Validation Report, Cover Letter and Statement of Assurance

Transcription

1 B.C. Ministry of Environment Climate Investment Branch Validation Report, Cover Letter and Statement of Assurance Page 1 of 20

2 7220 Financial Way, Suite 100 Jacksonville, Florida Phone: Validation Report Project Plan Title: Project Proponent: Quadra Island Forestland Conservation Project Offsetters Clean Technology Inc. Project Contact: Document Prepared by: Ms. Cornelia Rindt Offsetters Clean Technology Inc. Suite West Hastings Street Vancouver, BC V6B 1N2 Date: 29 December 2015 Janice McMahon, Sr. Vice President/Technical Director Forestry, Carbon and GHG Services Division Environmental Services, Inc. Corporate Headquarters: 7220 Financial Way, Suite 100 Jacksonville, Florida Reference/Project/Number: Project Location: Project Number: VO Strathcona Regional District, Electoral Area 772-C Quadra Island, BC Latitude: and Longitude: Page 2 of 20

3 Quadra Island Forestland Conservation Project Validation TABLE OF CONTENTS 1 VALIDATION REPORT COVER LETTER VALIDATION REPORT CONTENT INTRODUCTION / VALIDATION OBJECTIVE VALIDATION BODY EMISSION OFFSET PROJECT DETAILS GHG ASSERTION VALIDATION METHODOLOGY RISK PARAMETERS, ASSOCIATED VALIDATION PROCEDURES AND SUMMARY OF VALIDATION RESULTS IDENTIFIED DISCREPANCIES AND RESOLUTIONS VALIDATION REPORT STATEMENT OF ASSURANCE Page 3 of 20

4 1 VALIDATION REPORT COVER LETTER Ms. Cornelia Rindt Offsetters Clean Technology Suite West Hastings Street Vancouver, BC V6B 1N2 29 December 2015 Dear Cornelia, Validation Body Qualifications ESI maintains an accredited business management system consistent with ISO for the validation of GHG emission reductions from land use and forestry. ESI s accreditation number is 0800 issued by the American National Standards Institute. Validation Team Qualifications ESI s validation team was comprised of individuals with the education, experience, accreditation, professional designation, knowledge, and competency in the project s sectoral scope to validate the Project Plan. The validation team consisted of individuals with the following qualifications: Team Member Education Experience and knowledge assessment Michael Armstrong RPF, CPA, CA Competent for role of lead validator 1,2,3,4,5,6,8 Neil MacEachern MSc, RPF, EP(EMSLA) Competent for role of team member 1,3,4,5,6,7,9 Branden John Beatty MSc, RPBio Competent for role of team member 1,3,4,5,9 Sylvi Holmsen RPF, CPA, CA Competent for role of team member 1,2,3,4,5,6,7,8 Chris Ridley-Thomas MSc, RPBio, CPA, CA, EP(EMSLA) Competent for role of team member 1,2,3,4,5,6,7,8 Shawn McMahon BS, SAF CF Competent for the role of Senior Independent Reviewer 1,2,3,4,5,6 Eric Jaeschek BS, MS, SAF CF Competent for the role of team member 1,3,4,5,6 Janice McMahon BS, MS Competent for the role of QAQC 1,2,3,4,5 Page 4 of 20

