Verification Report Canfor Grande Prairie Sawmill Biomass Energy Project (2016)

Transcription

1 Verification Report Canfor Grande Prairie Sawmill Biomass Energy Project (2016) PRESENTED TO Canadian Forest Products Ltd. FEBRUARY 8, 2017 ISSUED FOR USE FILE: 704-ENW.EENW Tetra Tech Canada Inc. Riverbend Atrium One, 115, 200 Rivercrest Drive SE Calgary, AB T2C 2X5 CANADA Tel Fax

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3 PROJECT SUMMARY Project Title Project Description 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. Project Location 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 Credit Start Date January 1, 2005 Credit Duration Period Initial project credit duration period: January 1, 2005 December 31, 2012 Credit extension period: January 1, 2013 December 31, 2017 Expected Lifetime of the Project Actual Emissions Reductions /Removals Achieved Other Environmental Attributes Project Registration Ownership Quantification Protocol The project is expected to last 25 years 2016: 75,421 tonne CO2e None This project is only registered once and in one offset system the Alberta Offset Registry. Canadian Forest Products Ltd. Quantification Protocol for Energy Generation from the Combustion of Biomass Waste (Version 2.0, April 2014). Verification Period This verification covers the period from January 1, 2016 to December 31, 2016 i

4 Project Title Project Activity Canfor Grande Prairie Sawmill Biomass Energy Project 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 as outlined in section 3.1 of the Technical Guidance for Offset Project Developers (version 4.0, February 2013). In particular: 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. 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 an qualified third party, Tetra Tech Canada Inc. Project Proponent Canadian Forest Products Ltd. Michael Jordan, P. Eng. Director, Energy, Environment, and Climate Change Policy West 75 Avenue, Vancouver BC V6P 6G2 Phone: (604) Fax: (604) Michael.jordan@canfor.com ii

5 VERIFICATION SUMMARY Project Title Objective Summary Lead Verifier Canfor Grande Prairie Sawmill Biomass Energy Project Reasonable assurance on Emission Reductions contained in the GHG Assertion. Based on our review, it is our opinion to a reasonable level of assurance that the GHG emission reductions contained in the GHG assertion are materially correct and presented fairly in accordance with the related criteria. Min Si, M.N.R.M, GHG-V Nelson Lee, M.A.Sc., P.Eng., GHG-V Verification Team Kathleen Dunnett, P. Eng. Min Si, M.N.R.M, GHG-V Nancy Wellhausen Subject Matter Expert Independent Peer Reviewer Designated Signing Authority N/A Nancy Wellhausen Nelson Lee, M.A.Sc., P.Eng., GHG-V Verification Date January 6, 2017 February 8, 2017 Site Visits Date January 20, 2017 Report Date February 8, 2017 iii

6 TABLE OF CONTENTS PROJECT SUMMARY... I VERIFICATION SUMMARY... III 1.0 INTRODUCTION Objective Scope Level of Assurance Verification Criteria Materiality METHODOLOGY Verification Strategy Procedure Verification Procedures Verification Steps and Site Visit Risk Assessment Verification / Sampling Plan Team Schedule RESULTS Assessment of Internal Data Management and Controls Assessment of GHG Data and Information Deviation from the Protocol Assessment Against Criteria Evaluation of GHG Assertion Summary of Findings VERIFICATION STATEMENT CONFIRMATIONS LIMITATIONS OF LIABILITY LIST OF TABLES IN TEXT Table 1: Verification Scope... 3 Table 2: Verification Procedures... 5 Table 3: Rating Matrix for Inherent Risk and Control Risk... 7 Table 4: Risk Assessment for Applicable Emission Sources... 8 Table 5: Verification Team... 8 Table 6: Schedule of Verification Activities... 9 iv

