report shall include a chapter on the methodology and an overview of all information sources that have been accessed. Moreover, the final reports shall include: an abstract of no more than 200 words; a summary of maximum 6 pages. 4. DELIVERABLES AND ESTIMATED TIMETABLE Regular communication between the contractor and the Commission will be essential throughout the contract. The contractor shall regularly inform the Commission of the progress of the work and any important issues that may arise. 7 Due to room size limitations, the total number could be adapted depending on room available. 7
8 An inception meeting will be organised in Brussels between the contractor and the Commission Services within two weeks after signing the contract. At the inception meeting, the contractor will present its proposed methodology to perform the contract. The working language at this and all following meetings will be English. In addition to the inception meeting, the contractor shall be available, upon request of the Commission, to attend at least 2 video- or audioconference meetings and at least 2 meeting in Brussels to discuss the progress and the various reports. The last of these meetings is anticipated to be a presentation of the final report to the Industrial Emissions Expert Group (IEEG). The contractor shall submit the draft minutes of any such meetings within two weeks after the meeting. The language of the reports and all documentation produced in the context of this contract must be English. All documents have to be written in clear, understandable and correct language. The documents should be concise, straightforward and easy to follow, with a clear layout and structure, appropriate contents page, glossary, abbreviations and executive summary. Where colours are used (e.g. in graphs) the formatting should be chosen in a manner that allows identifying the information also in black and white prints. All reports shall be provided electronically both in a PDF and Microsoft Office 2007 compatible format. The final report shall be provided electronically and in three paper copies. The estimated timetable of the deliverables is: Inception report, summarising the inception meeting and setting out the methodology and time schedule for the work: within 2 weeks of the inception meeting; Intermediate report covering Task 1 and work plan for Task 2: within 4 months of the start of the project; Second intermediate report covering Tasks 1 to 3: within 6 months of the start of the project; Draft final report covering Task 1 to 4: before 30 June 2016; Final report, taking into account the comments from the Commission on the draft final report: 30 September
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