5 Experience and knowledge assessment notations: 1. Team member has conducted research with respect to the British Columbia greenhouse gas offset system as part of the preparation for the engagement. 2. Team member has successfully completed the ISO Part 3 GHG Validation and Verification of GHG Assertions lead auditor course and/or has multiple years of experience as a lead auditor. 3. Team member has prior audit experience directly related to GHGs. 4. Team member has prior experience specific to forestry and /or offset projects associated with forestry projects. 5. Team member has sufficient knowledge with respect to the sinks and sources associated with forests. 6. Team member is a Chartered Accountant (CPA, CA) in Canada, is a BC Registered Professional Forester, or a SAF Certified Forester. 7. Team member is an ISO Environmental Management Systems Lead Auditor. 8. Team member has prior experience in financial auditing. 9. Team member has a graduate degree pertaining to GHG management. Independence and Conflict of Interest ESI and the validation team have avoided any actual or potential conflicts of interest with Offsetters Clean Technology Inc. and the intended users of the GHG assertions in the Project Report. The parties involved in the validation of the Project Plan were not, in any way, involved in GHG consultancy services for the development of the GHG offset generating activities associated with the Quadra Island Forestland Conservation Project. To ensure independence and avoid conflicts of interest ESI requires that all team members adhere to ESI s Management System Manual relating to Independence and Conflicts of Interest. It is each member s responsibility to inform his or her Manager of any circumstance: a) That may place them in an actual or perceived conflict of interest; b) That may cause them to lack independence, and c) That may cause an impairment of impartiality. ESI s Management System Manual describes comprehensive independence requirements that are maintained at both the personal (auditor) and firm level. Quality Assurance and Quality Control ESI maintains an accredited business management system designed to ensure quality assurance and quality control. The business management system is consistent with ISO Greenhouse Gases Requirements for Greenhouse Gas Validation and Verification Bodies for use in Accreditation or Other Forms of Recognition. ESI conducts internal audits and management reviews in order to monitor compliance with its business management system. Page 5 of 20

6 Record Keeping and Data Management ESI maintains an accredited record keeping and data management system consistent with ISO To ensure compliance with ISO ESI maintains electronic records of all verification activities for a minimum of 10 years. Sincerely, Janice McMahon Environmental Services, Inc Financial Way, Suite 100 Jacksonville, Florida Phone: December 2015 Page 6 of 20

7 2 VALIDATION REPORT CONTENT 2.1 INTRODUCTION / VALIDATION OBJECTIVE The objective of the validation was to evaluate key assertions, data sources, methods, procedures and offset generating activities described in the GHG Project Plan associated with the Quadra Island Forestland Conservation Project [dated 23 December, 2015 (v1.12)], in accordance with validation criteria under the British Columbia Emission Offsets Regulation (the Regulation) 1 and the following: The Protocol for the Creation of Forest Carbon Offsets in British Columbia (FCOP); and ISO 14064:2007 Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements (ISO 14064:2007 Part 2). ESI considers completeness, relevance, conservativeness, consistency, accuracy, and transparency as criteria to facilitate the assessment of whether the Project Plan and estimated greenhouse gas (GHG) assertion(s) are presented fairly and substantiated by sufficient and appropriate evidence. The following validation report describes the scope of the engagement and the validation procedures for the Project. The report includes the techniques and processes used to test the GHG information and associated assertions, along with any additional information used in the validation. The validation was conducted in accordance with ISO 14064:2007 Part 3, ISO 14065:2013 and the Regulation. 1 Relavant guidance documents can be found on the Climate Investment Branch web page. Page 7 of 20

8 2.2 VALIDATION BODY General Information Validation Body Contact Information Lead Validator Contact Information Accreditation Agency Environmental Services, Inc. Janice McMahon Sr. Vice President /Technical Director Forestry, Carbon and GHG Services Division Environmental Services, Inc. Corporate Headquarters: 7220 Financial Way, Suite 100 Jacksonville, Florida Michael Armstrong Lead Validator 777 Dunsmuir Street Vancouver BC V7Y 1K American National Standards Institute Accreditation ID #0800 Scope of Accreditation BC validation (accredited) Date Accreditation Expires 08 March 2016 Status of Accreditation In Good Standing Page 8 of 20

9 2.3 EMISSION OFFSET PROJECT DETAILS Project Overview Applicable Project Plan Project Start Date 01 April 2014 Quadra Island Forestland Conservation Project, v1.12 (dated 23 December 2015) Validation Period 01 April 2014 to 31 March 2039 Expected Lifetime of the Project Project Description Applicable Project Scope Applicable Quantification Protocol (Version & Date) 25 Years The purpose of the Quadra Island Forestland Conservation Project is to reduce greenhouse gas levels and protect important conservation, recreation and cultural values. GHG emission reductions through forest conservation The Protocol for the Creation of Forest Carbon Offsets in British Columbia (FCOP) Version 1.0 Page 9 of 20