7 Table 7: Emission Sources Not Applicable to the Project... 9 Table 8: Summary of Internal Controls Table 9: GHG Data and Supporting Information Table 10: Eligibility Criteria Assessment LIST OF FIGURES IN TEXT Figure 1: Verification Steps... 6 Figure 2: Summary of Internal Data Management and Data Flow APPENDIX SECTIONS APPENDICES Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F Verification Plan Statement of Qualification Finding Log Statement of Verification Conflict of Interest Checklist Tetra Tech s General Conditions v

8 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., or for any Project other than the proposed development at the subject site. Any such unauthorized use of this report is at the sole risk of the user. Use of this report is subject to the terms and conditions stated in Tetra Tech s Services Agreement. Tetra Tech s General Conditions are provided in Appendix F of this report. vi

9 1.0 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, 2016 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. 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 8 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 2004 for these factors. All other factors were considered to be immaterial or functionally equivalent. 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. Verification Report Canfor GP 1

10 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. In 2016 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) 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 the verification is to provide assurance to AEP that the Emission Reductions contained in the GHG Assertion is materially correct and presented fairly in accordance with the relevant criteria. 1.2 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, types of GHGs, and time periods covered. The scope of the verification is listed in Table 1. 2

11 Table 1: Verification Scope Item Grande Prairie Sawmill Biomass Energy Project Geography Organization Activities and Processes Sources* Sinks / Reservoirs GHG GHG Assertion 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 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). N/A Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O) Baseline: 76,625 t CO2e Project: 1,204 t CO2e Net Reduction: 75,421 t CO2e Time Period January 1, 2016 to December 31, 2016 *included sources as specified in the Protocol. 1.3 LEVEL OF ASSURANCE The verification for the Project was conducted to a reasonable of level of assurance, as required by the Specified Gas Emitters Regulation (SGER). 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. 1.4 VERIFICATION CRITERIA The verification assesses the Project against Alberta Offset program eligibility criteria, including: Occur in Alberta; Result from actions not otherwise required by laws and be beyond business as usual and sector common practices; Result from actions taken on or after January 1, 2002; Occur on or after January, 2002; 3

12 Be real, demonstrable, quantifiable, and verifiable; Have clearly established ownership; and Be counted once for compliance purpose. The verification assesses the Project against the following program criteria and relevant supporting documentation: Alberta s Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7; Alberta Specified Gas Emitters Regulation (SGER), 2007; SGER, Technical Guidance Document for Offset Project Developers (Version 4.0, February 2013); SGER, Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance (Version 1.0, January 2013); Quantification Protocol for 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. 1.5 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 determined if the discrepancies could be deemed to be material errors. 2.0 METHODOLOGY The verification is performed according to ISO : Specification with Guidance for the Validation and Verification of GHG assertions. 2.1 VERIFICATION STRATEGY The approach used in this verification includes a combination of substantive procedures and test of controls. Tetra Tech uses 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 and sinks within the Project boundary. 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. 4

13 Controls reliance was used in supporting the substantive approach as described above. Procedures used in this verification include inspection, observation, inquiry, confirmation, recalculation, and analytics test. The detailed verification procedures are provided in Section PROCEDURE Verification Procedures Verification procedures for the key components are provided in Table 2. Table 2: Verification Procedures Verification Component Procedures The verification is conducted for Canfor Grande Prairie Sawmill Biomass Energy Project for 2016 calendar year. The Offset Project involves direct GHG emission reductions by Description of the nature, scale and complexity of the verification activity 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). Comparability with the baseline 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 Review the baseline calculations and supporting documents. Review Project Plan and Report. Interview facility operators. 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. 5