10 2.4 GHG ASSERTION Projected Project Reporting Period Year beginning April 1, YYYY Expected Gross Emission Reductions (t CO 2 e) Leakage (t CO 2 e) Reductions Risk (t CO 2 e) Net Emission Reductions or Removals (t CO 2 e) Cumulative saleable credits (t CO 2 e) ,250 (100,330) (5,792) 52,128 52, ,772 (9,365) (540) 4,867 56, ,932 (8,198) (473) 4,261 61, ,258 (7,137) (412) 3,709 64, ,937 (6,300) (363) 3,274 68, ,857 (5,615) (324) 2,918 71, ,851 (4,977) (287) 2,587 73, ,114 (4,510) (260) 2,344 76, ,332 (4,014) (231) 2,087 78, ,833 (3,698) (213) 1,922 80, ,186 (3,287) (189) 1,710 81, ,718 (2,991) (172) 1,555 83, ,097 (2,597) (150) 1,350 84, ,506 (2,222) (128) 1,156 85, ,044 (1,929) (111) 1,004 86, ,919 (1,850) (106) , ,567 (1,627) (94) , ,146 (1,360) (78) , ,828 (1,158) (67) , ,655 (1,049) (60) , ,457 (923) (53) , ,265 (802) (46) , (24) (1) 14 91, (51) - - (51) 91, (231) - - (231) 91,168 Page 10 of 20

11 2.5 VALIDATION METHODOLOGY Validation Methodology Validation Standards 14064:2007 Part 3, and ISO 14065:2013 Validation Criteria Level of Assurance Validation Scope Materiality Validation Procedures Mitigation of validation risk through the selection of validation procedures Inherent Limitations The British Columbia Emission Offsets Regulation (B.C. Reg. 393/2008); The Protocol for the Creation of Forest Carbon Offsets in British Columbia (FCOP); and, ISO 14064:2007 Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements (ISO 14064:2007 Part 2). The Climate Investment Branch of the BC Ministry of Environment (CIB) requires the Validation Body to conduct sufficient procedures to deliver a reasonable level of assurance. The validation was planned and executed accordingly. The scope of the Validation is the GHG offset generating activities associated with the Quadra Island Forestland Conservation Project with a start dated of 01 April Per section 4(3) of the Regulation: A project plan is subject to material errors, omissions or misrepresentations if: (a) The individual or aggregate effect of an error, omission or misrepresentation related to the project plan make it probable that the judgment of a reasonable person judging the assertion required to be in the project plan would have been changed or influenced by the error, omission or misrepresentation, or (b) The errors, omissions or misrepresentations are material as determined in accordance with a guideline, if any, issued by the director under section 7(4). See Section 2.6 for the risk parameters identified and the validation assessment procedures undertaken to address these risks. This validation assessed the model in place to calculate future emission reductions created by the project. In practice future emission reductions may be subject to significant external influences that are outside the scope of this engagement to assess. Hence, while our opinion addresses the reasonableness of the model for calculating emission reductions, no opinion is provided on the actual figure for future emission reductions stated in the plan which will be the subject of future third party Page 11 of 20

12 Schedule of Validation Activities verifications. Greenhouse gas and energy use data are subject to inherent limitations. A number of different measurement techniques may be utilized in accordance with the requirements of FCOP which may vary in precision and /or outcome, resulting in (materially) different greenhouse gas emission reduction estimates. Validation Planning & Review Site and Office Visits Validation Finalization & Reporting November 16 December 1, 2015 Site Visit: December 2 December 3, 2015; Office Visit: December 2 & 14, 2015 December 4 December 29, 2015 Page 12 of 20

13 2.6 RISK PARAMETERS, ASSOCIATED VALIDATION PROCEDURES AND SUMMARY OF VALIDATION RESULTS A summary of the key findings from the validation is provided in the table below. Details on the identified discrepancies and resolutions are provided in Section 2.7. Parameter Project Eligibility Demonstration of Ownership Validation Assessment Procedures Examination of the Project Plan for compliance with the BC Emissions Offset Regulation and FCOP. Assessment of project eligibility based on the information provided for in the Project Plan. Written representations from management regarding ownership of the properties and related emission offsets. Discuss encumbrances on landownership, e.g. covenants, land claims. Confirm carbon ownership by reviewing agreement(s) in place. Select sample of properties for site visits to confirm existence Result potentially material uncorrected errors associated with the approach taken to project eligibility. potentially material uncorrected errors associated with the approach taken to the demonstration of ownership. Completeness of Sources, Sinks and Reservoirs (SSRs) Site visit to confirm the nature of the associated emissions. Comparison of SSRs identified in the Project Plan to those identified during the site visit. Trace the SSRs from the Project Plan to the calculation spreadsheet to potentially material SSRs associated with the project that were not included in the Project Plan. Page 13 of 20

14 Parameter Selection of the Baseline Scenario Assessment of the application of conservativeness Validation Assessment Procedures ensure all are incorporated. Review project SSRs against the required SSRs per FCOP and determine if there are any missing mandatory SSRs. Assessment of the rationale for the selection of the baseline scenario. Assessment of the inventory data and appraisal reports used to determine the baseline. Discuss appropriateness of baseline with management. Assess baseline assumptions for reasonable. Discuss any usual assumptions with Offsetters. Confirm for instances where the project methodology allows for potentially more than one calculation approach that the selected approach considers the relative accuracy of the options and where these are equally accurate, considers the principle of conservativeness in determining the final approach. Result potentially material uncorrected errors associated with the approach taken to the selection of the baseline scenario. potentially material deviations from the principle of conservativeness that would materially impact the assertions in the Project Plan. Project Justification Review of the Project Plan and associated project justification against the requirements of the potentially material deviations from the requirements of the Protocol. Page 14 of 20

15 Parameter Application of Quantification Protocol to Project Assessment of Uncertainty and Risk (Permanence & Non- Permanence) Validation Assessment Procedures Protocol. Review of the Project Plan and associated project calculations against the requirements of the Protocol. Confirm the emission reductions are associated with the Improved Forest Management and Conservation / Avoided Deforestation under FCOP and are thus permanent (as defined under the Protocol). Confirm the approach to managing uncertainty is consistent with the Protocol. Result potentially material deviations from the requirements of the Protocol to the Project Plan. potentially material deviations in the Project Plan that would materially impact the uncertainty and risk assessment in the Project Plan. Quality of Evidence to Justify Key Parameters of the Project (e.g. Baseline Selection, Project Justification, etc.) Quality of Evidence to Determine GHG Emission Reductions and Removals Check underlying data and determine quality of evidence against key parameters of the Project. Agree emission factors used in the calculator to the Project Plan and to the approved sources (e.g. FCOP). Agree Project Plan to spreadsheet calculator. Agree model outputs to the spreadsheet. Assess the carbon modeling and assumptions for appropriateness. Test the spreadsheet potentially material deviations based on the underlying data for the key parameters of the Project. potentially material deviations from the requirements documented in the Project Plan and did not identify a lack of data transparency or gaps in data supporting the emission reduction assertions that Page 15 of 20

16 Parameter Assessment of project leakage Consistency of the Project Plan with the requirements of the Regulation GHG Data Management and Quality Control Validation Assessment Procedures calculator and assumptions to confirm consistency with Project Plan and the Protocol. Conduct a site visit to confirm existence and accuracy of stand attributes in the carbon model. Assessment of project leakage calculations and considerations in the Project Plan to ensure consistency with the Protocol. Examination of the Project Plan for compliance with the BC Emissions Offset Regulation and the Forest Carbon Offset Protocol. Test implementation of management controls over reported data for the entire project period including management review process, access controls to the applicable IT systems. Testing of key controls over GHG data management and quality control where determined to be more efficient than substantive testing. Result would materially affect the assertions. potentially material deviations from the requirements of the protocol for the assessment of project leakage. potentially material deviations from the validation criteria and Protocol. potentially material weaknesses from the GHG Data Management and Quality Control requirements within the Protocol. GHG Data Retention and Storage Test implementation of management controls over reported data for the entire project period including management review potentially material deviations from the GHG data retention and storage requirements within the Protocol. Page 16 of 20