14 Verification Component Procedures Review emission factors used. Assessment against criteria Evaluation of the GHG assertion Review and check against related criteria. Conduct site visit for physical boundary. Recalculate GHG assertions. Evaluate supporting documents Verification Steps and Site Visit The verification follows the steps outlined in the following diagram (Figure 1). Planning Gain understanding of technical operations and processes Gain understanding of data management Assessment Risk assessment and planning analytics Contribution analysis and Materiality analysis Verification plan and Sampling plan Verification Conduct verification procedures Conduct site visit Discuss findings log Report Senior review and independent peer review Issued for Review verification report Issued for Use report Figure 1: Verification Steps Site Visit Mr. Min Si conducted the site visit on January 20, The purpose of the site visit was to gain understanding of the offset project s operation, equipment, and control processes for assessment of Project s conformance with the Criteria. During the site visit, Mr. Min Si was accompanied by Mr. Michael Jordan (Director, Environment, Energy & Climate Change Policy) and observed the emission sources, various processes, data acquisition and on-site records handling process. The control devices that were used to collect and monitor activity data for emission calculations were observed. 6

15 Mr. Si visited the cogeneration facility, and observed biomass transfer, receiving and storage areas at the CHP plant, the biomass weighing system, various meters, power plant equipment, and the CHP control centre. The biomass transfer process from sawmill and the weigh scale station equipment for tracking biomass truck transfer quantities were also observed. The overall heat and electricity generation process and the biomass handling and utilization process were explained by Chief Engineer. Mr. Si also interviewed the financial accountant, Ms. Tracey Swant, of the CHP facility to gain understanding the data review, data management practices and record keeping procedures for the CHP facility. The CHP plant operators were interviewed to verify that standard operating procedures were followed 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, 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 3. Table 3: Rating Matrix for Inherent Risk and Control Risk Score Likelihood Consequence Rating possibility of misstatement >99% 66% < possibility of misstatement <99% 33% < possibility of misstatement <66% 1% < possibility of misstatement <33% possibility of misstatement <1% >or =5% misstated GHG assertion (threshold) Very High 3% <misstated GHG assertion <5% High <2% misstated GHG assertion <3% Medium 1% < misstated GHG assertion <2% Low <1% misstated GHG assertion Very Low 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: 7

16 Data used for emission reduction quantification consists of manually recorded data, metered data capture, and manual entry into the Canfor offset quantification tool; and 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 determined to be low as: Reasonable level of assurance requires a low detection risk. The risk assessment for the applicable emission sources is 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 / Sampling Plan Strategic, systematic and 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 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). 2.3 TEAM The verification team is included in Table 5 and the statement of qualification is provided in Appendix B. Table 5: Verification Team Name Nelson Lee, M.A.Sc., P.Eng., GHG-V Kathleen Dunnett, P.Eng. Min Si, M.N.R.M., GHG-V Nancy Wellhausen Role Designated Signing Authority Verifier Lead Verifier Independent Peer Reviewer 8

17 2.4 SCHEDULE The schedule for the verification is presented in Table 6. Table 6: Schedule of Verification Activities Task Completion Date Kick-off Meeting and Initial Information Request January 6, 2017 Site Visit January 20, 2017 Desktop Review January 6 February 6, 2017 Submit Issued for Review Report February 7, 2017 Issued for Use Report Delivered February 8, 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 7). Table 7: Emission Sources Not Applicable to the Project 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. 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 projection 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, therefor, 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. 9

18 3.1 ASSESSMENT OF INTERNAL DATA MANAGEMENT AND CONTROLS A summary of Canfor s internal data management and data flow is provided in Figure 2. Wood Waste Electricity Steam (F.T.P.) Natural gas Diesel Scale data Meter data Meter data invoice data invoice data Hog Database & Monthly Generation Net Heat Calculation Wood Tracking (Excel) (Excel) (Excel) GHG Calculator Project Report Automatic Manual Figure 2: Summary of Internal Data Management and Data Flow 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 Canfor s control is provided in Table 8. 10

19 Table 8: Summary of Internal Controls Reporting Element Data Source Controls Wood Waste Electricity Steam Natural gas Diesel GHG Calculator 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 BPCP program) Meters Invoices Historian Database Fuel Delivery Slips Division Monthly summary billing (invoices) Custom Excel based calculator 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 BPCP 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). Quantification completed by PwC with review by senior personnel at PwC and Canfor Authorized Project Contact. Offset report Reviewed by PwC and Canfor Authorized Project Contact. 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. 3.2 ASSESSMENT OF GHG DATA AND INFORMATION The GHG data and information provided to support the GHG assertion is deemed to sufficient. The information to support activity data is provided in Table 9, the emission factors used are taken from AEP s Emission Factors Handbook and Canada s National Inventory Report. 11

20 Table 9: GHG Data and Supporting Information Applicable Emission Sources GHG Data and Information Results Collection, Transfer and Transport of Biomass (P1) Estimated based on average of truck load and millage of round trip. 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 has approved the request on Feb 3, Fuel Extraction/Processing (P4) Natural gas invoices The natural gas quantification includes the natural gas to the CHP plant and to sawmill. The natural gas invoices are reviewed by Tetra Tech. The GHG data and information provided are deemed to be sufficient and appropriate. Facility Operation (P12) Diesel invoices for on-site diesel used by loaders The quantity of diesel consumed is determined by diesel supplier s invoice. Average daily usage in January 2017 is used to adjust the diesel usage for the The assumption is deemed to acceptable. 12

21 Applicable Emission Sources GHG Data and Information Results Combustion of Biomass(P15) Biomass waste quantify 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 method to quantify emissions from 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. 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. On-site Heat Generation Displaced by the Project (B18) The net heat calculated for the Alberta Bio- Energy Producer Program (BPCP) by a Professional Engineer is used as heat displaced by the project. Monthly average pressure and temperature data is used to estimate the net heat generation. In 2016, direct metering data for LP steam s temperature, pressure and flow was used to calculate the gross heat in the LP steam to sawmill. In addition, DCS system incorrectly set up a cap for LP steam flow for the beginning of the year. When the steam flow is over the cap, the DCS system recorded the flow as the cap, instead of the actual flow. The actual LP steam flow when it was over the limit is unknown. Tetra Tech reviewed the raw metering data, the impact of this cap is deemed to be immaterial, and would result in a conservatively low calculation of offset credits. Off-site Electricity Generation Displaced by the Project (B6) Metering data is used. The displaced electricity calculated by using gross generation and subtracting the parasitic load and CHP wood handling usage. No issues found 13

22 3.2.1 Deviation from the Protocol Although transport of combustion residue Ash (P17) is excluded in the protocol, Canfor established in the Project Plan that emissions associated with the transport of combustion residue are quantified. Inclusion of this source is conservative for the GHG assertion. The 2016 quantification calculation includes this source and is consistent with the Project Plan and the transport of combustion residue (P17) is classified under collection, transfer and transport of biomass (P1) in the quantification. 3.3 ASSESSMENT AGAINST CRITERIA The result of assessment against program eligibility criteria is provided in Table 10. Table 10: Eligibility Criteria Assessment Offset Eligibility Criteria Assessment of Eligibility Criteria Occur in Alberta Result from actions not required by Law Result from actions taken on or after January 1, 2002 and occur on or after January 1, 2002 Real and demonstrable Quantifiable and measurable Have clearly established ownership Counted once for compliance purposes Implemented according to a government approved protocol (for offset projects) Verified by a qualified person meeting the requirements under Section 18 of SGER. Registered on the Alberta Emission Offset Registry Site visit confirmed the project physical location. Combustion of biomass waste is not required by law for energy generation. Project started from January 1, Site visit confirmed the existence of the project. Activity data is measured and emissions are quantified using approved protocol. Canfor owns 100% of the offset project, ownership has been established. The offset credits will be serialized on CSA Carbon Registry. Approved Protocol is used. Verifier meets the requirement under Section 18 of SGER. Project registered under CSA Carbon Registry Alberta Emission Offset Registry. 3.4 EVALUATION OF GHG ASSERTION The verification opinion is that the GHG Assertion meets the requirements of the Specified Gas Emitters Regulation. 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. 3.5 SUMMARY OF FINDINGS A detailed findings log is provided in Appendix C. There are no unresolved material discrepancies. 14