17 Parameter Validation Assessment Procedures process, access controls to the applicable IT systems. Result Managing the risk of reversal (Risk that the systems are no updated for forest depletions and natural disturbance) Assess how the Project Plan manages the risk of reversal in terms of the calculation and monitoring. potentially material deviations in the GHG Data Management and Quality Control requirements within the Protocol. Page 17 of 20

18 2.7 IDENTIFIED UNADJUSTED DISCREPANCIES N/A Identify The Nature of The Misstatement Identify Quantitative Impact (tco2e, % of the asserted emission reduction and over/under-statement) Identify any changes to the validation procedures in light of the identified misstatement Cumulative Unadjusted Misstatement N/A Page 18 of 20

19 3 VALIDATION REPORT STATEMENT OF ASSURANCE To Offsetters and BC Ministry of Environment Offsetters engaged Environmental Services, Inc. (ESI) to validate the Quadra Island Conservation Project with a start date of 01 April 2014 submitted by Offsetters Clean Technology for the GHG offsetting activities of the Project located on Quadra Island B.C. The Project Plan (v1.12, dated 23 December 2015) estimates that the Project will result in a total net reduction of 91,168 tonnes of carbon dioxide equivalent (tco 2 e) over the 25-year validation period from 01 April 2014 to 31 March Offsetters was responsible for the preparation of the Project Plan in accordance with the British Columbia Emission Offsets Regulation (the Regulation). This responsibility included the design, implementation and maintenance of internal control relevant to the preparation of a Project Plan that is free from material misstatement, whether due to error, omission or misrepresentation. This responsibility included the development of the Project Plan, which encompasses the collection of data, performance of calculations and presentation of information. As an independent validation body, ESI was responsible for planning and executing the validation in order to deliver an opinion as to whether the Project Plan is presented fairly in all material respects in accordance with the validation criteria which comprise: The British Columbia Emission Offsets Regulation; The Protocol for the Creation of Forest Carbon Offsets in British Columbia (FCOP); and, ISO 14064:2007 Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements (ISO 14064:2007 Part 2). ESI is accredited by a member of the International Accreditation Forum (IAF), in accordance with ISO (Accreditation ID #0800) for greenhouse gas (GHG) validation which includes specific accreditation for validation of GHG emission reductions from land use and forestry and is therefore eligible under the Regulation to complete the validation of the Project. The validation criteria require that the validation be planned and executed in a manner to obtain reasonable assurance as to whether the assertions in the Project Plan are materially correct and are a fair and reasonable representation of the project. We completed our validation in accordance with ISO Part 3 Specification with Guidance for the validation and verification of greenhouse gas assertions and the BC Emission Offsets Regulation S.4. As such, we planned and performed our validation in order to provide reasonable, rather than absolute assurance, with respect to the Project Plan s conformance to the validation criteria. We believe our work provides a reasonable basis for our conclusion. Page 19 of 20

20 There are inherent limitations in the ability to validate emission reduction assertions associated with future events. This validation assessed the model in place for calculating future emission reductions. However, since the asserted emission reduction is based on future events, actual results will vary from the information presented and the variations may be material. Accordingly, no conclusion is made as to whether projected emission reductions will be achieved. Based on our validation, in our opinion the project is presented fairly, in all material respects, in accordance with the validation criteria. Michael Armstrong, RPF, CPA, CA Lead Validator Janice McMahon Sr. Vice President and Technical Director Authorized on Behalf of Environmental Services, Inc Financial Way, Suite 100 Jacksonville, Florida 32256, USA 29 December 2015 MA/JPM/VO ESI Quadra Validation Report-final K pf 12/29/15f Page 20 of 20