23 4.0 VERIFICATION STATEMENT Based on our review, it is our opinion that the Emission Reductions of 75,421 t CO2e contained in the GHG assertion generated from the Canfor Grande Prairie Sawmill Biomass Energy Project in the period of January 1, 2016 to December 31, 2016 are materially correct and presented fairly in accordance with the relevant criteria. The Statement of Verification is provided in Appendix D. 5.0 CONFIRMATIONS As required by AEP, 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. 15

24 6.0 LIMITATIONS OF LIABILITY Tetra Tech has undertaken the verification of the asserted emission reductions associated with the Canfor Grande Prairie Sawmill Biomass Energy Project in accordance with Technical Guidance for Offset Project Developers (Version 4.0, February 2013). Tetra Tech has assessed the offset project GHG assertions 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 at the Canfor Grande Prairie Sawmill Biomass Energy 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 judgement of the verifier. If you have any questions or comments, please contact Min Si ( , The Conflict of Interest Checklist is provided in Appendix E. Issued in Calgary, AB, February 8, Respectfully submitted, Tetra Tech Canada Inc. Prepared by: Min Si, M.N.R.M., GHG-V Lead Verifier Reviewed by: Nelson Lee, M.A.Sc., P.Eng., GHG-V Designated Signing Authority /sy 16

25 APPENDIX A VERIFICATION PLAN

26 February 8, 2017 Canadian Forest Products Ltd West 75 th Avenue Vancouver, BC V6P 6G2 ISSUED FOR USE FILE: 704-ENW.EENW Via Attention: Subject: Mr. Michael Jordan Director, Environment, Energy and Climate Change Policy Verification Plan Canfor Grande Prairie Sawmill Biomass Energy Project for Emission Reduction Credits in 2016 Calendar Year 1.0 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 2016 Calendar Year. 1.1 OBJECTIVE The objective of the verification is to provide assurance to Alberta Environment and Parks (AEP) that the GHG Assertion is materially correct and presented fairly in accordance with the relevant criteria. 1.2 ASSURANCE The scope and level of effort of this verification is planned to achieve a reasonable level of assurance as required to satisfy requirements of the Specified Gas Emitter Regulation (SGER). 1.3 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, types of GHGs, and time periods covered. The scope of the verification is listed in Table 1. Tetra Tech Canada Inc. Riverbend Atrium One, 115, 200 Rivercrest Drive SE Calgary, AB T2C 2X5 CANADA Tel Fax

27 VERIFICATION PLAN FOR 2016 CANFOR BIOMASS ENERGY PROJECT VERIFICATION Table 1: Verification Scope Item Grande Prairie Sawmill Biomass Energy Project Geography Organization Activities and Processes Sources* Sinks / Reservoirs GHG GHG Assertion 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 Canadian Forest Products Ltd. Combined Heat and Power Generation 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). N/A Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O) Baseline: 76,625 t CO2e Project: 1,204 t CO2e Net Reduction: 75,421 t CO2e Time Period January 1, 2016 to December 31, VERIFICATION STANDARDS The verification is performed according to ISO : Specification with Guidance for the Validation and Verification of GHG Assertions. 1.5 VERIFICATION CRITERIA The verification assesses the Project against Alberta Offset program eligibility criteria, including: Occur in Alberta; Result from actions not otherwise required by laws and be beyond business as usual and sector common practices; Result from actions taken on or after January 1, 2002; Occur on or after January, 2002; Be real, demonstrable, quantifiable, and verifiable; Have clearly established ownership; and Be counted once for compliance purpose. \Verification Plan Canfor GP.docx 2

28 VERIFICATION PLAN FOR 2016 CANFOR BIOMASS ENERGY PROJECT VERIFICATION The verification assesses the Project against the following program criteria and relevant supporting documentation: Alberta s Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7; Alberta Specified Gas Emitters Regulation, 2007; SGER, Technical Guidance Document for Offset Project Developers (Version 4.0, February 2013); SGER, Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance (Version 1.0, January 2013); Quantification Protocol for 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. 1.6 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 determined if the discrepancies could be deemed to be material errors. 2.0 DATA MANAGEMENT AND CONTROLS A summary of Canfor s internal data management and data flow is provided in Figure 1. Wood Waste Electricity Steam (F.T.P.) Natural gas Diesel Scale data Meter data Meter data invoice data invoice data Hog Database & Monthly Generation Net Heat Calculation Wood Tracking (Excel) (Excel) (Excel) GHG Calculator Project Report Automatic Manual Figure 1: Data Management and Data Flow 3 Verification Plan Canfor GP.docx

29 VERIFICATION PLAN FOR 2016 CANFOR BIOMASS ENERGY PROJECT VERIFICATION 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 Canfor s control is provided in Table 2. Table 2: Summary of Internal Controls Reporting Element Data Source Controls Wood Waste Electricity Steam Natural gas Diesel GHG Calculator 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) Steam heat_invoicing Spreadsheet (excel spreadsheet for BPCP program) Meters Invoices Historian Database Fuel Delivery Slips Division Monthly summary billing (invoices) Custom Excel based calculator 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 BPCP by AMEC Professional Engineer, 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). Quantification completed by PwC with review by senior personnel at PwC and Canfor Authorized Project Contact. Offset report Reviewed by PwC and Canfor Authorized Project Contact. 4 \Verification Plan Canfor GP.docx

30 VERIFICATION PLAN FOR 2016 CANFOR BIOMASS ENERGY PROJECT VERIFICATION 3.0 TEAM The verification team is presented in Table 3. Table 3: Verification Team Name Nelson Lee, M.A.Sc., P.Eng., GHG-V Kathleen Dunnett, P.Eng. Min Si, M.N.R.M., GHG-V Nancy Wellhausen Role Designated Signing Authority Verifier Lead Verifier Independent Peer Reviewer 4.0 SCHEDULE The schedule for the verification is presented in Table 4. Table 4: Schedule of Verification Activities Task Completion Date Kick-off Meeting and Initial Information Request January 6, 2017 Site Visit January 20, 2017 Desktop Review January 6 February 6, 2017 Submit Issued for Review Report February 7, 2017 Issued for Use Report Delivered February 8, RISK ASSESSMENT The risk assessment for line items is provided in the Verification Report. A summary of risk identified during the verification is provided in Table 5. Verification Plan Canfor GP.docx 5

31 VERIFICATION PLAN FOR 2016 CANFOR BIOMASS ENERGY PROJECT VERIFICATION Table 5: Summary of Risk Identified Category/ Line Item Verification Objective Risk/Concern Identified Procedure Accuracy Inaccuracy Conduct a site visit to determine meter locations and meter ID Review calculations Occurrence and responsibility Non-existence Conduct a site visit GHG Assertion Completeness Cut-off Incomplete emission sources disclosed Improper metering and recording Conduct a site visit Conduct a site visit Review records Consistency Inconsistent quantification Review calculations Review Project Plan and Project Report Classification Inappropriate emissions types, presentation, and description Review calculations Review Project Plan and Project Report Electricity Generation Displaced in Project Completeness Accuracy Improper measurement of electricity import and export Inaccurate calculations and measurement for the electricity import and export Conduct a site visit to determine meter locations and identification numbers Reconcile meter identification numbers with meters identified in Project Plan and Report Trace meter records to emissions calculations Check calculations Inspect calibration records Review QA/QC procedures Inspect raw data Natural Gas Consumption Accuracy Inaccurate measurement Inspect calibration records Review QA/QC procedures Biomass Combustion Cut-off Accuracy Improper recording practices Inaccurate measurement Inspect raw data record Inspect scales for biomass Inspect calibrations Accuracy Inaccuracy Review historical energy and production records Baseline Condition Consistency Inconsistent quantification Review calculations 6 \Verification Plan Canfor GP.docx